Good morning, it's Paul & Jack here with the SCVR for Wednesday.
Agenda -
Paul's Section:
Goodwin (LON:GDWN) (I hold) - interim results show improved profit vs LY. Strong balance sheet. Looks priced about right for now, but there's interesting potential upside from new contracts kicking in.
M&c Saatchi (LON:SAA) - another positive trading update from this PR group. It looks good to me, so am regretting having sold out recently!
In Style (LON:ITS) - interim results from this fast fashion eCommerce (and wholesaling) business aren't bad considering the sector-wide impact from supply chain costs/problems. ITS eked out a small (albeit reduced) profit, and has a strong balance sheet with plenty of cash.
Cineworld (LON:CINE) - terrible news today, as this hugely indebted cinema chain has now lost a big legal case. It looked insolvent even before the adverse judgement, and by my calculations doesn't have enough cash on hand to pay the legal damages. With over $5bn in gross interest-bearing debt, equity holders look very vulnerable to being wiped out either completely, or through a discounted equity raise. Massively risky, I think the equity is worth nothing. Bargepole. That said, it was propped up by the lenders last year, and 4-bagged from the lows (a surge that has since dissipated). So who knows? A share only for reckless gamblers, not investors.
Jack's Section:
Midwich (LON:MIDW) - full year profits to be materially ahead but also notes ‘ongoing product shortages’. Resellers tend to have low margins and struggle to create enduring value, although some do break free and act as larger-scale consolidators. I’m neutral here - good trading, but I'm not sure the company deserves too high an earnings multiple.
Avon Protection (LON:AVON) - another fall for the troubled former High Flyer. Winding down the body armour business is not Avon’s finest moment, but the share price reaction has been extreme, while brokers are forecasting a fairly swift rebound. Ongoing supply chain issues are a concern. It’s worth keeping tabs on, but management has made some big errors and not much has been done to explain these or convince me that lessons have been learned.
Explanatory notes -
A quick reminder that we don’t recommend any stocks. We aim to review trading updates & results of the day and…
