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Armstrong investments aka William Black added circa 1/2 million on the 10th.The same day as someone was offloading 700k or so.
I genuinely hope you are right mropz. Your comments are positive and balanced.
I will be over the moon if I am proved wrong and this is the launch pad for a recovery.
I don't agree.
The trading update seems to me to be balanced, if somewhat repetitive on the negative news that we've all been aware of since December last year, with positive 'green shoots' for the future.
I don't think you can be too hard on Nick and Phil for the growth strategy they chose, after all the world is a significantly different place than what it was 2 to 2 1/2 years ago when we were just starting to come out of lockdown, I certainly never foresaw inflation/interest rates etc. increasing at the speed they did.
If I've one issue, it's the way the cancelled contract was allowed to happen in the first place and the subsequent time spent trying to negotiate a suitable settlement which still hasn't been sorted, (but I don't know how these things work), hopefully Carclo will have learned from this experience and it will serve them well in the future.
Given the number of positives stated in the update i.e. "we are witnessing early positive indications of enhanced margins and cash generation as FY2023 concludes" & "We expect a steady recovery in operating margins in the near term as our new strategy starts to yield results" & "HSBC remain supportive and the Group successfully reached an agreement with them to reset the interest cover covenant for 31 March 2023" etc. in no way says to me that a rights issue is under consideration or will be needed.
Lastly, the statement, "and are engaged in ongoing discussions with the customer to reach a commercial agreement for this contract" is as clear an indication of compensation as you could ask for, I just wish they'd get on with it and then let us know how much they've negotiated, I'm working on the basis that the delay means that the BoD are going to ensure that fair compensation is paid.
Thanks boys….
“cash-intensive top-line growth strategy was unsustainable”. This update smells of a rights issue to strengthen the balance sheet in the future.
No talk of any compensation for the lost contract. Suggests we won’t get any.
Looks like you made the right call!
This is beginning to look very exciting. We have here that heady ****tail of value and growth. *Rubs hands in glee.* Someone has had a sell order at 14p for a very long time. But at 11.30am on Wednesday someone else put in a sizeable buy of perhaps 200,000 shares and more that filled the last of that sell order. We spiked above 14p for the first time this year.
It was the latest of a few lumpy buys that have been dropped in this month: https://finance.yahoo.com/quote/CAR.L/history/
If we can close the week and then the month at or above 14, then it could be very propitious for the technical picture of this share. A short squeeze could well be under way. It’s early days in the process - this is a multiyear play based on Carclo’s presence in some key growth markets - but I see a volcano rumbling here. This share is on a 4.5x earnings multiple for goodness’ sake!
Some interesting news to digest:
https://www.marketwatch.com/press-release/led-secondary-optic-market-booming-with-rising-demands-and-massive-opportunities-2023---2028-2023-02-22
(This one doesn’t mention Carclo by name but it is a player in the double-shot moulding market.)
https://www.marketwatch.com/press-release/2-shot-injection-molding-market-industry-analysis-database-for-period-from-2023-2028-2023-02-12
GLA and DYOR!
Funny you should mention chinese made drones cos i'm sure i heard summat on R4 recently about unease in the UK about using chinese sourced drones...
h**ps://www.express.co.uk/news/uk/1734445/police-news-chinese-drones-surveillance-suella-braverman-weather-balloon-shot-down
I agree testudo. Carclo operate in a growing market, and with debt and pension payments well covered by current free cash flow all that growth will fall into the laps of shareholders. Settlement relating to the cancelled contract should also improve sentiment. GLA
Share price is moving north on very small volume so I presume we are due an answer on the compensation package, who knows it might surprise us and wipe out a large chunk of their debt .
Hi all. New here. Long-time lurker, first-time poster. This is an exciting juncture for Carclo and several other businesses I’ve been watching that have taken a big hit in recent times (PHE and TGP on the LSE and NANO on the TSX). But it’s Carclo I find most compelling of a very interesting bunch.
The share hit a high (a classic double top) in January 2013 and went on a dramatic slide. When that downtrend was broken, in December 2014 and at about 90p, it went on to double over the next 30 months to about 180p, before resuming its downtrend. That slide that commenced in June 2017 has endured five-and-a-half years. It hit peaks in May and November 2021 and September 2022, without ever breaking out.
Yet next week, just by dint of time, (barring a calamity in price today) the share looks like opening above the trendline on the weekly chart for the first time across those 67 months. That is quite important, and the share - which has provably traded very technically - looks like it is making a bit of a move today.
It would take nothing to double in price (to where I initially invested with my SIPP and family funds) and that is why I have bought again today.
