Good morning from Paul & Graham! 

Today's report is now finished.

Agenda - 

Paul's Section:

MJ GLEESON (LON:GLE) - excellent results for FY 6/2022, beating (previously raised) forecast. Bulletproof balance sheet, and the market cap is currently at par with NTAV, so you're really getting it at a discount, because the large land bank is probably worth well above book cost. Positive-sounding outlook. If I had to buy one housebuilder, this would be it. The average selling price is only £167k, all houses (not apartments), so this should be defensive, in any housing market downturn. This share looks exceptional value, in my opinion. 

DFS Furniture (LON:DFS) - sorry it took me so long to crunch these numbers. I'm horrified at DFS drawing down most of its overdraft, to fund divis and buybacks. This seems incredibly reckless, given the rapidly deteriorating macro picture. The balance sheet remains horrible. I consider it uninvestable right now, much too high risk.

Hilton Food (LON:HFG) - is down 27% today, on a profit warning. The house broker lowers FY 12/2022 forecast by 23%, so this price reaction looks justified. Acquisitions have been fuelled by debt, which looks a bit too high to me. It's trying to expand, fund a lot of capex, and pay divis at the same time, which looks too ambitious. Overall, it doesn't interest me - the margins are too low, and inflation/costs/consumer retrenchment are all significant headwinds.

Graham's Section:

THG (LON:THG) (555m) - this e-commerce business issues a profit warning with its interim results. Rising whey prices have hurt margins at its myprotein business, and its beauty brands and websites are also suffering from the difficult consumer environment. THG has elected to “protect” and “shield” its customers from rising prices, in order to gain market share and improve customer retention. This has resulted in a large (£89m) loss in the six-month period, and a significant increase in borrowing far beyond that which would have been caused by normal seasonal outflows. This company had a much higher valuation at IPO, far higher than our market cap threshold. However, even at its current much reduced asking price, I am struggling to find any value or quality here. After today’s share price fall, the adjusted EBITDA multiple is still 6x-8x.

Avation (LON:AVAP) (£58m) (+4%) [no section below] - this aircraft leasing…

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