Good morning! A quick report today, as I have to jump on a train shortly for Peterborough, to spend 2 days at Mello Workshops. I did my presentation slides last night, and woke up this morning with some more good ideas, so a few last minute amendments to do still.


Crawshaw (LON:CRAW)

Share price: 49p (down 9% today)
No. shares: 79.6m
Market Cap: £39.0m

Final results - for the year ended 31 Jan 2015. This is a difficult company to value, as its stated aim is to do a substantial roll out of its butchers & hot food shops. Therefore it should be a very much larger business in years to come (200 shops are planned, about 10 times the current size of the business!), and the share price is anticipating that. Therefore it looks expensive on the current size & performance.

Balance sheet - is very strong. The key figure is £9.1m cash (with no debt, all was repaid in the year), which came about due to a Placing. Therefore almost a quarter of the market cap can be adjusted out, as being the cash pile. I seem to recall new shops costs about £400k to fit out, so the cash pile is enough to roughly double the size of the business, about 20 new shops.

Profitability - turnover rose from £21.0m last time, to £24.6m this time, and growth should accelerate as new shops are opened by the new CEO (a former top guy from Lidl UK - so someone who is familiar with the sector, and has already been part of a major store roll-out).

Operating profit rose 15.1% to £1,137k. So not an exciting level of profitability yet, especially when you consider the £30m enterprise value. EBITDA was £1,573k, which ignores the £436k charge mainly for depreciation.. Therefore the EV/EBITDA valuation multiple looks very aggressive at 19 times. A figure of about a third of that would seem more reasonable to me, so the valuation is really one third the current business, and two thirds future growth expectations.

Current trading - LFL sales in the first 10 weeks are actually down, by 4%. That's got to be a bit of a concern, although they are up against very strong comparatives (up 19%). Even so, I would not expect sales to be going backwards.

Outlook - "short term profits will be held in check for…

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