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A very late reply as I've only just checked in! The return on equity is enormous... therefore for the P/E not to be ridiculously low, the price/book has to be high. The equation is: [price/book] = [p/e] X [ROE].
does anyone know why the P/B ratio on this is so comparatively high? Is it because of the pension payment,share buyback and high brand name value?
I note that there is a return of cash due to investors here of 200 pence per share. I also note brokers estimate are currently circa 200 pence above the current bid value. Would it be sensible to buy some of these for the 200pence per share return?
IMI: HSBC increases target price from 1530p to 1675p, while downgrading to neutral.
IMI: Morgan Stanley moves target price from 1154p to 1192p, while downgrading to equal-weight.
IMI: UBS takes target price from 925p to 1000p downgrading from neutral to sell.
IMI: Alphavalue downgrades to reduce, while maintaining the target price at 1102.50p.
In its recent trading update, IMI said organic revenues growth in the year to date was 4% – or 6% including acquisitions and exchange rate movements. However, there was a slowdown in growth. There was no outlook for 2013 given in the statement. However, management said that second-half bookings momentum was similar to the first half at around 4%. This was down on last year on an organic basis, hit by lower activity in nuclear and IMI’s “more selective approach to new fossil power projects in India and China”. Some analysts trimmed estimates after the statement, but all in all the valuation is looking reasonable. The shares are trading on a 2013 earnings multiple of 11.7, falling to 10.7 in 2014. The prospective yield is 3.5% next year rising to 3.8%. The Telegraph’s Questor team last said to hold the stock when the shares were at 991p in March. Since then the shares have been as low as 780p before rallying back to the level seen in March. There are still major questions about the global economy in 2013, but IMI’s end markets should remain active, if not buoyant. However, the lack of clarity means that the shares must stay at a hold rating for now, Questor believes.
IMI: Morgan Stanley raises target price from 1123p to 1154p, overweight rating kept.
IMI: UBS raises target price from 850p to 925p, neutral rating kept.
Engineering giant IMI said that second-half trading has been in line with expectations so far though it did highlight some weakness in its Fluid Power division, owing to a tough US vehicle market. Group organic revenues, which adjust for acquisitions and exchange rate movements, were up 3% in the four months to the end of October and were 4% higher for the first 10 months of the year. Reported revenues meanwhile were up 5% and 6%, respectively. However, volumes in the IMI's largest division, Fluid Power, which accounted for a third of group sales last year, had weakened as anticipated, the company said. In the four months to the end of October, Fluid Power organic revenues fell 4% and were down 2% in the year-to-date. "The principal contributor to this decline has been the commercial vehicle sector, most notably in the US, with revenues down 8% for the four months to the end of October," the firm said. Elsewhere, the company's units have held up well with: 15% organic growth seen in the Severe Service unit, its second-largest division which accounted for a quarter of group sales last year; 2% organic growth in Indoor Climate; flat revenues in Beverage; and 6% organic growth in Merchandising. The company said it has retained a strong balance sheet with year-end net debt expected to be between £150m and £170m "following a seasonally strong second-half cash performance". However, this is still significantly up from the £108m of net debt at the end of the previous fiscal year.
iMI: Panmure Gordon downgrades from buy to hold, target cut from 1,140p to 1,040p.
IMI: Societe Generale initiates coverage with buy rating and 1,080p target.
Global engineering group IMI is to set up a joint venture in China to supply the country's burgeoning nuclear power industry. The firm has signed an agreement with Shanghai Automation Instrumentation Company (SAIC) to supply control valves for new plants. SAIC are industry leaders in controls and instrumentation technology and were already important suppliers to the Chinese nuclear industry, IMI said. The nuclear power market in China is expanding fast with 15 operational reactors, 27 under construction and more expected to start construction in the near future. IMI said the new company would produce the valves at a new production facility to be built on the Chong Ming Island of Shanghai.
Jefferies has reiterated its 'hold' rating and 930p target price for engineering group IMI, saying that while it is a good business, there's still work to be done to satisfy 'near-term concerns'. The broker explained: "Management are targeting 75% of sales in their sweetspot (currently 55%) by 2017, and £20m of incremental year-on-year investment maybe required over that period. "Whether or not the group will be spending £100m on this investment by 2017 clearly depends on the progress they are making with the top line. We believe they will have to manage this carefully in the near-term, especially given the possibility of markets remaining challenging in the near-term."
The Tempus column in The Times took a look at controls and valves maker IMI on Friday morning, focusing on the group's margin target of 20 per cent in its three key divisions. 'Such forecast are all well and good until you fail to meet them', the paper said. Shares in IMI dropped on Thursday after the firm announced that its Severe Service division saw margins fall from 16% to 14% after it took on lower-margin business in China and India in the hope of gaining more profitable work in due course. Meanwhile, there was disruption from the relocation of its manufacturing facilities. Tempus also highlighted the group's guidance for organic revenue growth to slow down in the second half. "The shares change hands on ten times this year’s earnings, but the continuing economic uncertainty suggests little reason to chase," the column's Martin Waller said.