Still more intriguingly, though, are the Fibonacci levels in this recent downtrend. A retracement to the 50% Fib would take it to 91p, tantalisingly close to the several equal highs at 94p, and to the ICT fair-value gap to the swing low at 101p.
I consider these modest targets. In the longer term, the swing low at 316p should also be achievable.
The reason I think this is that there could be a tremendous amount of growth around the corner for Carclo with just a little bit of a pivot in what it does. Carclo has been active in the aerospace sector for 100 years. Its specialism there is, inter alia, applying technical plastics to electronic components and aerofoil blading.
Now consider this. The war in Ukraine has demonstrated one thing more than any other: the value of drones. Small, cheap drones and thousands of them. Currently these are sourced from China, which is hardly a reliable partner in a major defence-procurement exercise.
I would guess that, through a tweak of its existing capabilities, Carclo could quickly be in a position to deliver cheaply mass-produced, British-made drones to the MoD and other NATO partners, whether directly or as commissioned by a major defence contractor.
I am a humble retail investor with no inside knowledge whatsoever, but if management are not actively exploring this potential already, then they are letting shareholders down.
If they are, however, then the possibilities for Carclo are tremendous, and a 2000+ percent increase in the market cap (to c£200m) could be eminently achievable. In that event, the current fears over gearing and the pension deficit would become a negligible sideshow.
This is, to my mind, one of the most undervalued shares on the market.
BUT: DYOR and GLA.
Cheers,
?Testudo
Fantastic risk/reward here IMO. Have fully loaded back to level when it was sub 6p a few years back. Top line growing, experienced management in place, low cyclicality sales with large medtechs… once margins normalise at target 8-9%, all of the residual profit post pension/interest payments will fall in shareholders laps.. GLA :)
has one heck of a capital structure
calculate its tangible net worth (not greatly different from zero, no?)
then consider how its tangible capital deployed is financed (loans and pension deficit)
this is fun to watch (even better if I'd shorted)
that talks about impact on banking covenants
first equity increases from c 7 to 8pc
Ha ha spot on Mike, you couldn't make it up!
Clarity on why Nick and Phil left?
If that is a trading update, then they have no trade.
Pointless RNS says nothing new but will tank the share price, maybe directors want to buy more shares ;-)
They obviously didn’t have any solid penalty clauses in the contract !
" 36k and 24k." is I think a huge vote of confidence. We are almost certainly not talking about multi millionaires here, it could easily be a very significant investment for them. In addition to 'William Black/Armstrong Investments Limited'
Schroders have increased their holding to 13% They are no fools!
But there was no need for them to do so, the sp had already stabilised yesterday following the RNS on Wednesday.
I'm not sure where caital losses would come into play given that they would have to sell shares to crystallise such (hypothetical) losses and I can't see them buying with one hand and selling with the other.
I'm sure they'll have the opportunity of share options in the future as befits their positions, however, just like everyone else, I believe, they'd like to see a profit on todays investment and are in the best position to know that's possible/probable.
Perhaps, the fact that Carclo's Enterprise Value (theoretical takeover price) is (according to Yahoo Finance) £47 million and (according to the recent TU) they have a total equity attributable to the equity holders of the company of nearly £30 million, they believe that the company is currently significantly undervalued.
This is undoubtedly a view shared by William Black/Armstrong Investments Limited who've recently increased their holdings in the company by 650,000 shares - confirmed in the after market (6.29 pm) TR1 on Tuesday that was largely ignored because of the RNS on Wednesday.
Hang on. The directors have spent 36k and 24k. Yes that is a lot of money, but no it isn't a huge vote of confidence either.
Had it of been 200k, id be excited. Remember we have been here before, with the last 2 directors buying in at (Saunders) 38p and (white) 41p. I honestly think that sometimes these things are necessary rather than a good investment. It may well be almost a free investment, if using the losses on capital gains allowance. Plus they will get options at some point, so can recoup this money what ever. I dont read anything positive in to recent events at Carclo.
I totally agree Beza, a good point - if I'd just taken over at the helm, I'd have done exactly the same so that, not only did everyone know these things didn't 'happen on my watch', it also creates a watershed/datum for a fresh start.
Now looking to the future, If you take into account that the two main people have just purchased 500,000 shares today between them, that speaks volumes, talk about being 'in the know' and getting in at the right time.
Yes for sure. Can't expect directors to burn £50k and must know that contract loss is not therefore as bad as it may sound. Debating whether to join them and buy some more here.
The director purchases totally 500, 000 shares is ‘food for thought’. Did last weeks update have an element of ‘kitchen sinking’ in it by the new exec?? Recent events have certainly been unsettling for shareholders.