Good morning all,
As we approach the EOFY and ready ourselves for a possible sales update for the first half of 2018 (note: the company provided an update this time last year), I thought I'd share some further analysis as part of my own DD.
This particular post looks at an estimated makeup of the current Top 20 (see adjustments below and note that the company itself has not published an update since the 2017 Annual report).
The key points to the above are as follows:
1. Ex CEO and founder Frank Richmond's marked change in substantial holding - down from 21.3% to 5.17%. This follows his resignation 12 months ago and his decision to relocate to the UK. Nevertheless he remains a substantial holder (over 5%) despite pursuing new business interests over there.
2. CNW's current Board of Directors have all significantly increased their holdings recently and both our CEO and Chairman have become substantial holders (No.1 and and No.3 respectively). I'd also opine that other non board executives have increased their holdings in lieu of F.Richmond's off market sell down, however I cannot be sure of this as the company is not compelled to publish this information under ASX rules and guidelines.
3. Over half of the individuals in the Top 20 are working for Cirrus in some capacity.
Folks, this is a very tightly held register made up of an unusually large number of key executives (hence the relatively low no. trades each week) -
a rare situation for a publicly listed company. And IMO it speaks volumes about the company's overall strategy for growth and profit and the intentions of its key personnel as many have invested their own money which suggests that they actually believe in the current and future growth and prospects of this company, and aren't here to milk mum and dad shareholders in order to fund extravagant corporate lifestyles.
A tightly held register and low trading volumes also means that should the company progress to consistent and regular profit reporting (IMO they could potentially be citing dividends within the next 12 months), then the big end of town will most likely need to pay significant on-market premiums in order to accumulate a reasonable and / or substantial holding.
In summary, the current Top 20 (though not completely visible as yet) is very encouraging from a retail perspective and should the company produce another stellar quarter of sales and positive cash flow (i.e. leading to a substantial annual NPAT increase), then IMO it won't take much volume to generate a substantial re-rate over the next month or two. Then lookout for the big boys if and when they start playing in our sandpit.
Key dates in the short term:
Possible sales update - by end of this week ?
June quarter results - by end of July
FY18 results - by end of August
GLTA
Cheers
Elpha