Positive Points: The balance sheet remained strong, said management, and the group added it would continue to focus on value-enhancing acquisitions in its targeted fields of operation. IMI reported growth in both its Severe Service and Merchandising businesses, although margins fell slightly in Severe Service. During the half year, IMI acquired Remosa SpA, a leading engineering business specialising in valves and related flow control products for severe applications, for £107 million. IMI stated it had contingency plans in place to defend margins should activity levels weaken from current levels.
Negative Points: IMI is exposed to specific risk in relation to the US consumer, as both the beverage dispenser and merchandising systems businesses are dependent on US consumer spending and continued investment. Currency movements hold a high degree of risk given that 90% of IMI's sales originate outside the UK. Potential costs pressures emanating from rising metal/raw material prices could impact going forward. As at 30 June, the group’s pension deficit stood at £208 million (2011: £188 million).
Financial Highlights: IMI posted half year pre-tax profits of £154.4 million (2011: £144.3 million). Revenue for the six months ended 30 June was £1.09 billion (2011: £1.03 billion). The board recommended an interim dividend of 11.8 pence per share (2011: 11.0 pence per share)
interim results: IMI on target but pace of growth likely to slow. Engineering company, IMI Plc registered an increase in half year pre-tax profits and said the pace of revenue growth is likely to slow in the second half of 2012. As expected, geographical performance had been more variable, with growth in both the Americas and Asia being offset by a weakening market in Europe, the company said. Whilst management advised the pace of revenue growth is likely to slow in the second half, given in particular the weakening economic conditions in Europe, IMI still expects to make further progress in the remainder of the year.
Engineering group IMI Plc can trace its roots back to 1862. Today, the company operates through five divisions. 1) Severe Services - designs, manufactures, supplies and services control valves and associated equipment for power generation plants, and oil and gas producers 2) Fluid Power - designs, manufactures and supplies motion and fluid control systems, principally pneumatic devices, for original equipment manufacturers in commercial vehicles, life science, rail and other industries 3) Indoor Climate - designs, manufactures and supplies indoor climate control systems 4) Beverage Dispense - designs, manufactures and supplies still and carbonated beverage dispenser systems, and associated merchandising equipment for brand owners and retailers 5) Merchandising Systems - designs, manufactures and supplies point-of-purchase display systems for brand owners and retailers. IMI's shares are listed on the London Stock Exchange and it is a member of the FTSE100 Index.
Metal basher IMI said in April it had made a positive start to the year and its interim results should see the firm reporting year-on-year improvements in turnover, operating profit and earnings per share. Market consensus is for turnover of £1,095m, operating profit of £185.6m and earnings per share share 38.8p. Nomura recently started covering the stock with a 'reduce' recommendation and a 750p price target. It is below consensus with its full year earnings forecasts owing to: "1) weakening European industrial indicators; 2) North American trucks inventory build leading to a manufacturing decline in 2H12 [second half of 2012]; and 3) European construction weakening." The broker is especially concerned at expectations for IMI's Fluid Power division, noting that "in the past 10 years, there has not been a time when Fluid Power (FP) grew organically when our EU leading indicator was as weak as now." Jeremy Batstone-Carr, head of equity research at Charles Stanley, said he will be looking "for continued margin improvement particularly in the Fluid Power and Beverage businesses - Severe Service margins are expected to be similar to those in H2'2011 (15.2%) reflecting the increased lower margin valve shipments from Brno. Improvement should be seen in the H2. In Fluid Power we will also be looking for any further deterioration in the European outlook - in Q1 [first quarter] weaker European sales off-set good growth in the US and Asia."
Jefferies has downgraded its rating for engineering giant IMI from 'buy' to 'hold' ahead of the group's first-half results on Thursday. "Ahead of these results, we lower FY12F & FY13F earnings per share (EPS) by 4% and 2% (cutting underlying assumptions and updating forcurrency) and fear that consensus is too high still. The market may be favouring the cyclicals for now, but we prefer to revisit lower down."
Coverage Shares in IMI (IMI) jumped 18p to 992p after the engineering business reported year-on-year sales growth of 8% for the three months ended 31st March, with a particularly strong performance from its Severe Service business, where revenues rose by 30%. The growth was boosted by the acquisitions of valve manufacturers Remosa and InterAtiva in February for a total consideration of 107 million pounds. The engineering company also noted a 14% rise in sales from its Merchandising division, with increased demand in the US automotive sector.
Positive Points: IMI's Severe Service unit has had a strong start to the year with shipments for the first three months of the year up around 30%. Revenues in the first quarter within its Fluid Power business were at similar levels to last year, with reasonable growth in the US and Asia offset by weaker sales in central and southern Europe, added the group. IMI acquired Remosa SpA, a leading engineering business specialising in valves and related flow control products for severe applications, for £107 million.