The latest Investing Matters Podcast episode featuring Jeremy Skillington, CEO of Poolbeg Pharma has just been released. Listen here.
LOTM
Thanks for the info. And now like you I am confused by the current actions.
FS
LOTM
I don't know where the current debt is traded, so I can't check, but I assume, given the interest rate on this debt, it is trading at less than par. I guess therefore this is what makes the sums add up for the buy back.
FS
GMHK - Thanks for your reply. How do you reach your conclusion on price - 350/150/450? Is it calculation, extrapolation, some insight on speciality chemicals or whatever? Genuine question. Thanks.
GMHK
You indicate that 350 p is your target share price for Synthomer. On 164m shares that implies a market value of around £574m. Assuming a P/E of around 10 that implies earnings of around £57m. If the market for speciality chemicals is to return to "normal" is that not a bit conservative? Or have I got the maths wrong?
I am a long term holder not a trader (don't have the skills). I have added 5,200 shares today to bring my average buying price to £5. There will be surely be movement around the current price, particularly since it seems to jump around on very small volumes. But my sense of the new management is caution and competence, although, of course, they need some luck on the timing of a demand upturn. Clearly a risky investment but so far so good. I will buy more shares if the price goes north of 200p, otherwise I wil hold.
Red Sea crisis seeps into German chemicals sector.
See here: https://uk.investing.com/news/stock-market-news/red-sea-crisis-seeps-into-german-chemicals-sector-3305622
Any thoughts / relevant knowledge?
MoD’s £10-a-shot laser beam which will ‘revolutionise warfare’ fired for first time (From The Telegraph)
See: https://www.telegraph.co.uk/news/2024/01/19/dragonfire-laser-beam-fired-for-first-time-defence-ministry/
Sorry - wrong board
MoD’s £10-a-shot laser beam which will ‘revolutionise warfare’ fired for first time (From The Telegraph)
See: https://www.telegraph.co.uk/news/2024/01/19/dragonfire-laser-beam-fired-for-first-time-defence-ministry/
Raydio
There seem to be numerous areas of interesting future developments that Synthomer has a stake in - and where they appear to be regarded as a "player" e.g. battery binders - see here:https://finance.yahoo.com/news/global-battery-binders-market-size-093000461.html
Short term the share price is very volatile, clearly. Long term we probably won't have any numeric indicators until next year. But on the basis of publice information, the new board's positive public statements appear to have substance.
And as a (semi) connected follow up ...
The University of Leeds has a multidisciplinary approach to AI, with its Digital Manufacturing Group applying technologies to industrial challenges, and links to companies such as AstraZeneca, GlaxoSmithKline, Pfizer, Syngenta, IBM, Infineum and Synthomer.
With nothing better to do I asked ChatGPT to criitique the latest Synthomer Trading statement. It said :
In summary, the statement effectively communicates Synthomer's current position, strategic moves, and outlook. Further detailing specific metrics, market insights, risk management, and customer demand factors could contribute to a more comprehensive understanding for stakeholders.
I can't answer your main question, but I can answer a broader one as an investor who purchased in May 2022 and stayed in and took up my full entitlement in the rights issue.
I bought in originally at £3.07 and averaged down over time to just before the rights issue was announced to £1.87. My last pre RI purchase was at 67p. I estimate I lost around 80% of my original investment after the RI was announced and the old share price dropped to 42p (ish).
On my larger investment (after the rights issue) I am today around 70% down on my total investment to date at the current price of £1.95 ish. About £50k down.
As a recent stock market investor (4 years or so) Synthomer has been an interesting experience. Today with a not too bad announcement from the directors, at least against a fairly decimated chemical sector, there has been a price movement between £2.15 when I looked this morning and a current price of approx £1.95 at 4PM And this on net sale and bought volumes of almost zero (approx £430k bought and £350k sold). Today is as interesting a day as any.
Hi MikeS02
Thanks for the post. You are correct. It appears Mr Catto has only taken up one third of his RI entitlement. As I am fairly heavily invested in the outcome of this company, I will (perhaps foolishly) still take some comfort from this.
I think the director in question (A Catto) owned 1.2m shares pre the consolidation - 60k new shares afterwards. So with his 60k new shares he has 360k rights (less the 50k he has just sold). Even after selling the 50k rights, assuming he takes up the balance, he has to find £600k approx. Maybe he just doesn't have the other £100k to to take up his full entitlement in the rights issue? Or am I (quite possibly) missing something / wrong?
Per the Rights Issue Prospectus the EBITDA to June 2023 was £158m. Also, the Prospectus talks about at least doubling this as reasonable (a medium term opinion not a forecast).
Taking £316M (2 x £158M) as a start point for EBITDA in the medium term, and taking off depreciation of £100M and interest of £60M (my estimates from the 2022 accounts and the latest half year figures) gives a PBT of £156M, assuming no other items. With a tax rate of 22% (my estimate) you get a PAT of £122M. Assume a P/E ratio of (say) 10 and you get a market value of £1.2BN. And with 164M (new) shares in issue this gives a price per share of around £7.50.
Finally, I am not giving a view, I am just doing sums. You will change assumptions as you wish. Thoughts?
The new management have a challenging task in a difficult market, but seem to be taking the appropriate steps – focussing the business, selling off non-core areas, renegotiating credit lines to maintain appropriate liquidity levels, driving down costs etc. I don’t understand the sector or know the management well enough to comment knowledgably, but the steps they have taken seem to me to make sense. To me the core business should have a reasonable future in all but the most extreme of economic circumstances. My strategy is to invest not trade. I will stay with them.