Morning traders 2 / 10, page-6

SGG, FA Long

Overview

Shaver Shop is a specialist personal grooming retailer that has successfully operated in Australia for 30 years. Shaver Shop is an Australian retailer that operates in Australia and New Zealand & online with 110 stores.
Shaver Shop Group Ltd (ASX: SSG) share price was beaten down in morning trade on the 28^th of September 2017.
At the time of writing the specialty retailer’s shares are down a whopping 32% to 42.5 cents.
Why have its shares been beaten down recently?

This morning Shaver Shop provided the market with a trading update. As you might have guessed from the share price decline, it wasn’t a positive one.
According to the release, management expects FY 2018 EBITDA to be in the range of $13 million to $15 million. This compares to the pro forma EBITDA of $14.9 million it delivered in FY 2017 and comes despite same-store sales growth coming in at 11.9% for the first 12 weeks of the new financial year.
I believe the market has overreacted to bring down the price more than 42% at one stage to close to 40.5% end of the day.
Valuation criteria include

According to AFR(Australian Financial Review) the shares are currently trading below book value of $0.47c per share
http://www.copyright link/research-tools/SSG/results-reports/per-share-performance

	Column 1	Column 2
0	Book Value	$0.47
1	P/E ratio (TTM)	5.98
2	EPS(TTM)	0.07
3	TEV to EBITDA	4.11
4	Price to Sales Ratio	0.54
5	TEV to Sales	0.61
6	P/B Ratio	0.92
7	Return on Equity	16.19
8	Return on Assets	11.26
9	Free Cash Flow	+1.38M
10	Cash Flow per Share	+0.03
11	Dividend Yield (TTM)	9.3%

Dividends and Insider trading

They paid 4c of fully franked dividends this year with an upcoming dividend of 2.4c coming on October 24^th with an ex date of 10^th Oct.

	EX DATE​	AMOUNT​	FRANKED​	FRANKING CREDIT​	BOOKS CLOSE​	DATE PAYABLE​
1	14-Mar-2017​	0.016​	100%​	0.007​	15-Mar-2017​	06-Apr-2017​
2	09-Oct-2017​	0.024​	100%​	0.01​	10-Oct-2017​	24-Oct-2017​

We also can see below SSG’s chairman Brodie Arnhold loaded up 500,000 shares on open market transactions the day of the dip at $0.423 and bought $211,480 worth of shares. There could many reasons a chairman/insider to sell shares but only 1 reason to buy them. Chairmen usually have more knowledge of the inside of the company and inside buying is a good sign, as no director buys shares expecting them to fall. Such a big share purchase gives me confidence as the larger the purchase, the stronger the signal to buy.

	Column 1	Column 2	Column 3	Column 4	Column 5	Column 6
0	SHAVER SHOP GROUP LIMITED (SSG)	Brodie Arnhold	28 Sep 17​	500,000​	$0.423​	$211,480​

Catalyst

Trading below book value of $0.47, the value discrepancy is too much to ignore. Also with an extremely low P/E ratio of 5.97 as well as TTM dividend yield of 4c (9.3%). There is also an upcoming fully franked dividend of 2.4c with an ex-date of 10^th of Oct. I believe the market overreacted to the trading update and predict the share price will track back upwards to its original price and have set a fair price target of $0.84.