8364 replies to this topic

[Investment novice]

Risk of law suits and debt impacts share valuation..


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[vishalsur]

Guys....quick question if anyone can answer

 

Take Steinhoff's stake in Pepkor

It's 71% of that Market Cap which is 41 Billion Rands, so that is around 29 Billion Rands that Steinhoff will pocket if they sell at current price

 

The current market cap of Steinhoff is 5 Billion Rands

How does that make sense

[Everlearning]

Yip, IN, am also extemely bullish!

Notwithstanding the volitilty presently around a number of the 'blue chip' and the opportunities I am missing there, I regurely remind myself I am Steinhoff "Long" !!! 

 

Believe our 'payday' is coming when the market takes their blinkers off and begins to more fully understand the value of this company. 

[Investment novice]

Picked up a significant portion today on the dip.
Feeling more comfortable to hold the stock.


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[woolhoff]

I guess so..! Thanks Andi. Lets hope for the best

Normally there was always a nice run up before results where released. So I think there will be a nice increase before the 26 June for HJ 1 2020 results. After that, no one can tell what will happen.
I personally think that HJ 1 2020 will still be good as COVID 19 impact will be minimal here. We will see a huge increase in EBITDA due to IFRS16. Also, all operating units are profitable for the HJ1 2020.
Interesting for me will be the cash flow for the period and also the cash levels as at 31 March 2020.

But I guess for now we can only wait and see.

[LarryK]

Nice bump up and good volume

[andi222]

Great read ups here! Thanks for the extensive analysis.Where do you guys roughly see the share price by end of june? Not an easy one i know but can we atleast be hopeful of it going north instead of south?

 

Normally there was always a nice run up before results where released. So I think there will be a nice increase before the 26 June for HJ 1 2020 results. After that, no one can tell what will happen. 

I personally think that HJ 1 2020 will still be good as COVID 19 impact will be minimal here. We will see a huge increase in EBITDA due to IFRS16. Also, all operating units are profitable for the HJ1 2020.

Interesting for me will be the cash flow for the period and also the cash levels as at 31 March 2020.

 

But I guess for now we can only wait and see.

[vishalsur]

what gives

Whole market is up and SNH is flat:(

[woolhoff]

Great read ups here! Thanks for the extensive analysis.Where do you guys roughly see the share price by end of june? Not an easy one i know but can we atleast be hopeful of it going north instead of south?

[Pilotpilot]

Ye .. Thanks Andi

 

I had a quick scroll through their 180 page Financials!   Wow....Pretty extensive stuff...

 

At last...... this is what everyone has been waiting for. I just wanted to see their balance sheet and earnings, and with those figures they are significantly undervalued. They have roughly 4,3 Billion shares and they have close to 3 times more cash than their market Cap and the value of their inventory is 4 times that of the companies Market cap. Even if you strip the goodwill from their balance sheet, they have net assets of around R6-60/share (R28 bil). They are also at a 0,6 P/E, which is probably the lowest on the JSE.

 

Their Debt to earnings ratio (which I like to use for companies in trouble), which I thought was in the 8-10 range, but in fact it's between 3-4, and it's pretty much in the safe zone for me. 

 

I am not that clued up with all the litigation and claims, but this does look like very good financials. I have seen it many times before, that a share-price only really jumps about a month after really good results and when all the dust has settled. It's usually just to confuse investors and then all of a sudden it pumps! I have a feeling that this is probably going to happen, because the market is pretty "lul" about these financials.Like a game of poker, no-one wants to show their hand or make the first move......

 

Lets watch this space......

Edited by Pilotpilot, 29 May 2020 - 04:40 PM.

[Everlearning]

HI Andi, 

 

Thanks for summing these results up for us so well.

 

Can't agree with you more that at the moment, the volatility in the share price is being driven by the sentiment of a number of uniformed 'small' investors.

 

Interestingly, there continues to be large volumes being traded on the Frankfurt exchange. As at 30 April 2020, of the total issued shares, 67% trade on Frankfurt Exchange and only 33% on the JSE. It is my belief (judging from the shares traded after being included in the SDAX) that the more serious investors/funds are starting to mop up shares which will eventually see less irrational investors and result in the share price moving to a more realistic level.   

 

in the meantime, I am 'staying on the train' and remain a buyer !

[andi222]

The last week has given us some really positive developments with regards to Steinhoff.

 

A quick summary from my side:

Pepkor HJ 2020 results:

Revenue has increased by 6.5%. It would have increased by around 8% without COVID19. These are exceptional results given the current economic environment of SA.

