Macfarlane Grp. Share Price (MACF)

This company grows profits at 14.5% p.a. but for two consecutive years profits will fall.

Over 10 years profit over turnover is up by 50%. (3.75 -> 5.5)

I note that the company never states exceptional restructuring costs despite buying lots of businesses.

This is IMO a big plus.

With a P/E of 13 and a dividend yield of 3% on the face of it this looks like a good buy.

On the other hand I have two concerns:

1) Are they amortising goodwill fast enough?

2) They are for the first time entering the EU but will the cultural and Brexit issues weigh heavier than the technological synergies.

The business buys on average two businesses per year.

Goodwill is about £100m and is being amortised at 5% p.a.

As the report suggests an issue is the amortisation of customers.

IMO assuming that they will keep customers for an average 20 years is not realistic.

If amortisation was doubled then profit over turnover would be up by 30% over ten years (3% -> 3.9%)

My concern is the possibility that the company is pursuing margin causing them to lose turnover.

I note that all their acquisitions include a payment contingent upon future trading targets which seem to be heavily weighted towards profit and that adds weight to the above concerns.

Turnover fell for the first time despite the influence of about £30m spent on acquisitions.

One reason for this is price deflation with a 30% fall in recycling prices and this could hit inventories.

Nevertheless there are long standing concerns about asset stripping goodwill.

I would buy at about 110p.

Mcfarlane Acquisitions

2024 Polyformes £11.5m

2024 Allpack Direct £ 4.7m

2023 B & D Group £ 5.4m

2023 A & G Holding Gottlieb £ 4.3m

2023 A.E. Sutton Ltd £13.7m

2022 PackMann £ 7.4m

2021 (Labels Division) (£ 6.3m)

2021 Carters Packaging Ltd £ 4.5m

2021 GWP Group Ltd £15.1m

2020 Armagrip £ 1m

2019 Leyland £ 3.25

2019 Carnweather Ltd £ 3.9m

2018 Tyler Packaging £ 2.1m

2018 Harrisons Packaging £ 2.8m

2017 Greenwoods Stock Boxing £17.2m

2016 Nelsons for C & P Ltd £ 7.2m

2016 Edward McNeil

2016 Colton Packaging

Stargate Bingo and we have lift-off prices that have gone through 146 nice cups and handle break-outs IMOO DYOR

Roger that stargate a weekly close above 134 a fresh new course target is set in motion for a retest of the old 146 ATH (2021). IMOO DYOR

Overhead supply from previous trading at current price level, more than 2 years ago, is unlikely to cause resistance to upward equity rise. Weekly price pivot low of 26/10/23 to weekly pivot low of 24/2/24, provides an bullish uptrend line, supporting the sp, which has made a new weekly high sp. The volatility based Bollinger bands are separating, signifying increased volatility. The RSI(relative strength index), is above 50, providing additional confirmation that MACF, is in an uptrend. DYOR.

Easy to lose sight if you're a short term trader but some companies have done extremely well with bolt on acquisitions with bank facilities. I think management is astute. Nice to see SP closer to 2 but I can't influence SP but far those looking at these posts to either buy or sell, read the results, see progressive dividend, cash flow and hold as I'm doing. I like the Pac Man buy, could be a steal but dyor!