GW stock biggest gainer on market

[Aramis K]

The new GW continues to do very well on the stock market.

 

"The U.K. maker of Warhammer battle games overtook copper miner Kaz Minerals Plc as the biggest gainer in the FTSE All-Share Index this year after saying sales and profit are booming.

 

Games Workshop Group Plc shares jumped 10.4 percent to 1,812 pence at 9:00 a.m. in London, extending its advance for the year to 154 percent."

 

 

"...raised his estimate of pretax profit for the year through May 2018 by 38 percent to 55 million pounds ($71 million)."

 

https://www.bloomberg.com/amp/news/articles/2017-09-05/warhammer-maker-tops-u-k-stock-gains-for-2017-as-profit-surges

 

(Mods - this didn't seem exciting enough for News, but people sometimes have insights to share about this stuff)

[Ishagu]

Lol remember all the doom and gloom a few years ago? The haters were loving it.

 

Now, nothing but shiny, happy people ^_^

[Mechanicus Tech-Support]

It's amazing how adopting modern business practices can turn things around 

[WarriorFish]

This is before they start rolling out all the models we've been asking for too...

 

Rough Riders please.

[the jeske]

Lol remember all the doom and gloom a few years ago? The haters were loving it.

 

Now, nothing but shiny, happy people

Well don't know about only happy people, but are claiming that 4-5 years ago the stuff GW was doing was good? Because what they are doing right now, no matter if people like it or not, is opposit to the stuff they were doing back then.

[Captain_Krash]

This is great news. clearly there back on top from where they were 4-5 years ago. Cheers to GW from turning a new leaf and making everyone happy one way or another

 

Krash

Edited September 5, 2017 by Captain_Krash

[Perry]

This is great news. clearly there back on top to where they were 4-5 years ago. Cheers to GW from turning a new leaf and making everyone happy one way or another

 

Krash

Strange, I seem to remember People moaning that GW was the worst thing ever 4-5 years ago and that nothing would replace the early 00's glory days

[Sete]

This is before they start rolling out all the models we've been asking for too...

 

Rough Riders please.

Exactly this. I'm sitting on my money, (yes smaug style) waiting for something proper to spend it.

[MoK]

They could share the love and lower prices a bit.

[Rik Lightstar]

They could share the love and lower prices a bit.

While there are unlikely to be direct price drops, don't be surprised to see more boxes like the AoS Giants where a single Giant is £35 and it's £50 for two.

 

This is likely to be especially true of the slightly older kits rather than brand new stuff.

 

Also think along the lines of the Battalion/BattleForce boxes and maybe "boxed games" like the Dark Eldar one where you get approximately £75 of Jet bikes and Hellions for £40 plus some rules for other ways to play.

 

Rik

[Hfran Morkai]

Same with the Horus Heresy games.

 

You pay £5 for a Tartaros Terminator squad and get Custodes, Sisters and the characters for free...

[dex_911]

I am proud of GW for this turn around. Now I can continue to enjoy one of my favourite hobbies of all time for many years to come :)

[Silentz]

Unless they get bought by Hasbro

[Frater Cornelius]

Unless they get bought by Hasbro

At this rate GW will buy Hasbro :D

[Kenzaburo]

I've been enjoying the ride to the top quite a bit. I just wish I had bought more stocks, when they were still super-low in early January.

[N1SB]

Hi guys, since the half-year report was released, well, half a year ago, I've been studying GW's annual reports going back a decade, as have many of you.  I had already a very optimistic outlook even back in January.  To remind you, that was BEFORE the announcement of 8th edition (there were salty rumours, but also it was alongside how Sisters were going to be in the starter set, which I didn't believe) or the Konor Campaign (which I also predicted when there were NO hints at the time unless you really dissect the half-year report as I did).  Link is here just to hold myself accountable: http://www.bolterandchainsword.com/topic/329700-good-news-from-gw/?p=4628374 , the only thing I got wrong was the month of the release dates ( i.e. I anticipated 8th ed would come out in May, I was WRONG, it came out early June).

