The Lemon Fool

Are Wyg worth a punt on recovery after yesterdays kitchen sinking by the new guy?

THe market cap has dropped to just £37m after the profit warning but the business turns over £160m a year and the order book is fine. The balance sheet is pretty ok and they do generate cash. Last year their pre-exceptional operating profit was nearly £9m. It may be that they have been using exceptionals to boost this and real profitbality is lower, I don't know.

They do generate cash and had modest net debt (now set to rise) of just £2.5m.

I wonder if this couldn't be another RBG and a bidder will emerge, there has been a lot of activity in the sector. I originally bought in at 99p and bought some more at 60p yesterday as I just can't see them going bust and they have traded at considerably higher prices in the recent past.

Lester

WickedLester wrote:Are Wyg worth a punt on recovery after yesterdays kitchen sinking by the new guy?

THe market cap has dropped to just £37m after the profit warning but the business turns over £160m a year and the order book is fine. The balance sheet is pretty ok and they do generate cash. Last year their pre-exceptional operating profit was nearly £9m. It may be that they have been using exceptionals to boost this and real profitbality is lower, I don't know.

They do generate cash and had modest net debt (now set to rise) of just £2.5m.

I wonder if this couldn't be another RBG and a bidder will emerge, there has been a lot of activity in the sector. I originally bought in at 99p and bought some more at 60p yesterday as I just can't see them going bust and they have traded at considerably higher prices in the recent past.

Lester

Lester,

I'm not sure I entirely agree with regard to cash. It looks like FCF has been consistently poor for years and a once healthy net cash position has changed to the modest net debt as you mention. I don't follow this company so I'm not sure where the cash has gone, but it's bleeding it somehow, which is not very appealing. I don't really like people businesses such as consultancies so it would take a lot to get me interested in WYG. I don't buy anything on the basis of hoping for a bid to emerge and would need to understand why this is going to recover operationally, especially since the operating margin is so poor. I thought the margin of car dealers was bad but WYG is even worse which makes it a pretty unattractive investment IMHO.

All the best, Si

I doubled up my holding at 60p after the profit warning as I often buy on profit warnings but sold the lot today for between 63 and 64p after this news came out:

https://www.investegate.co.uk/wyg-plc-- ... 20210909Q/

On 6 September 2017, the Company was notified that on that day Mike McTighe, Chairman, exercised all his outstanding 1,075,162 options under the Transformation Incentive Plan and sold the resulting shares in the market at a price of 64 pence each.

Basically if the chairman of the company has no faith in them then neither do I.

I'm actually surprised that the price hasn't fallen today.

I took a loss on them, that's the third loss i've now taken in my SIPP but both of the other companies I sold at a loss went bust soon afterwards. I'm not saying that's WYG's likely fate but I feel more comfortable out of this one now.

Lester

I'm glad I followed the Chairman out of this now as they have warned again and the price has tanked.

https://www.investegate.co.uk/wyg-plc-- ... 00044122X/

Although I don't expect then to go bust I think they may need refinancing. I don't think i'll get back in but will keep them on the watchlist.

Lester

Well a bid has emerged for these at a massive premium to Friday's share price of around 16p.

https://www.investegate.co.uk/wyg-plc-- ... 00184831Z/

It's still lower than the price I got out at but not by too much. A much needed boost to suffering shareholders and a real bonus for those that bought in at the lows.