I Read The News Today Oh Boy! 7-Sep-2018

7th Sep '18 by matylda

8 comments 2030 reads

Morning all!

Gear4music Holdings ( £G4M ) – 617p – £129.2m – PER 45.1

Trading Update For The 6 Months To End August 2018 – Revenue up 36% (which is ahead of expectations) to £42.5m (FY18: £31.2m) backed up with active customer numbers up 40% to 547,000. Expects FY EBITDA to be in-line (but mention of margins seems to imply PBT will not be – Perhaps). There’s a strange year end (by a month) change too.

Gets more attractive as the price drops but still not yet convinced here – The mention of margins is a bit of a put off (not sure if this is a small (real, not EBITDA) profit warning), I remain Neutral for now.

As always, all comment most welcome!

Unlock with Email

Unlock with Google

Already have an account?
Login here

About the Author

Matylda

Premium Member

8 comments

Glorenfeld

7th Sep '18

£G4M

I'm somewhat concerned about this update. Not with the numbers necessarily, but with the language. They refer to pre-flagged increasing competition driving down margins in their AGM statement, but that isn't what their AGM statement says at all. That refers to good performance despite continued competitive environment, and makes no mention of margin pressure. 'continued competitive environment' to my mind implies a steady state, rather than increasing competition.

I hold and I'm not nescessarily planning to sell, but misrepresenting what you've already told the market is a bit of a red flag.

matylda

7th Sep '18

Not sure if I was being too sceptical here or not - It does seem to be worded rather strangely though.

MrContrarian

7th Sep '18

My morning smallcap tweet: Pallets and drugs and rock'n'roll.

£G4M, £RM2, ImmuPharma (LON:IMM)

Gear4music (G4M) H1 trading: rev up 36%, ahead of mgmt expectations but guides FY EBITDA in line with mgmt expectation. due to margin pressure. "We are confident that strong sales growth alongside a controlled overhead cost base will compensate for short term gross margin compromise."
RM2 (RM2) trading: Bits of goodish news then the sucker punch lower down: "conversion of trials with large customers into long-term contracts taking longer than anticipated, the Company's expectation of turning EBITDA positive in 2019, as first noted on 9 March 2018, is challenging." The CEO trills: ""We are delighted to have started the deployment of 'smart' RM2 ELIoT-enabled pallets with world leaders etc etc." No reference to the warning. SP 99% down in 3 years.
Immupharma (IMM) Trying to salvage something from the Phase III Lupuzor debacle in April where it didn't meet statistical significance. In May IMM said the subset of patients who were had anti-dsDNA autoantibodies did show statistically significant improvement. Now an agreement with a specialist provider to distribute Lupuzor via a Managed Access Programme to allow Lupus patients early access to Lupuzor prior to any regulatory filing. Up to 500 patients will take it. No idea how positive this is.

andrea34

7th Sep '18

I am not convinced by £G4M at all, it seems as though they are trying everything they can to boost sales so that profits will remain at least in-line. I am actually thinking that they are moving the year-end by a month so that they will be able to meet profit expectations for the year and are hoping that when the results come out people will have forgotten that they have sneaked an extra month in. Well, we're not that stupid! Maybe other investors think the same as the share price is currently down 4.4%.

I have to also say that G4M isn't good value because the share price has dipped below 600, I'd say the share price is below 600 now because investors are increasingly shunning the company being fed up with the directors trying to sweet-talk their announcements to prop up the share price.

JohnEustace

7th Sep '18

£G4M Not sure how bad it is but it’s not good news is it? I don’t see why the margin pressure should be temporary, that’s not how things work these days.

Andrew niven

4th Apr '19

I have been looking at this company but finding it difficult to understand how a company can onlynearn 1m from 100m turnover. Ami missing something?

matylda

4th Apr '19

That would be related to margins, mentioned above, not only by me.

Andrew niven

5th Apr '19

Yes margins this low not sustainable but also indicates either poor management or business model.
I would imagine margins very high with regard to musical instruments and low cost internet sales.
Doesnt sdd up to me. Not sure im buying the logistics excuse

Unlock the metrics for all these stocks and more...

Take a free trial

Facebook Twitter Youtube Instagram RSS

This site cannot substitute for professional investment advice or independent factual verification. To use it, you must accept our Terms of Use, Privacy and Disclaimer policies.

Unlock the metrics for all these stocks and more...

Take a free trial

I Read The News Today Oh Boy! 7-Sep-2018

Unlock the rest of this article with a 14 day trial

About the Author

Matylda

8 comments

Unlock the metrics for all these stocks and more...

Unlock the metrics for all these stocks and more...