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Seconding your points on the CEOI remember being on the public...

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Baggedem

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24/05/23

08:07

Post #: 67929104
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Originally posted by natnicnak: ↑

Negatives here are the obvious -
- when a business appoints an external advisor to undertake a strategic review it is an admission its leadership team doesn’t have the know-how to run the business. The ceo has effectively made himself redundant. Given the $100million excess stock error, he should have been sacked some time ago. It is one thing to have bought more stock to counter global covid shipment issues, it is another to have basically blown a large part of the $3.05 per share capital raise on stock essentially written off or sold for peanuts and which stalled CCX (tied up the business in knots), for the best part of 24 months until fully resolved.

- up until recently CCX’s releases all said stock was ‘clean’; today we read it is not and that it will be in Q3 2024, come Jan 2024 (in 7 months). My take is that the owners, shareholders, have basically been lied to about this issue.

- Evans UK; still tough and unanswered question remains can they ever make it work as a business run from Australia .

- Australian store trading has been abysmal in 2023. This is another factor indicating the CEO is doing a lousy job even when we allow for stimulus cash etc in comparatives.

- Management has proven it almost always resorts to heavy discounting for its ammunition to arrest sales declines when tough trading conditions exist. Something is missing in its ranks; there is an apparent gap in capability inhibiting its ability to confidently run and expand its global footprint. Leadership visibility is limited to a much tarnished CEO.

positives

- net debt will be zero and net cash positive position in some 30 odd days. No change on half year statement, positive, indicative of ability to convert stock to cash. Further, debt facility reduction in 2024 by around $25m emphasises ability to generate net cash from operations

- additional cost reduction initiatives welcome. I like changes to logistics particularly closure of 9 warehouses, new facility in USA. As sales recover it weaponises CCX’s logistics and allows great profit leverage from incremental sales growth.

- trading improvement in April and May, especially in the US; this provides hope there is now some floor under the reset, post covid online channel sales reduction, at least a pause to the drop seen between say Oct 22 and Mar 23 as consumers returned to stores and cost of living pressures became elevated. US sales since Christmas basically back to 2021 levels.

- CCX has lost 2 years and wasted a substantial amount of the $132m, $3.05 a share capital raise performed at $3.05. Very little said on initiatives for global expansion or what is being done to capitalise on CCX’s unique brand proposition; that is what gets investors excited and lifts its earnings multiple.

Expectations are for better trading performance commencing in 7 months. I’d expect ebitda margins ex-UK moving back to mid teens at same time. Jury out on UK mid term profitability until we have tangible evidence that CCX can make it work over there.

Market cap is very low for a business that will be pushing $300m sales again next financial year with a reset cost base and stock back to where it should have been at the start of the stock spending spree fiasco. You are buying a net zero debt business operating at a global scale that can generate some $50m ebitda on completion of the cost restructure and as trading conditions improve more broadly, for less than 3 times ebitda.

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Seconding your points on the CEO

I remember being on the public earnings call back in August last year where the CEO stated "we won't be discounting inventory" which I didn't believe at the time and subsequently turned into a farcical clame.

Pushing forwards to the February result - Skip to 48:15 of the earnings call and you will hear the CEO chuttering something about "smoking crack" when an analyst is pestering him. https://webcast.openbriefing.com/ccx-hyr-2023/player/index.php?player_id=50677

Oh, that and the the inventory investment that has been pissed up the wall. Perhaps it's time to call it a day, Phil.

The only interesting potential catalyst for me right now are what Brett Blundy's intentions are on the register. To my knowledge he has no internal involvement in the business but I suspect this may change.

CCX Price at posting: 40.0¢ Sentiment: None Disclosure: Not Held
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Seconding your points on the CEOI remember being on the public...

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Seconding your points on the CEOI remember being on the public...

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