 

With that in mind, I just have the following comments please:

 

 

1. Comment on your interpretations of GW's performance freely as you please!  But AFTER you read the annual report please

 

 

Annual report here, it's a PDF like FW experimental rules, very accessible: https://19485-presscdn-0-14-pagely.netdna-ssl.com/wp-content/uploads/2017/07/Combined-document.pdf

 

And tbh reading financials is actually easier than reading Codices and list-building, trust me.  Don't tell anybody but I actually commit more mental RAM into figuring out competitive army lists than analysing companies that I would later recommend for mergers & acquisitions.  But you can tell so much more if you see GW as new CEO's army list and anticipate their next moves, it's actually quite fun to do.

 

Because not reading the annual report and commenting on GW's business performance is like the guy who offers tactical advice without ever reading the Codex.

 

 

2. Ya okay, GW's full year performance exceeded even my expectations

 

 

So the half-year report accounted for the huge summer push GW had, primarily for AoS, with General's Handbook and the Season of War.  Summer was the big sales drive, but then it was over.  Afterwards, there was IMHO another big push with Gathering Storm and the Triumvrates, but also IMHO it kinda missed the Christmas rush (Gathering Storm 1 came out in January I think).  Thus, at the half-year mark GW's year-on-year revenue growth was 28%, that's really HIGH.  It was confident it'll hold steady, maybe go to 30%.  A very legitimate counter-perspective suggested, if 8th ed was coming out, everybody playing 40k/30k was going to WAIT AND SEE...and NOT buy stuff, so that actually hurts revenue in the short-term, and they told me, "Be realistic, 25% growth for the whole year is already really good, it won't be 30%."

 

Well, I was wrong about 30%.  It's closer to 34%.  Then their profitability surge is insane for a manufacturing company.  Because then consider the following.

 

 

3. Conditions are tough for a company like GW (making their success all the more impressive)

 

 

There's lots of stuff going on.  Not talking politics, but the Brexit process is a form of turbulence.  I know people saw that as a boon, but it was only a short-term one, and IMHO it was less than many people expected.  We're seeing other UK-based miniatures companies close down (the most recent one was Spartan Games...it MAY be GW is drawing business away for them, it's possible).  Meanwhile, and although you may not think they're related at all, but they kinda are, LEGO is announcing substantial layoffs  (believe me, there's way more similarities than one may think between our tiny army men and LEGO toys).

 

GW's growth is impressive, and their progress comes not because of, but despite significant headwinds.  And it's even more pronounced when you consider this...

 

 

4. These numbers don't really account for 40k 8th ed yet

 

 

GW's fiscal year end is end of May.  40k 8th came out early June.  Consider that for a moment.

 

Think about what you and your meta did when you heard 8th was coming out.  If you or your meta was anything like me and mine, we went on a full-freeze of activity for months.  We were all in wait-and-see mode.  I remember we were so cautious that we made contingency plans that we would focus purely on 30k if 8th turned out to be unpopular, helping our friends migrate to FW's HH.

 

Yeah, there was a sales spike I'm sure when 8th came out.  It's not fully accounted for here.  Put another way, this is like a game where you're going for an endgame Objective cap, but it's only Turn 4 and you got more Victory Points than you need to win.

 

Now, this is complicated by a difference between sell-in and sell-through.  In other words, we couldn't buy 8th ed stuff, all them Primaris Marines and the new starter box set and indices (i.e. sell-through, the product moving THROUGH to the end customer), but FLGS (i.e. Trade Channel) already bought them to stock them (i.e. sell-in, they're sold INTO the stores).  Still though, B&C, better than anyone, knows GW's really about Good Marines and Bad Marines, They FIGHT.

 

 

5. Final point - GW 5 years ago and now

 

 

Lol remember all the doom and gloom a few years ago? The haters were loving it.

Now, nothing but shiny, happy people

 

 

I hear what you're saying, Brother.  And I'm not disagreeing with you when I say this: GW years ago is NOT GW Now.  They're like 2 different companies.

 

Even 2 years ago, if you showed me GW's annual report, I'd say this was some sort of traditional manufacturer, a sunset industry.  They're making some product that's been around decades, just maintaining their current sales is a challenge, any further growth is a pipe dream, just cut operation costs with technical advances.  And that would explain GW to a T with the old mindset under the previous CEO.

 

I look at this and, if someone masked all the references to GW, I'd be like, "these company looks good, they're based in the UK?  What, do they make VR headsets or those popular camera drones or something hip with the millennials?"  It's beyond unrecognisable.

