Utilico Insights - Jacqueline Broers assesses why Vietnam could be the darling of Asia for investors. Watch the full video here.
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Thanks Londoner
This isn’t one of those companies that I delve too deeply into. Mainly, because when I try, I see too many moving parts to have confidence in my numbers. Rather, I trust Senior’s management to be capable of running the business effectively; a business operating in growth markets.
I was encouraged by the presentation and Q&A.
It reminded me that the build rates of Boeing and Airbus are still well below the rates of 2019, and will not return to those rates until 2025/6, with growth continuing beyond.
The business is well diversified, with 6% of total revenues in the troubled 737Max program.
In answer to a question on the likely timeline to a ROC target of 13.5%, the CFO didn’t hesitate to reiterate the previous expectation and gave end 2025 as a target.
FCF largely went to the dividend with costs relating to the acquisition of Spencer largely responsible for the increase in debt.
As we move through 2025/6, with ROC greater than the 13.5% targeted there’ll be a significant step up in profitability. A normalization of the growth rate and improvements in the supply chain will reduce WIP from last year’s £28m to a more normal c.£5m. In the absence of acquisitions, debt and associated interest costs will fall. All these components should contribute to FCF levels at or better than the c.£60 we saw in 2019.
Barring any jarring adverse company related event, which I see as unlikely given the product diversification, this is still a stock I’m comfortable to hold into the 2025/6 timeframe, when I’ll reassess my position.
FCF has been unimpressive for a couple of years, and is a wee bit of a worry. "Provisions" implies there may be a bad debt or compensation arising, I think. An uncertain element, and undoubtedly the reason for both the muted response here, and the continued languishing of the share price.
Rise today short lived. Must be ripe for a takeover at these levels...
The results are good, apart from one niggle: FCF. I'm sure it's not a big issue but I'd like to understand what is buried in the drop:
- we started with more OP (38 vs 32m)
- but then 'increase in payables and provisions' is lower (17 vs 38)
- and we paid more interest (17 vs 10)
What's the story with those two items? Especially the 'payables and provisions' item which looks weaker than last year.
Will rise today as the results look solid if unspectacular. Importantly outlook is good for this year and beyond.
Results to end dec 2023
Revenue +14%
Operating profit +14%
EPS +55%
Dividend +77%
Despite £5.6m one off costs.
HOWEVER debt up 15%.
Remains in line.
Where is it? Thought it was today ... ?
Will rise today as the RNS is saying ' don't forget we have lots of great contracts so buy our shares'.
.... err ... via 146? What's going on this morning!?
No rason to assume lower income noe or in the future
Really shooting up
Of the lows again
Once it re bounds it will be fast and furious just like the way down
With no indication from company that anything is amiss
Topped up again!! Great dip. Completely oversold imo.
Leapgrog, thanks for the post - a fall caused by a downgrade , written by people of varying credibility , is about the best explanation for a sp fall and gives me confidence that the sp will recover soon.
BUZZ-UK's Senior drops after Barclays downgrade
** British engineering firm Senior's shares down 4.5% at 163.8p; top loser on London's midcap index
** Barclays cuts price target on stock to 168p from 205p and rating to "equal-weight" from "overweight"
** Says U.S. Federal Aviation Administration's oversight for Boeing and Spirit AeroSystems' manufacturing may slow 737 MAX production rates for suppliers, leading SNR to potentially guide below 2024 EPS and free cash flow consensus
** Stock gained 41.9% in 2023
Likewise topped up. Nice dip
A wheel may have dropped off the front of a 767 but that does not warrant another large drop in sp here. Just bought anothe £5k at 163.
Share drop unwarranted imv. Boeing will continue making planes - so sp should recover imv.
Why do you think that would happen, Den?
Seems in good shape with fundamentals recovering well from pandemic set-back, markets and demand strong, still an obvious acquisition target etc.
I'm not being argumentative, just curious as to your logic? I'll continue to hold in expectation of a bounce to acquisition, but if it dropped as you think I will buy more
This remains at elevated levels, not a buy till a drop to 125 I’m afraid.
We are unloved! On a PER of 18 this is not exactly cheap, so I can understand the reticence of others. However I am happy to hold, and would add again in the 150s.
Should lift the sp a couple of pence imv. We shall see.