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Hello from across the pond, I went to sleep on this stock after the CEO and CFO bought last year. IMO this is an undervalued company and I won’t be a bit surprised if it gets bought out. The 10 year bond corporate bond should be rising and that will greatly help the pension liability from my understanding. A low PE like Carclo’s with growing earnings and cash flow with rising inflation make it an even better buy at this price. Instead of a dividend it would be better in my IMO to plough money back into the business or buy back some shares of stock. The company may not be able to buy back shares though under the terms of the pension agreement. Hopefully we will see some more insider buying.
Seems very sloppy Zhozho.
Hopefully our board have made this point direct to Pewl Hunt.
It's not a downgrade because estimates of revenues and EBITDA are unchanged. What appears to have happened is that a Peel Hunt analyst made several errors leading to miscalculation of eps. Their recent 'housekeeping note' says:
Following a change of analyst on the stock we are re-publishing our forecasts with revisions to depreciation, interest and tax assumptions. Crucially, the revenue and EBITDA lines remain unchanged, confirming the direction of travel as the company starts to reap the benefits from recent capex and restructuring investments. The next anticipated newsflow is a pre-close update in April, ahead of FY results likely to be in June. Our recommendation remains Buy, TP 65p.
Watch the last presentation on youtube...earnings expected to be ahead of target...Phill White buys at 41 & 33p...new long term orders from large corporate customers...factory in China running non-stop...
I can't believe there are investors out there who would listen to a broker (having a vested interest in pushing the price down prior to good results being announced)?
With inflation eating the pension deficit I am hopeful of a resumption of a dividend in 2023/24...however small that would be! That would be the rocket fuel that propels Carclo to it's old price. I still hold .4% of the company and bought more when it fell to 20p. Patience is the key to this recovery stock.
At 25p that is a PE of 7, I think that is pretty good. I was trying to find a industry average earlier, or similar peers, but I could not. Bearing in mind the capitalisation and expertise required for manufacturing, I think the PE ratio should be more like 15. Therefore 3.5p x 15 = 52.5. My logic here is this is not a business that a rival could just start or imitate, there is a significant barrier to entry here - a defensive moat as buffet would say, hence my increased PE ratio.
PE of 15 is the average on the FTSE according to google:
UK FTSE All-Share recorded a daily P/E ratio of 15.090 on 05 Apr 2022, compared with 14.980 from the previous day.
I also read on the other board that the earnings decrease is really due to tax and interest rates, not loss of revenue. EBITDA unchanged - though don't personally have the broker note.
STRONG BUY under 30p IMO, still legs after that. Full year TU normally around April 27th.
Usually one comes out in April.
It appears as though there has recently been a broker downgrade for Car. Stockopedia was showing a 2023 forecast EPS of 5.86 pence/share. It is now showing 3.5 pence/ share for 2023.
POSTED ON ADVFN EARLIER
Trades.
I log onto my ADVFN moniter.
Then click on CARCLO (2nd column).
Follow this by clicking on TRADES (top "header" column)
You get the trades for the day.
Now log out.
Type "CARCLO share chat" into Google search. Scroll down (3rd choice) "ADVFN"
Now click on TRADES (top again) this time you get all the trades ie, lse and AQSE
Now you will see both the 250k trade and the 200k trade side by side. Not sure if the bid offer info is correct but when I looked yesterday I also felt they could well both be purchases. Jmo
All that without much contribution from Aerospace division. That might pick up for various current reasons?
I said before, they can get that going, and sell it, clear their debts and focus on plastics.
According to interims, net cash assets were
Sorry meant
According to interims, current cash assets were
Hi Jolly, yes there are better out there, but H1 produced around 3.7m operating profit (removing the covid grant).
If we double that, then we are looking at 7m operating profit. According to interims, net cash assets were circa 50M.
Debt was about 30m + 30m retirement. Depends whether retirement should be used in EV?
Market cap 20M+ 30M debt = 50/7 = 7.14 or 20M+30M+30M = 80/7=11.4
What we dont know, is what the Ebit will look like for year, and what the EV will be (if more debt is repaid).
Not sure what multiple to then use for Ev/Ebit, for a global manufacturer?
The non current assets PPE look quite high, dont know if they own buildings etc?
At 20M market cap, I feel this is a good entry point for a global manufacturer.
