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CCX - CITY CHIC COLLECTIVE LIMITED


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Event

  • FY09 NPAT exceeded our forecasts and market expectations, growing 7% to $22.6m. The government stimulus package couldn't have come at a better time for SFH as it posted healthy revenue gains across its store network. Favourable currency movements also helped contain gross margins with benefits flowing through to the bottom line.
Full Event Analysis Impact
  • It's been a rollercoaster ride for investors after the stock plunged to record lows in February amid fears the group would collapse unable to meet its debt repayments. Compounding problems were revelations that a senior employee was involved in fraudulent activity relating to property expenses over the past five years to the tune of $16.7m.
  • The elimination of fraudulent activity should remove around $1m from the cost base going forward. Import tariffs are also due to fall in January from 17% to 10% which, combined with a hedged currency exposure near US$/A$0.78, could see further expansion in gross margins depending on how competitors pass on savings.
  • Our FY10 NPAT and EPS estimates are revised to $20.9m and 10.8cps respectively. We assume no revenue growth while margins remain relatively stable. FY11 should see a more significant improvement and we expect NPAT of $22.9m on EPS of 11.8cps.
  • SFH says the positive momentum has rolled over into the first seven weeks of 1H10 trading. We relax our medium-long term revenue and margin assumptions, increasing our DCF valuation to $1.05.
Recommendation Impact(Last Updated: 20090828) Our recommendation moves to an Accumulate below $0.95 where the stock trades on a revised FY11 PER of 8x.From Aspect Huntley -

 

FY09 NPAT exceeded our forecasts and market expectations, growing 7% to $22.6m. The government stimulus package couldn't have come at a better time for SFH as it posted healthy revenue gains across its store network. Favourable currency movements also helped contain gross margins with benefits flowing through to the bottom line.

 

It's been a rollercoaster ride for investors after the stock plunged to record lows in February amid fears the group would collapse unable to meet its debt repayments. Compounding problems were revelations that a senior employee was involved in fraudulent activity relating to property expenses over the past five years to the tune of $16.7m.

<LI>The elimination of fraudulent activity should remove around $1m from the cost base going forward. Import tariffs are also due to fall in January from 17% to 10% which, combined with a hedged currency exposure near US$/A$0.78, could see further expansion in gross margins depending on how competitors pass on savings.

<LI>Our FY10 NPAT and EPS estimates are revised to $20.9m and 10.8cps respectively. We assume no revenue growth while margins remain relatively stable. FY11 should see a more significant improvement and we expect NPAT of $22.9m on EPS of 11.8cps.

<LI>SFH says the positive momentum has rolled over into the first seven weeks of 1H10 trading. We relax our medium-long term revenue and margin assumptions, increasing our DCF valuation to $1.05.

 

 

Our recommendation moves to an Accumulate below $0.95 where the stock trades on a revised FY11 PER of 8x.

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  • 1 month later...
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Hi Alonso

It's not the only one that's getting sold down by funds. Everywhere I've looked the last 2 weeks or so, I've seen funds are decreasing their exposure to the market.

This stock is one I had in my list for shorting yesterday. The only reason I didn't take it was the margin required was 45%, when I only have to put up 10% for most others. So I get more bang for my buck elsewhere.

If I'm looking short so are lot's of others I would imagine.

Cheers

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  • 2 months later...
  • 1 year later...

I did not see the announcement as negative either, although there was a wee article in the Fin Review on Saturday which did. In fact, if you had not read the announcement itself you would have gained an entirely different impression from the Fin Review.

 

The trouble is that all retailers have been tarred with the same brush, irrespective of all points of distinction. You and I know Alonso that the biddies who shop at Millers are of a different kidney. We have done our homework and have reason to believe that they have not chosen to leave their discretionary dollar in the bank and deprive Millers of it as the north shore boilers have done with DJs. Nope, its not a matter of discretion for all shoppers.

 

According to those so observant journos, retail is finished. It's over. Forget about it. Good thing some of us can see things against a larger backdrop than appears available to the teenage journos. Can you imagine the Millers biddies sitting at their computers scouring the world for the kind of stuff Millers sells? Someone needs to tell the journos that retailing has been around for thousands of years. It is not going to end this year. Journalism, on the other hand, may be a lot closer to its demise. :biggrin:

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  • 2 years later...

That was a good decision Alonso. When did you sell?

 

I quite like this one. The H1 report was out 18 Feb last year, but no sign of it this year, and the SP is drifting.

 

I bought in 2008, and didn't sell as many as I should when it was higher, but I have enjoyed the dividends for many years.

 

I have bought back those that I sold, and am thinking about topping up.

 

Any thoughts?

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You've got me confused now. I bought some over the course of 2011 but a year ago I sold others I'd bought

at horrendous prices a long time ago.

Nothing about SFH has been a good decision for me, but I am a bit more optimistic since the Rivers purchase.

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