Good Afternoon,
Continuing on from EMC: Composting Sinclair Williams (SNCL) Share Certs; as quoted
here by one irate reader that isn't happy (in quotes).
"Sinclair Williams (SNCL) continue their historic trend
of disappointment with the CEO falling on his sword today. As asked last year
about SNCL, my flippant comment that I hope you aren't composting your share
certs created upset. Perhaps now they'll have a group hug! Over to SNCL to sum
up trading above their "poor start to the season."
William Sinclair has had a difficult season so far. While
some progress has been made in the ramp up of production, we are not as well
developed as we had expected to be at this stage. We have also seen a slow
start to the season with sales to retail and professional customers below last
year. There has been margin pressure in both professional and retail sectors.
Consequently the Board expects that the result for the year on an underlying
basis will be materially worse than last year.
Allowing for debt, SNCL will have to pass the cap around
soon, the read across to B&Q (Kingfisher/KGF) might not be as favourable if
one measures compost against KGF sales. It would be very unwise to bet against
KGF with the current buyback in progress. [*] With a few savvy investors spotting
the money for old rope long. SNCL benefited with the hope value in the
recessionary grow your own that failed to materialise. With the younger generations
avoiding any form of home horticulture and DIY, the future isn't so rosy, quite
how they’ll turn around this business remains to be seen. Price perception of
compost and gardening materialise is amazingly difficult with older generations
being the driver rather than the youth of today."
In May SNCL announced a funding shortfall that came with a good
indication of the results coming out today. The unaudited interim results won't assist those
negotiating an equity investment in the company or for that matter a sale. More
so, should there have been a trading update?
Strangely without knee-jerking immediately to buy, there's
some potential for SNCL. If the "turnaround" crew (Directors)
see potential value, most shareholders would have their hand bitten off circa,
20 pence but there's potentially more even allowing for liabilities (Debt near
£24M). To start such an enterprise and get a consistent quality it would now be
more expensive than buying SNCL for £7.5M and assuming all liabilities.
Just to cheer Mr Irate and his composting chums whom are fearing the
worst , its wise to consider the possibility of there being greater upside from here, but
from a highly speculative / risky viewpoint.
For those thinking of
spreadbetting or CFD'ing SNCL, its virtually impossible now save for those any current positions.
The market capitalisation has gone from £30m to £1.5m ish. Equity longs only
need apply, but not for widows nor orphans, as there's a significant risk of a
capital raising of around £6M or total wipe out. One could be accused of losing
my marbles but...!
*Since March, there's been a significant change in the support and sentiment of Kingfisher (KGF), breaking 354 pence, despite KGF being in the market (share buyback) for near 40% of volume the price is now at a key support stage, watch the volumes!
With FX woes in France and margins being key. 2nd Quarter trading update due in near three weeks, 23rd of July (perhaps 24th) without checking. Can there be an improvement in trading?!? Last years was not great, blamed in part to a tough comparative "strong Q2 in 2013. Summer is key, one hopes they don't blame the weather but with headwinds needed from Q2. France, Poland and Britain? LFLs.
Atb Fraser
No comments:
Post a Comment