by Both deals expanded IG Design’s geographic reach, client base and product lineup, but debt brought increased reliance on seasonal business during Thanksgiving and Christmas and exposure to retail giants like Wal-Mart. While these types of sales relationships can be very helpful given the path to market they offer, they can also present challenges.
IG Design outsources most of its production, leaving the company as meat in the sandwich between suppliers on the one hand and price and margin-conscious retail buyers on the other, at a time of rising inflation, freight and input costs.
These challenges are at the heart of IG Design’s snow warnings for October 2021 and January 2022. Careful management of working capital and costs, Concern of making targeted.
A refinancing over the next six months will give management additional space to work within as the board and new boss seek to deliver a return on the company’s fortunes. There are already some positive signs given a small profit forecast for the year to March 2023 and shares could look very cheap if the return can be made permanent.
Market cap of £127m looks low compared to consensus estimates for sales of £788m, even when adjusted for debt and leases, 130p share price could look very attractive if earnings per share approach its 2020 peak of 16.9p in 2018 (we have sold) 584p), and dividends again approached 8.75p.
IG Design has risks, but there are also opportunities. Purchasing.
Researcher says: speculative buying
Marquee: IGR
Share price at closing: 130p
Update: Circuit
This column has been relatively successful in identifying companies whose competitive position is very strong and whose valuations are attractive enough to take over. Notable examples include Sky, Gamesys, Clinigen and ContourGlobal, where the deal is expected to close very shortly.
However, we recklessly gave up the others for just one predator to attack; It’s the latest to be added to food case specialist Devro, Manx Telecom and Morrisons.
We were disappointed by a useless share price, and eventually we got bored and moved on with a small loss of capital.
Dividend income made up for this shortfall, but was 87% higher than our offer from Germany.
Note to self: be more patient.
Russ Mold is investment director at stockbroker AJ Bell.
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