Market's view on Cake Box Holdi.
Published on April 2024
- Speculation exists about potential bid talks involving River Capital Pty due to unusually quiet share trading volume.
- Royal Mail might be facing a takeover as UK companies appear significantly undervalued.
- There is a sentiment that the company is liked by Australian investors.
- Concerns are voiced over the company’s negative like-for-like sales in the second half and the lack of a long-term strategy despite liking its business model.
- It’s noted that the company’s growth will likely align with the general economy, with opportunities for expansion primarily through new store openings. The hub and spoke model has been successful, and lower interest rates could facilitate franchise expansions.
- The company is perceived as undervalued with a need to accelerate the pace of new store openings. Despite a capital-light model, there’s caution about the operational risks of rapid expansion.
- Cake Box has announced a Full Year Trading Update showing robust growth, driven by new store openings, enhanced marketing, and increased online sales, with revenue and adjusted profits expected to exceed market expectations.
- There is anticipation of a potential buy recommendation in an upcoming Investor’s Chronicle article.
- Discussions suggest River Capital PTY might soon place a bid for Cake Box at 250p.
- Enhanced marketing strategies and a proactive property approach are expected to drive sustained, capital-light, cash-generative growth for Cake Box.
- Stocks like Cake Box, which have no debt and a net cash position, are typically valued at 20 times earnings, indicating a fair price could be around 240p.