 

To compare, this is like meeting up with a girl/boy (your choice, it's all good, we live in an enlightened age) you knew back in high school, only it's right after you graduated from university, so it's just been a few years.  You remember her/him as this frumpy-looking person who was annoying you for attention, because she/he had a crush on you and you just weren't interested since you were too busy painting miniatures back then.  Then, during that reunion, you see this supermodel approach your table, smiling at you, and you're like "giggity, what's going on here" because you don't recognise her/him and OMG IT'S HER/HIM.  She/he must have been working out or just looked terrible in her/his school uniform or something, 'cos damn.  And then you spend the rest of the meal regretting being so mean to her/him just a few years ago, internally screaming at yourself.  That's what this feels like right now.

 

So take it easy on the naysayers.  They weren't being mean, they were calling it as they saw it at that time.  This results are beyond what would've been optimistic.

 

 

+++++

 

Even I'm withholding further comment until I had a long read of this.  Even beyond being Warhammer fans, this is a very interesting case.  I encourage everyone to really read https://19485-presscdn-0-14-pagely.netdna-ssl.com/wp-content/uploads/2017/07/Combined-document.pdf just to learn more about the Hobby we love.

[Marshal Rohr]

So they sold the soul of their games. Makes sense. 

[Brother Casman]

I always enjoy reading your analysis/thoughts on GW's financials, N1SB. And kudos on predicting the summer event!

[Lord Marshal]

Lol remember all the doom and gloom a few years ago? The haters were loving it.

 

Now, nothing but shiny, happy people

 

Haters? You mean justified criticism. People were 'doom and gloom' for valid reasons and, shock horror, when a company makes a conscious effort to improve they... gasp, are more optimistic.

Edited September 6, 2017 by Lord Marshal

[N1SB]

I've been doing some reading and re-reading, to provide some context to this and a balanced view.

 

Edit - the long story short is: currency manipulation, political intrigue, and 8th ed/Konor campaign all made GW a top performer in UK stock market.

 

 

1. What happened with GW just now?

 

 

GW's stock price shot up.  There's 2 reasons for that: currency effects (due to outside forces) and actual performance (due to GW's actual efforts).

 

As you probably know, the UK economy is in an uncertain place right now due to the complications of the Brexit.  A side effect was that its stock market, the FTSE, seems to be shooting up.  That's because of currency effects.  Basically, as you probably also know, the British pound is "weak", it went down in value compared to other currencies.  You probably remember when this happened we all decided to buy stuff from Forgeworld, because it's "cheaper" for us outside the UK than before.

 

GW is a very British company (it's based in Nottingham, its manufacturing is in Nottingham, it still has more stores in the UK alone than any other continent) that happens to still do a lot of international business.  So it's like an exporter, trading in currencies "stronger" than the British pound, making it more valuable in comparison.

 

The new GW continues to do very well on the stock market.

"The U.K. maker of Warhammer battle games overtook copper miner Kaz Minerals Plc as the biggest gainer in the FTSE All-Share Index this year after saying sales and profit are booming."

 

Kaz Minerals Plc.  What is this, and why are they relating it to GW?  It's because it's a mining company with mines around Kazakhstan (where Borat comes from very nice) and has NOTHING to do with the UK except it happens to be listed on its stock market (also here in Hong Kong).  Kazakhstan is close to China, which is still doing really well and has a huge demand for Kaz Minerals' copper, thus its huge increase in stock price.

 

Thus, you have 2 "British" companies (GW is, Kaz Minerals is SO not) that mostly do business outside the UK.  Just that alone inflates their value via currency effects.

 

That said, GW is really leading the pack now, and it is at least partly due to its turnaround starting last summer (May 2016 onwards) when AoS's General's Handbook and its Season of War summer campaign (which awarded points just for buying AoS stuff), a perfectly set-up combo like Move-Advance-Charge, so we ask now...

 

 

2. What is the trigger for THIS piece of news right now?

 

 

 

"This is my last preamble. I will not be seeking re-election at the AGM in September. Kevin Rountree has my full confidence and I could not be leaving the business in better hands."

- Tom Kirby

 

 

GW just announced dividends.  HUGE ones.  These are the payments to shareholders for buying their stock in the first place, their return on their investment.

