Probably,or at least hopefully,too cheap!We have a bit of a problem at the moment which is that there seems to be too much stock chasing too few customers in the cycle trade.This is general not specific to any supplier.
A lower pound will mean importers will need more capital to finance stocks and in the short term could harm profits until customers get used to paying higher prices particularly until all suppliers have cleared old stock.This could hurt margins in the short term.
Generally even lower interest rates & lower share prices could bump up the deficit in the pension funds.
Feel we are on the right track and expect the company to improve on lasts years profit. With new web sites going live during the later part of this year I expect the 2017 year to give us a further jump in profits. On just 5 X earnings the shares are too cheap and I have added today a further 10k
Well good to see that there is some trading in this very thinly traded stock now the results are out and the statement re the HMRC duty that may have pushed the price down the past few months is re stated that if there is a liability it will fall on the suppliers.
The Pound has surged to its highest point in four weeks against the US dollar after a big move in currency markets followed last nights US interest rate announcement. Since Wednesday morning, the US dollar has declined by 1.8% against the Euro and by over 3 cents (2.2%) against the Pound.
The Federal Reserve held its benchmark interest rate at 0.5% as expected last night but then backtracked on future rate rises. Fed Chair, Janet Yellen, said only two interest rate hikes were now likely in 2016 versus the four the US central bank initially predicted just a few months ago.
The Pounds rally has taken the GBP/USD rate above its 2016 average which is around the $1.43 mark. The Bank of Englands interest rate decision earlier today did little to impact the Pounds sharp rebound from last months 7-year low of $1.38.
Yes I agree the shares are certainly cheap........I was merely looking at challenges;however in my opinion in spite of these Tandem is a much better company than it was a few years ago with a more diversified product offer that makes the company less seasonal based & helps with overheads apart from additional profit opportunities.
I have added a nominal 1000 shares to my holding today.
Shares in Tandem Group (120p) have taken a hammering since an ambiguous trading statement was released on 9 March. In particular an unquantified issue with HMRC relating to Pro Rider and ESC products has been flagged up and the potential liability has clearly spooked investors. However, these businesses have been recently acquired and any underpaid taxes should be recoverable from the sellers.
The company is involved in the design, development and distribution of sports, leisure and mobility equipment. It has struggled to find favour with investors, more as a result of failing to promote itself rather than any disappointment in terms of the performance of the business. In 2014 Tandem Group delivered earnings per share of over 34p even on a diluted basis and once the full benefits of recent acquisitions are factored in then the company as a whole should be comfortably beating this figure on a regular basis.
In the most recent trading statement the company also highlighted the fact it considers the mid-tier independent cycle market to be 'saturated and highly competitive'. To compound matters the relative weakness of Sterling versus the US dollar is also unhelpful. However, on a more positive note revenue in 2015 was up around 10% on the previous year and there was growth of 4% in the first eight weeks of 2016.
Full year results covering the 12 months ended 31 December 2015 are due out next month. Although there had been a significant improvement in performance in the first half the latter part of the year appears to have been very tough given the contents of the trading statement this month. The figures should make for reassuring reading and there should be an update on the issues recently highlighted. The market never likes uncertainty so any clarity, particularly on the potential underpaid taxes, may provide a welcome boost. Shareholders in Tandem Group should be prepared to be patient as it is an illiquid stock which is prone to sharp movement. On valuation grounds the shares look too cheap and must rank as a BUY.
Tandem have a couple of well known bike brands Dawes & Claud Butler but are in my opinion are squeezed as mainly suppliers to smaller independent retailers between the big retailers Evans,Halfords & online suppliers like Chain Reaction & Wiggle who are increasingly sourcing & branding their own product & are also up against the big International brands Specialized,GT,Scott etc.These latter brands have perhaps more appeal in a highly fashion/publicity oriented market.
We also have a number of direct selling up market but value orientated suppliers like Canyon who are taking market share.
The company is doing the right thing in increasing its product range & moving online to direct selling but as always it has to be careful about competing with its dealer customers who could move elsewhere.The electric bike business in UK is tiny compared to the rest of Europe and must have potential for direct sales.
The pension deficit is a worry & could put off takeover as a buy out of the scheme(ie sale to an insurance company) would cost at least twice the indicated short fall,based on pension buyouts I have seen elsewhere.
I have been a shareholder here for some years.
Firstly can I say I still think the market has this wrong.
What they are saying I
bicycles and mobility will be up .
Last year this was 874 k so lets take a modest increase to 900k.
Sports and leisure will be a touch down. it was 1452000 so lets take 1250000
I am still getting over 2 million and EPS ahead of last year.
If EPS comes in at the same 34p the shares are on 4 x on my re calculated 40p they are on about 3.5 times.
As usual a note of caution going forward but that's bull ( be interesting to see if options are granted).........as they have a full year from the new business.
The only headwind is USD v CABLE ..........but that can be covered by vastly reduced shipping costs and devaluation of the local currency.
I can see some money is being spent on developing the on line direct marketing part of the business which is wise and will reap rewards going forward.
I reduce my full year forecast from 60p eps to 50p eps ( this current trading year)
I shall therefore be buying on any further weakness.
That is once the market settles down as it was 105/145p 30 mins ago which is unacceptable.
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