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undervalued.... but a slow burner... which can be good for patient people.
Agree - on basic sums cash would mean 120p-ish alone, with zero value on business.
Didn’t expect Molins to pull off this disposal, but what did we expect when the shares have been undervalued for so long! The last time I posted, I said the company needed to invest in their ageing assets. Now, they won’t need to invest as much. Instead, they will have a lot more cash at hand. Before the disposal, Molin's enterprise value was £18m, now it is 25% higher! Let’s say they invest £8m, that would leave them with £28m-£30m in the bank. Regarding, their pension schemes, shouldn’t the deficit come down if interest rate or UK Gilts and US Bonds start to rise? Well, that depends on what’s in the composition of Molin's pension assets. For those who haven’t read my March post, here is a reminder link: http://bit.ly/2mwmyrh Oh, BTW, with this disposal, I expect the shares to trade around £1.20 per share or higher, giving a market value of £25m. Think about it, if their Tobacco division has similar fundamentals to their packaging division, shouldn’t that be worth at least £20m in a liquidation! But, I need to do further research, before coming to a full conclusion.
Given the shares are down by 80% since the peak, Molins can recover because a recent trading update suggesting the poor results is for last year. Customers were delaying orders till 2017. The second good news is their pension situation. With the UK Bond Rates (known as the 10-year Gilts) rising. Their assets pay more in cash flow to Molins retirees. The Drawback is Molins asset age in 14 years (is a record), and 60% of their assets meet that age. Their last big spend was in 2003 at £13.6m. Since 2009, Molins average £4m in CAPEX. Don’t be surprised if they spend £10m. On share price, Molins could average 80 pence per share in 18 months. But, don’t be surprised if it falls back to 40 pence because of the markets at all-time highs. For more read: http://bit.ly/2mwmyrh
If you would like to hear Tony Steels, Chief Executive, present on behalf of Molins he will be appearing at our next investor forum on the evening of Wednesday 29th of March. Also appearing will be the management of Watkin Jones and Accrol. To learn more about the forum and to register for free please follow this link: https://www.eventbrite.co.uk/e/equity-development-investor-forum-march-2017-tickets-32226603639 Thanks, The Equity Development team
very poor update. Management of this company could not run a kebab shop.
New broom showing us what an awful job the previous chap did! Hopefully the new chap will be an improvement. We shall see!
.....flows the usually gloomy theme.
At last we have some strengthening of the BoD. Strange that the outgoing CE is praised for his "considerable contribution" when "considerable value destruction" appears closer to the truth.
Seems a good shout to me http ://masterinvestor.co.uk/evil-diaries/the-evil-diaries-pantheon-molins-and-proxama/
Last year Molins sales £87m Profit: Underlying profit before tax from continuing operations of £3.8m (2014: £5.3m) Statutory profit before tax from continuing operations of £2.0m (2014: £3.9m) Disposal of Arista Laboratories incurred a loss of £5.8m. This turned the profit of £2m (after tax £1.7m) into a loss of £4.1m. So this year should be back in profit, although Molins expect a significant increase in the amount they pay into Pensions Anyone have an idea of what this increase might be?
"Trading in the first quarter of the new financial year is at similar levels to last year. While we continue to be cautious about market conditions, the Board's expectation of Group trading for the financial year to 31 December 2016 remains unchanged, supported by the current level of order prospects." From preliminary results RNS 25/2/2016 Outlook There is currently little sign of an immediate recovery in the tobacco sector, although the order book at the beginning of the year for the instrumentation business was strong. The Packaging Machinery division has made encouraging progress, but it entered 2016 with a lower order book and we are now more cautious about trading conditions, although there are a significant number of prospective projects under discussion. Looking further ahead, prospects in the medium-term remain positive, particularly in the Packaging Machinery division, and the Instrumentation & Tobacco Machinery division remains well placed to benefit from any improvement in market conditions in the sector.
Bought in yesterday, just missing the x dividend date by a couple of days, it was only 1.5p anyway. Molins has got rid of the loss making Arista Laboratories incurring a loss of £5.8m. This turned the profit of £2m (after tax £1.7m) into a loss of £4.1m. Going forward there are now 2 divisions: Packaging Machinery for which the outlook is very positive. Instrumentation & Tobacco Machinery the outlook for which is not very positive.
An uninspiring set of results today with no seeming urgency on the part of the Board to rise to the challenges and opportunities.
No real take up in directors purchases for a long while, I may have a punt myself if they showed some confidence.
The recent decline in Govt bond prices, and the resultant increase in yields, will, as recently reported in the FT, will be good news for defined contribution pension scheme deficits.
The last completed scheme specific funding valuation of the Group's UK defined benefit scheme, which was carried out as at 30 June 2012, showed a funding level of 86% of liabilities, which represented a deficit of £53.0m. The solvency position of the scheme at that date, which reflects the scheme's position if it was wound up, showed a funding level of 56%. Valuations are extremely sensitive to a number of factors outside the control of the Group, including discount rates. The trustee of the scheme and the Company agreed a deficit recovery plan, which commits the Company to paying to the scheme £1.7m per annum, in monthly instalments from July 2013, with a then estimated recovery period of 17 years from 30 June 2012. The annual deficit recovery payments increase by 2.1% per annum. The deficit recovery plan will be formally reassessed following the next scheme specific funding valuation, which will be carried out as at 30 June 2015.
Has Molins (MLIN) been punished too harshly? Over 2014 the AIM-listed shares in this diversified industrial engineering group plunged from 194p to 80p. Then, after a brief rally to 91p in early 2015, have dropped again to 76p. At this level they trade on a forward price/earnings multiple of 6, reducing to 5, and the prospective yield is a whopping 7.2% - assuming the company achieves the consensus forecast (see table). That Molins has tested such low levels over four months implies the market is sceptical of the 5.5p dividend, although forecasts imply earnings cover of 2.2 to 2.8 times - scope, therefore, for earnings downgrades and the payout still to happen. The history has involved a strategic shift from tobacco machinery to packaging machinery, also scientific testing for the cigarette industry - i.e. aspects of related diversification. Despite Molins enjoying a strong position in machinery, tobacco was seen as a mature if not declining industry apart from China and some other developing countries.
Ouch.... at least dividends maintained...
tpl, zam...
npt, nbu, camk, thal, api...etc etc
Shocking set of results today. Totally unexpected. Wonder what Investors Chronicle have to say about one of their tips