 

To compare, I took a look at dividends in previous years around this time:

 

Nov 2012:  18p

Oct 2014:   16p

Oct 2016:   25p (after AoS's General Handbook and Season of War summer campaign)

Sept 2017: 35p (right now)

 

It IS a measure of a company's performance when they pay their investors well, but it's actually more political than mathematical.  Apple was famous for not paying dividends even when it was doing really well, because Steve Jobs managed to convince everyone to reinvest that money back into research & development.

 

Thus, the stock price was really a response to the dividends announcement, but there's more to this.

 

Basically, the "board of directors", a bunch of old men in suits, get together and meet with the CEO and CFO to discuss dividends.  This board are representatives "elected" by shareholders to look after their interests, which are mainly to get paid.  They agree to how much dividends get paid out.

 

The former CEO and still non-executive Chairman, Tom Kirby, is about to leave that Chairman role.  The current/new CEO, Kevin Rountree, who really seemed responsible for GW's turnaround, is probably going to take on the Chairman role as well.  But to confirm that, he has to be "elected" by shareholders.

 

And the best way to court their vote is through dividends.  It's not "paying them off" in a corrupt sense, it's that as investors...they just expect to be paid.

 

The next "election" by GW shareholders to vote new CEO Kevin Rountree as Chairman is happening in SEPTEMBER, later this month.  Did you notice usually they pay their dividends in October and November, whereas this time it's a little early?  Isn't the timing pretty interesting?

 

 

3. So GW's stock price is based purely on currency effects and shareholder politics?

 

 

Absolutely not.  I just wanted to point that out because, as 40k fans, of course we want to see GW succeed, and I'm always concerned about observation bias.

 

The dividend payout, and thus the stock price, was driven by GW's performance this summer.  It's like they felt so confident from the start of GW's fiscal year (which starts in June, around the time 8th came out, notice the timing again) that they can "give away" lots of money to shareholders.

 

Fact is, last summer GW's performance was driven by AoS's new rules and campaign.  This summer, GW's performance was driven by 40k's 8th ed and campaign.

 

And partly because 40k has long been more popular than Warhammer Fantasy's range (I don't want to quantify exactly what that ratio is, but I don't think it's in doubt) plus 8th ed was better received than AoS even with the General's Handbook, I'm thinking we're going to see results this year that blows last year's away.

 

GW's basically repeating the same thing that brought them success in their initial turnaround, but with more experience so they do it better, with a more popular product range.  All those are multiplicative effects on what was already a winning formula.  Last year, the 6-month year-on-year growth was 28%; GW should top that this year.  And remember, we usually look at things year-on-year, so GW's growing on huge growth, which is not easy.

 

In short, 8th ed, new Indices, Start Collecting! boxes, other boxes people bought during the campaign, Primaris Marines, did so well, GW can afford a huge payout.

 

And the fact they're paying THIS much more suggests the best is yet to come.

 

 

4. So what happens next, FOR US, as GW customers?

 

 

They could share the love and lower prices a bit.

 

The CEO probably won't be lowering miniature prices per se as he's already explained he's maintaining the gross profit margin, but he'll probably deliver more value.  That'll be in the form of more stores for you to play, more games that you like, and possibly more starter kits that are cheaper bundles, but mainly to attract newcomers.

 

And the reason for this is, as big a surge as last summer's AoS General's Handbook and Season of War brought with a 28% year-on-year growth, the rest of the year managed to top that with 34%, as we can see from their annual report.  So I've been thinking what happened before 8th ed and Konor, because GW will have to match that level of success this coming year, too, in order to maintain their growth.  This will be a very important year for Kevin Rountree to prove his mettle.

 

New codices and miscellaneous stuff, that's all business as usual, already a given.  They need to add stuff on top of that, new products, done better, to drive growth.

 

There was Blood Bowl.  Then the Gathering Storm trilogy, plus their Triumvirates.  Then Shadow War, which sold out in 15 minutes.  GW needs that level of success.

 

2017 November to Christmas: Well, there's AoS Shadespire, which is fine.  More interestingly, Necromunda, a specialist game like Bloodbowl, has already been announced, coming out in November...basically around the same time as Blood Bowl.  And another classic, Talisman, will be coming out at Christmas.