Not sure what you mean by 'quality' of ebit??
not for long, mind
still seems racy valuation (EV/EBIT) given lack of quality of ebit
''but 20p is even better.''
yes it was - now up 40% from the low of 2 days ago
Like most I am shocked at the sp post-Ukraine invasion - I thought 30p was a great buy but 20p is even better. Still can't see any material change to Car's future prospects (and thus, won't be selling) given that factories are still running 24/7 (bar the effects of rising inflation on costs & wages)...and even though free covid testing ends in UK at the end of March there are still many parts of the world (ie. Latin America & Asia) where lfts will continue to be in huge demand for some time. Whilst Ukraine is consuming everything in the news a disaster is unfolding in Hong Kong. Exports to China? Let's hope so as their home-grown vaccine shows no affect on Omicron and their zero-covid policy is starting to unravel. That may be natural justice to some but there still remains huge demand worldwide for medical plastics due to the backlogs caused by covid. Just my view but there are big rewards for those who keep the faith in the medium/long term.
I don’t want to get into a long conversation about it but a pension deficit is NOT debt. It is a far longer term liability, managed by trustees who can act with considerable flexibility, and generally understand the need to maintain a healthy business to protect future contributions. Carclo appears to have a supportive relationship with the trustees. So if the assertion is that the pension deficit should be added to the EV in the same way net debt is, that is a rather subjective assessment, and not one that all educated investors will agree with.
Since I have to post to correct my self I will elaborate:
I meant Ev/Ebit for hays of 8 not PE. If you consider that is close to Carclo, especially if the CAR sp recovers a few points then what is the difference?
Hays have net cash of 200M, are buying back shares, and promising to pay around £100M in a special dividend (that is over 5% yield at todays SP). Those are the extras you get somewhere else at the same valuation metric, so does make CAR look expensive. Would look even worse if you pick a super small cap, or O&G company, I just used Hays because it is average.
Im holding CAR but better places to put your cash IMO.
@Jolly, Well done on calling the price 25p. I calculated the EV/Ebit around 7 now - that was last night so could be a little lower, but yes when you look at other companies with similar numbers, they don't then have the debt. I couldn't put more money here, when there are I3E, even companies like Hays with shed loads of cash and a PE of 8 or 9 look a little better. I was checking out BILN last night (where you were posting), but may have got back to fair price.
Carclo is an ok investment, but fact is there are just better out there. I am still invested here, see no point selling at a big loss. But wont be averaging down until this starts to turn or can be valued on new metrics.
I think its the same old boring and painful cycle of small caps always taking the biggest hit as we enter a bear market. I am still currently a holder......but have lost most of the profit I made on the way up......I don't need to sell.......but my past experience has been that these can go much lower......even though the company has positive news. Its all to do with market sentiment......and the general trend. Almost all shares are down at the moment....and it could get a lot worse......and for some long period of time!
cos it still isn't cheap on ev/ebit rel to comps imv
It's an odd one for such a big drop!
Dunno, maybe just a panic market reaction to the end of the COVID plastic boom. Hmmm?
Hi larrs,
There are a few interesting post over on ADVFN.
I get the feeling that investors believe it's current market sentiment with folks who got involved very early in this recovery, when the share was 5p ish , locking in any profits.
Like some others, I believe we will bounce back as we get closer to, and when the results are posted but as we all know the share is not without its risks. Jmo
Why is this flying down? Also why is no one talking about it here....?
Thanks Steel, 24/7 working at the factory is a good sign. So is the sp support at 31p. If we can wait out the situation with world markets we should, hopefully, be rewarded with a fully charged and recovering manufacturing company with excellent future prospects.
A lot of the smaller companies are down significantly recently. Having reviewed 2 other companies last night, I increased my holdings on those companies. One company (SRC) stated revenue 107% increase from last year, and still trades 25% below recent price. I therefore think that part of this drop is a correction of sorts, which is affecting all small cap equities currently. However the good ones will bounce back, and I expect Carclo to be one of those. The lack of any update prevented me from adding more here, in contrast to SRC for example with far more recent good news.
There is also the possibility that this has been shorted, but the the borrowed stock was under 0.5% so not declared. The post by Rivaldo, could be answered that it was shorting? Very easy to drive this type of low liquidity stock down, and it may also have happened last time it touched 30p, then swiftly rebounded?
Not worried here, very tempted to buy, but own rules prevent more here currently.