AX1 - Accent Group

[skc]

This is a BIG deal for a compnay of RCG's size. RCG is only worth $193m market cap at the last price of 72c.

The positive is that the brand acquired are probably of higher calibre than RCG's existing portfolio. There will be synergies to be extracted and the increased scale of the company will attract more insto holdings.

The negative is obviously intergration risks, and perhaps a bit of stock overhang via the share placement to the vendors (assuming they are selling to get OUT of the shoe business).

The listed/unlisted earning multiple arbitrage is what it is, and the placement deal means the seller gets to enjoy the uplift as well.

It really is a merger of equal and it's a fault of the ASX that shareholders don't need to approve a deal of such magnitude.

The market should like it, regardless. My open price prediction = north of 80c.

 

[Klogg]

The negative is obviously intergration risks, and perhaps a bit of stock overhang via the share placement to the vendors (assuming they are selling to get OUT of the shoe business).

They're holding the shares in escrow for 2 years, and current management are joining RCG, so I'm not sure they're looking to get out entirely. But I guess over time, this may happen.

The market should like it, regardless. My open price prediction = north of 80c.

I would have thought the Cap Raising to instos and current shareholders at 70c would have put a cap on the price. But then again, I know nothing about short-term price movements.

 

[Klogg]

I've just gone over this in a lot more detail and am less opposed to the idea, simply because:
- there are no plans to extract synergies/cost reductions initially (minimal integration cost risk)
- Australian retail operations for AGL are growing extremely quick
- Wholesale operations for AGL have declined, but RCG management excel in this area

The only negative I hadn't seen earlier is that the Dr Martens and Timberland licenses expire at the end of this year. Unlikely they'll lose them, but it'd be a pretty big blow if they did.

Still some analysis to do, but at this point I'll participate in the SPP.

 

[tinhat]

Well, I can cancel the open buy order I've had in the market since 5/3/15 @ $0.70 as I will have an opportunity to pick up some more through the SPP. Whether I do or not is another matter. The figures provided look good.

 

[rb250660]

Well this turned out to be a nice holding in my SMSF too. Cheering!

 

[galumay]

Well this turned out to be a nice holding in my SMSF too. Cheering!

You took the words out of my mouth!

 

[tinhat]

Took profit today so that I can buy my allocation in the share purchase plan (hopefully I get to profit twice!). Wow, what a run. Do any value investors have a valuation for this company as a merged entity? Consensus target is currently $0.96

 

[galumay]

Took profit today so that I can buy my allocation in the share purchase plan (hopefully I get to profit twice!). Wow, what a run. Do any value investors have a valuation for this company as a merged entity? Consensus target is currently $0.96

I have a back of the envelope valuation range based on the financials released, its about $1.40.

I have hung on and resisted the temptation to sell as I watched my initial investment double. Considered doing the same as you, but its hard not knowing what the scaleback will be.

 

[tinhat]

The way I understood the retail share purchase plan, I didn't realise it was subject to scale-back. So, I am disappointed that while being allowed to apply for up to $15,000 of shares (some 21,428 shares), I was only allocated 7,500.

 

[galumay]

The way I understood the retail share purchase plan, I didn't realise it was subject to scale-back. So, I am disappointed that while being allowed to apply for up to $15,000 of shares (some 21,428 shares), I was only allocated 7,500.

Yup, I was expecting a strong scale back, it was described in the notices, and once the price took off prior to the placement I suspected it would be heavily oversubscribed. Still, 7500 is better than a poke in the eye with a burnt stick!

 

[galumay]

Another very nice HY report, I haven't done a full analysis yet but I am thinking it backs my intrinsic value calculation of around $1.45. The best performer in my SMSF by a substantial margin. Pity we won't get a crack at the CR as its institutional & sophisticated investors only.

 

[galumay]

Up 25% on the back of theur takeover announcement, my first triple bagger in the SMSF, got in at 63c!

 

[smallwolf]

Yes it does seem like good news.... I got in about 78c in 2014.

 

[So_Cynical]

I added it to a buy list about 5 weeks ago after an online shoe purchase, thought it looked cheap.

 

[Nortorious]

Nice work on staying in this stock. I sold out about 12 weeks ago when it looked like it may turn downwards. It's not a clear breakout as yet but is looking good if it can edge slightly higher. The stop loss point is a little too far away for me to look at getting back into this one.

All the best with your holding!

 

[NotWarrenBuffet]

What the hell happened to the price of RCG today? Down 7.7% as I type despite the announcement of a record full year profit and increased dividend! Is the market spooked by the departure of CEO Michael Cooper? Is the market an ass? Is there something I'm missing?

 

[luutzu]

What the hell happened to the price of RCG today? Down 7.7% as I type despite the announcement of a record full year profit and increased dividend! Is the market spooked by the departure of CEO Michael Cooper? Is the market an ass? Is there something I'm missing?

Your question there assumes the previous market price were "reasonable" and fair. Hence, the good news today ought to hike it up.

It could be that those making the market was expecting more... or just did a typo.

Just saw a similar, but reverse, instance recently with MRM... news release show it just lost some work, earnings expected to be down and FY17 looks pretty bad. The price went down for half a day and then stabilised and head up some 15% in a week after.

So the market is an azz I wouldn't want to put money of it going either way short term.

 

[skc]

What the hell happened to the price of RCG today? Down 7.7% as I type despite the announcement of a record full year profit and increased dividend! Is the market spooked by the departure of CEO Michael Cooper? Is the market an ass? Is there something I'm missing?

I haven't the time to looked too carefully but on first glance the reports were in line with expectations.

So yes a CEO departure can certainly cause short term price weakness.

BLA announced retirement of it's founding CEO 4 days ago and was marked down 15% on it's benign report. It's now pretty much back to where it was before that.

Take it as the market's acknowledgement to the good work by the departing CEO... the harder it fall, the stronger the acknowledgement!

P.S. That's not to say there isn't something negative in the report that I haven't seen yet.

 

[galumay]

There is a bit of negative stuff in there, nothing to justify the price drop though IMO, i guess RCG has had a terrific run up over the last 12 months and sometimes Mr Market does that to a company's share price. I have seen it quite a bit in my holdings this season, some that had really good reports being smashed and others that reported nothing special but took off.

I dont think it will take RCG to recover the lost ground - allthough like you I havent fully analysed the report or entered the data in my spreadsheet.

 

[NotWarrenBuffet]

Thanks for your thoughts, dudes. RCG certainly took a big whack today. Down 10.57% at day's end, compared to the All Ords which was down only 0.39%. The MACD is still looking good, though.