 

2018 New Year to March: probably another Gathering Storm-like thing they'll probably attach new Triumvirates.  Or something like that.  It's a great concept as you're selling campaign books, then the campaign books upsell premium miniatures.  But I remember the problem with the Gathering Storm was, unless you're an Imperial or Eldar player, it was not that meaningful to you.  True, there's plenty of Imperial and Eldar players, but if GW could somehow involve every faction/race, that would bring further growth by just expanding the addressable market.  Will it be a Gathering Storm-like book based on Armageddon, with a Triumvirate of Ghazghkull Thraka, Commissar Yarrick, and perhaps another faction's representative be out of the question?  How about a new Abaddon with 2 other Chaos characters?  A Primarch?

 

(There's a good chance it'll be an AoS version of Gathering Storm instead.  I would honestly be a little bit disappointed.  I do play some AoS, but I'm more interested in watching how 40k develops.  We're here on B&C and we're skewed in favour of 40k, but things are so much more interesting in the plot of the grimdark far future now.)

 

2018 March: What could possibly match the 15-minute sellout of Shadow War?  This is the mission impossible, but to offer a balanced view, I think they way under-produced on Shadow War, so even though it sold out, its sales weren't quite as astronomical as we say because there was a limited amount.  I think they treated it as the equivalent of a Deathwatch or Warhammer Quest, which were pretty good but didn't sell like Shadow War.  Still...what could possibly top that?  Will it be a re-release of Space Hulk again?  Or a remake of classic Warhammer Quest based on the world that was?  Can it be Adeptus Titanicus here?  Remember Shadow War came out of the blue straight to the top by merely recyling rules, GW must have some skunkworks project here.

 

But in order to pay the dividends they're announcing now, GW must have already allocated the budget for product development already.  All those decisions must have already been made, and they still had cash to spare.  And they must know they got to follow it with a strong year throughout, which would normally make them more conservative with money, but they're so confident they're splurging on their shareholders.

 

There's going to be bigger and better than just 8th ed's release, and we already know some of the stuff.  I'm speculating a bit here on Gathering Sequel II: the Plot Thickens and Shadowyer War, but there's gotta be something.  Edit - there is a part of me that's thinking if they release just 8th ed codices, so that every faction gets their codex this year, if they can meet their sales goals, which can explain why they're so bold.

Edited September 8, 2017 by Not 1 Step Backwards

[Silentz]

Holy Tom Kirby is pretty rich.  He personally owns 6.6% of the company - 2,134,186 shares. 

 

So the most recent dividend paid was £0.74p per share...  that's  £1,579,297 .  £1.6 million pounds from one dividend payment! 

 

Good lad. 

Edited September 8, 2017 by Silentz

[N1SB]

Holy Tom Kirby is pretty rich.  He personally owns 6.6% of the company - 2,134,186 shares. 

 

So the most recent dividend paid was £0.74p per share...  that's  £1,579,297 .  £1.6 million pounds from one dividend payment! 

 

Good lad. 

 

Great, you're reading the annual report.

 

But just a heads up, that 74p figure is from "Dividends per share declared in the year", which means the whole year.  So not 1 dividend, but the whole year.

 

This was a really good year, though.  For the past 10 years, it was usually a lot less than that.  1 year it was just 18p.  Another year, it was 0...the whole year.

 

But ya, he's pretty rich.

[Moonreaper666]

 

Unless they get bought by Hasbro

At this rate GW will buy Hasbro :D

So when can we expect the Pony, Transformer and G.I. Joe Codexes?

[Bjorn Firewalker]

 

 

Unless they get bought by Hasbro

At this rate GW will buy Hasbro :D

So when can we expect the Pony, Transformer and G.I. Joe Codexes?

I can foresee GI Joe as a Tempestus Scions unit, MASK as an Ordo Hereticus unit with close ties to the Adeptus Mechanicus, and the Ponies as Daemons of Slaanesh.

 

Of course, everyone wants Optimus Prime as a triple changer who transforms into a Land Raider AND a Stormraven gunship, and a Megatron who transforms into a Necron Obelisk.

[OnboardG1]

GW are one of the few companies that genuinely benefit from the Brexit pound crash. The company I work for has a dollar denominated supply chain so we got kicked in the nuts.