Macfarlane Grp. Share Price (MACF)

Tenobas thanks for the link MacFarlane in my view is far more integrated and resilient to be moved by this however who knows competition is competition even coming from Turkey 😊

I think that Eren Holding has a highly integrated operation which goes all the way to individual cardboard boxes. https://www.modern-ambalaj.com.tr/

https://www.modern-ambalaj.com.tr/urun/kutu-21

That is in Turkey but I guess that in time it will be here.

Tenobas I think this (https://www.euwid-paper.com/news/companies/eren-holding-officially-launches-pound1bn-shotton-mill-project-in-wales-260924/) is big but how does it impact their operations?

I said I would buy at 110p. We arrived there today but I am not buying yet.

I think that today's fall is due to:

Eren Holding said its new plant would process a quarter of the waste cardboard the UK currently sends abroad, and focus on creating containerboard - used to make packaging and corrugated boxes from recycled paper - as well as tissue products.

The question I think is whether there will be more vertical integration in this industry

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