In the presentation management has shown that April sales where basically zero, however in the first weeks of May there was a significant increase of sales compared to prior years. With the government giving out grants and the low interest rates I think we might even reach last years revenue figures of around 70 Billion rands. Also there will be cost saving due to rent free periods.

EBITDA has increased significantly to around 5.9 billion Rands or 350 Mil €. Yes a big increase resulted from IFRS16 however this is exceptional and above my expectation.

Biggest suprise for me however is the cash flow from operating activities. Last year they burned -2.2 Billion cash, this year Pepkor has generated a 2.3 Billion positive cash flow. 

2 Billion Rands was used to repay debt for the 6 months.

 

Overall Pepkor has exceeded my expectations and I think there is a great future for this company.

 

Now looking at the STEINHOFF INVESTMENT HOLDINGS LIMITED AFS 2019. (Mostly Pepkor SA)

It is one of 4 major clusters in SNH, Europe & the UK, USA, Africa and Australia. It should be noted that this cluster roughly represents only 25% of Steinhoff international

 

Key Highlights 

- Improvement in Gross Profit, nearly 14% improvement due to cost cutting and other management incentives. If these incentives also reflect on the other units we will see a massive increase in the total Group
- EBITDA has improved from 6.7 billion Rand (2018) to 7.5 billion Rand (2019). 470 Mil € (excl corporate costs EBITDA was 500 Mil €.)
- Cash has almost doubled from 6.5bn Rand (2018) to 11.8bn Rand (2019). Also 4.8 billion rands received from the Unitrans deal is not included here yet and Properties of the value of around 3 Billion still outstanding.

- Cash flow from operating activities has increased from a cash burn of -1.5 Billion Rands to a positive cash generation of 3.6 Billion Rands. 

- Equity of 47 Billion Rands or close to 3 billion €.

 

Overall:

From these first financial statements from the new management we have seen significant positive progress with regards to the operating units. 

We also know that Pepco has performed exceptionally well, Mattress firm has been turned to profits again. Only struggling unit remains is Conforama.

Again there is a lot of negativity spread in social forums and news articles which make investors jittery haha. Guys as mentioned before keep calm and let management do what they are currently doing. Currently its working as reflected in the results.

 

My biggest concerns going forward:

- Legal claims seem like they will not be settled anytime soon as the finance guarantees have now also launched claims against basically all possible parties haha. But again as of today no provisions have been raised for any claims and no one has been arrested to date. So for me it looks like this will still go on for some years if not decades. As long as Steinhoff does not have to pay anything these claims might as well go on for years and everyone can sue whoever they want. Its kinda getting a bit ridiculous here.

- The rand has lost some serious value compared against the Euro.

- The Covid 19 impact cannot be defined yet.

- No key investor. Currently we do not have a key shareholder in Steinhoff. We have too many jittery shareholders who buy and sell as out of pure emotions. 

- At current share level price we might be excluded out of the S-DAX again which would normally mean a drop in the share price.

 

What do you guys think of the numbers? DTD or Captain what do you guys say?

 

Again this is just my personal view and opinion and no recommendation to buy or sell shares

[Lionelza1]

All aboard!

Haha, my target R1. 40.....gonna be one bumpy ride I'm guessing

[LarryK]

All aboard!

Seems like run up has started... I'm back in

[Lionelza1]

Shud be a decent run-up around 2nd week in June as per their sens re results.... Be ready to jump on

Seems like run up has started... I'm back in

[Milo]

I presume that the share price will go up because the economies are opening up. Pepkor is also busy going up.

[DayTraderDad]

Yes yes done deal. Was announced 27 November 2019 via a SENS.

The big question tho is what price did they get. Luckily the deal was concluded before the corona virus.

We will see in the half year results what they got. My best guess is that they will receive a cash consideration of around 300 million euros and around 200 million euros of liabilities gone.

Again a major successful move from management to conclude the deal at the best time possible.

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Hi Andy indeed a good deal for SNH

[andi222]

Yes yes done deal. Was announced 27 November 2019 via a SENS.

The big question tho is what price did they get. Luckily the deal was concluded before the corona virus.

We will see in the half year results what they got. My best guess is that they will receive a cash consideration of around 300 million euros and around 200 million euros of liabilities gone.

Again a major successful move from management to conclude the deal at the best time possible.

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[Bubble]

Andy, do you know if the Unitrans deal was concluded and money in the bank?

 

https://www.business...d-report-2020-5

[Lionelza1]

Shud be a decent run-up around 2nd week in June as per their sens re results.... Be ready to jump on