Announcement today has sent the share price down 15% (11:30am) as the company called out technical issues in it’s migration of PaulCamper onto the Camplify platform.

Expected sales impact for FY24 is a material reduction of $3.5-4m from disruption over the migration which completed at the end of April. The company expects normal trade in the PaulCamper markets by June FY24 and to allow a clean FY25 to use the changes to rollout additional products and they expect FY25 to have $3-4m in efficiency savings from the changes.

I have used the chance to finally buy CHL, my view is the price was already pushed down by lower sales growth expectations in Europe after the H1 result, adding to concerns about Apollo’s exit from the share register and results last week that point to a week industry.

The Apollo factors I see as not materially relevant and a slow growth year as they bed down the PaulCamper integration and set the base to scale is also over discounted. So as unwelcome as todays announcement is, I see it as a temporary hitch and an opportunity to buy at a doubly discounted price.

I have not quite finished my valuation work, but enough to be satisfied with the price and was concerned I had missed a chance when the price rebounded on Monday following the Apollo result last week. However a recent listening to One Up On Wallstreet (Peter Lynch) made me aware of the “Monday” effect for small caps that “retail investors” dabble in. Namely they mostly do their research on the weekend and put in a buy order on Monday. So Mondays are usually one of or the best day for a small cap – CHL exibits this effect. So I held my order at a lower price that triggered this morning.

We will see how things go from here – worst case this is a decent into a hell of downgrades from European issues, but they are well cashed to endure some pain. Best case, it returns to growth and it’s operating leverage kicks off.

Disc: I now own in RL