Roundtable Discussion; The Future of Mineral Sands. Watch the video here.
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As good as can have been expected given the general market conditions.
The core CTP business is going great guns, with lots of new production contracts being implemented, additional new tooling contracts and continued global growth prospects. Aerospace is getting back into growth mode too and remains profitable.
So revenues are ahead of expectations and the pension deficit is reduced. And CAR have managed to keep profitability in line with expectations despite all the cost increases.
The outlook is similarly mixed, with strong demand and further revenue growth set against margin pressures.
I wish CAR would actually publish what those market expectations are - none of its brokers are on Research Tree so all retail investors are in the dark, which is ridiculous in 2022.
The MMs have marked down initially due to the "challenging" early FY23 outlook comment, but longer term holders should imo be happy to hold as I suspect a £19.9m m/cap is very good value indeed for a specialist business in growth mode with over £120m turnover and substantial PAT.
Wow indeed Warren,
Yes the company faces the same issues as others, Covid in Asia, War in Europe , supply and inflation issues the world over.
Net debt increased and likely to increase further with planned expansion. The company is winning orders and large ones at that.
And the pension deficit has plummeted with the companies balance sheet a lot stronger.
I would like to write further but have a train to catch.....the often talked about 're rating is now certainly on the cards. Jmo
Why didn’t I load up yesterday, this is an incredible turnaround story , going to open 50% up .
Bad news is best handled by staying ahead of it — I think it would now be damaging if the update was bad news due to the radio silence — which I am sure they would know so hoping this is not the case
Something grim coming
Looking at the spread... there must be something from coming,?
I hope it is tomorrow, I cant take much more of this. If not then, I guess after the bank holiday.
I'm guessing the recent selling is probably a prior warning not to get too excited....
Should hopefully get a trading update soon ?
True , fingers crossed your right !!
On the other hand Warren.
No announcement of disruption in China due to the recent Covid outbreak is reassuring indeed.
Big concerns with this company is the potential disruption, no announcement reassuring us their operations in China are not affected!!!!!
The company mentioned in last year’s presentation to shareholders that they had enough funds for the moment and that selling the aero division was not something they were considering.
It would be great if the pension situation improved (bond yields, members transferring out, mortality figures etc. etc.) enough to warrant the trustees removing the restrictions on dividends early. Even a very token dividend would transform the share.
I don’t think a share buyback, for all purposes like a dividend, returning money to shareholders, is something the company would do. We need a bigger float rather than a smaller one. Some institutions won't invest in a company with so few shares on offer.
JMO
Hi, I agree with your sentiment, though these last few weeks are a tough hold. I have a few 'good' uk companies like this and they have all sold off and not picked back up again. So it may be that results are good, but we have to wait to see the upside. I hope they can reduce debt and the pension deficit. I have said before, perhaps sell the aerospace division to reduce debt and focus on growing the plastics. GLA.
Just pulled this out of the report to clarify:
Under the terms of its financing agreements the Company is not permitted to make a dividend payment to shareholders up to the period ending in July 2023.
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