Cube Report (7 Dec 2020) – Games Workshop beats expectations… again

Cube Report (7 Dec 2020) – Games Workshop beats expectations… again

Good morning folks,

In today’s roundup I’m going to take a quick look at Games Workshop (GAW), Frasers/Debenhams, and may also try to catch up on some stories from last week.


Games Workshop

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Market cap £3.3 billion
RNS Half-year Trading Update
Writer disclosure Long GAW

This is a brief update from Games Workshop – and straight to the point, as usual.

Following the update in early November 2020, the Company announces that our preliminary estimates for the six months to 29 November 2020 indicate sales of c. £185 million (2019: £148 million) and profit before tax of not less than £90 million (2019: £59 million).

The aforementioned November update said that H1 PBT would be  “not less than £80 million”.

So an extra £10 million of PBT has snuck in – not bad!

It certainly appears to be firing on all cylinders. Interested parties might wish to check out the twitter feed of Rhomboid, who has GAW as his largest holding currently, and can be counted on for regular updates on its progress. Strong global hiring activity is a feature that he has recently alerted me to.

Alas, this is not a large holding for me – but it has nearly doubled in price since I bought it in November 2019. So I can’t complain.

In addition to the capital gains, there has been a nice dividend stream. And there’s news on that front, today: 60 pence per share will be paid on January 25th.

Overall, it’s hard to find any faults in this share. Increased revenues are translating into lots of profit growth and cash flow – partly because of the high margin core business, and partly because of the IP-driven royalty income.

As has been noted by my friends on Twitter, H1 pre-tax profits this year are set to eclipse the entire full-year result for last year.

And the analysts are still remarkably cautious – the latest consensus forecast, prior to today’s update, was for full-year PBT of only £132 million.

I’m glad I have a piece of this. I don’t have the same level of conviction as Rhomboid, but I am still very glad to be a participant in what it’s doing!

 


Frasers

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Market cap £2.2 billion
RNS Statement re: Debenhams
Writer disclosure No position.

Mike Ashley is trying to pick up Debenhams out of administration, but the clock is ticking:

Whilst Frasers Group hopes that a rescue package can be put in place and jobs saved, time is short and the position is further complicated by the recent administration of the Arcadia Group, Debenhams’ biggest concession holder. There is no certainty that any transaction will take place, particularly if discussions cannot be concluded swiftly .

I haven’t been the biggest fan of Ashley’s acquisition spree, but it’s difficult to argue against an administration rescue package – the proposed valuation should be on the floor.


 

See you tomorrow, folks.

Graham

 

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