Caffyns (CFYN)
Posted: November 17th, 2016, 6:04 pm
I've recently bought a few Caffyns. They're a small car dealership trading at a significant discount to underlying asset value.
The market cap is about £15m at £5.40 a share and earnings last year were 90.1p. The dividend was 21.75p.
Now one things that I do understand is that selling new cars is a low margin and cyclical business and we may be near the top of the cycle. However Caffyns historic p/e is less than 6 so there is scope for the profits to fall quite a long way before the shares look to be on a demanding rating.
But what has really attracted me to them is the balance sheet. Net tangible asset value is over £26m and this includes freehold property with a book value of £35m. Also the freehold property portfolio has recently been revalued producing a surplus over book of nearly £10m which has not been included in the accounts so in effect they have freehold property worth £45m. Against this they have net debt of around £11m meaning the company is trading at a significant discount to the value of it's property portfolio less all debt.
The Caffyns family own a significant percentage of the shares and I think it is doubtful they will want to sell up but as a safe investment with an intrinsic value way in excess of the market cap I think it is attractive.
Lester
The market cap is about £15m at £5.40 a share and earnings last year were 90.1p. The dividend was 21.75p.
Now one things that I do understand is that selling new cars is a low margin and cyclical business and we may be near the top of the cycle. However Caffyns historic p/e is less than 6 so there is scope for the profits to fall quite a long way before the shares look to be on a demanding rating.
But what has really attracted me to them is the balance sheet. Net tangible asset value is over £26m and this includes freehold property with a book value of £35m. Also the freehold property portfolio has recently been revalued producing a surplus over book of nearly £10m which has not been included in the accounts so in effect they have freehold property worth £45m. Against this they have net debt of around £11m meaning the company is trading at a significant discount to the value of it's property portfolio less all debt.
The Caffyns family own a significant percentage of the shares and I think it is doubtful they will want to sell up but as a safe investment with an intrinsic value way in excess of the market cap I think it is attractive.
Lester