Member Info for londoner7

Imonly60, good spot. From BBC - Administrators said one part of Owen Pugh, which operates Marsden Quarry near Sunderland, will continue while a buyer is found, securing 30 jobs. Mr Petts said there had been "a considerable amount of interest" from potential buyers of the Marsden Quarry operator, Owen Pugh Aggregate. The site is landfill and aggregate reclamation, not Breedon core business, so I guess it depends on the quarry resources. It's the civil engineering side of the business which is in difficulty. No doubt Breedon will be looking at it. Londoner7

Tones, the usual summer lull. Many of this years top gainers had a pull back. I've been following this company for a few months but felt it was too rich. The recent pullback prompted me to look again. I liked what I saw and opened a position. Yesterday's Capital Day presentation seems to have been well received by the market. The presentation is a bit dry going through the slides alone, but gave me a better appreciation of the company's business and the strength/value of partnerships in the industry. The co-presentation from a market leader like J&J wont hurt sentiment. It's clear from the presentation that Scapa have come a long way in recent years but - important to me as a late entrant - also clarity on the route to further progress. Londoner7

Wolfwatch, Thanks for the link. The author makes good points on the arguments between maintaining (growing) debt against a high dividend payout while growing the company and I concur with his conclusion, 'High risk / High reward'. However, I think his focus on the 7% dividend and the apparent comparison with the 6% cost of debt is misleading. "I’m absolutely NOT against Marston’s growth plans, but I’m pretty certain every professor teaching Economics 101 would sigh and shake his head to see a company paying a 7% dividend yield but having to borrow money at 6% to cover its growth funding needs." He uses the interim data but at the interims Marston's share price was around 140p and the prospective dividend was 5.4%. Does that make Marston's a better buy at 140p than here at 106p? He may be upset to learn that not only are management committed to the 'holy' dividend but to raising it by 0.3p (approx. 4%) pa. The correct comparison to make is between cost of debt and ROCE. Cost of debt is 6%, crucially ROCE is higher and growing. ROCE is also a focus of management (look at their commentary) so it appears they understand 'Economics 101'. Londoner7

This morning Berenberg put out a sector report, lowing Green King to sell, Raising Wetherspoons to hold and lowering Marston's to a hold and price target from 175p to 120p. Basically it's a review following subdued updates from GK, M&B and the trade generally. Nothing new but they generally still have a preference for Marston's in the sector but expect a pullback in D&P lfl from 1.6% at the 30 week stage to 1% at the full year stage - Berenberg had been expecting 2%. This offers some target numbers for next week's update. I generally thought the figures and commentary on Marston's are supportive of the investment case. I'm a holder on my expectation that the current subdued consumer confidence will pass, I'll add further on signs of improvement but a ready seller if it doesn't. Londoner7

Hi spogbat, You've been pointing towards this asset swap for a while, so it appears you have your finger on the pulse. Breedon have a habit of announcing deals with trading updates so maybe we'll have to wait a little longer, but as you outline it the deal makes sense. I'd take quarries over concrete plants every time - economic moats etc - but I hope there's a big chunk of cash. One of my concerns has been the slow progress in spending the �30-40m Breedon have available for acquisitions. The �9m for Humberside and the change for Pro-Mix spent this year is light. Berenberg recently reduced their conviction in Breedon due to the slow progress in acquisitions so progress in this area might get a positive price reaction. Londoner7

Not usual for some shares, particularly Breedon. Currently, Breedon are a buy @ 84.85 and a sell @ 84.6. If the market price quoted is 84.5 - 85.5, mid price 85 then both buys and sells will be recorded as sells. The headline market price might come back to 84.5 - 85.0 to reflect actual trading. Londoner7

Less talk, more action! http://www.mineralproducts.org/17-release27.htm Londoner7

Interesting to note the apparent uninterested reaction to this morning’s RNS that the final hearing in the arbitration dispute with India has been moved back from Jan 2018 to August 2018. Does this suggest that the expected outcome, one way or the other, is already priced in to Cairn's share price? Or does last Friday's 4% drop suggest that the news was available to some investors ahead of today's update? Londoner7

Because there was a profit warning last month, which to anyone following this company came completely out of the blue. That's why I don't trust this management. At least until they can explain how it went so wrong between the the report outlook comment 2 months into Q1 and the end of Q1. Londoner7

approved. https://www.insidermedia.com/insider/midlands/plan-to-extend-breedon-run-quarry-approved Following yesterday's acquisition, with more in the pipeline, this shows continued steady progress in securing additional reserves. Londoner7

First half numbers down as expected. I like the positive commentary for the second half and into 2018. Expect them to reconfirm their expectation of a 40:60 OP split for the year in the call at 11am. Looks the capital cycle has turned. Londoner7

I'd say the statement is in line with my expectations. But worth looking at the negative elements: "In the most recent 12 weeks of the period, like-for-like sales were up 0.6% which continues to be ahead of the market. As we previously guided, operating margins are slightly below last year in line with our expectations." They are pointing to a market that is weak and weakening further. Let's face facts, recent signs are of a weakening UK economy and real incomes flat to negative. I've sailed through many recessions. I remember the 80's, for me a breeze but for many very hard times. And this is key – Marston’s business is impacted at the margin, i.e. the spending power of your average Joe. The question is, is this a short term blip for the UK economy or a longer term problem? If it's a longer term problem then IMO Marston’s is not a place to be invested. Consider margins which are under pressure from recent rises in the minimum wage, the apprentice levy and the exodus of European workers. Marston’s are confident in their cost expectations for 2018. As an investor I hope they are proved right, but a significant element isn't in their control. Debt service costs will continue to rise into 2020, albeit marginally, while expansion for growth continues. Time will tell if this is the right strategy. As with most companies management is handsomely rewarded if an aggressive growth strategy pays off, and still do pretty well if it doesn't. As usual it’s the shareholders who pick up the tab when it fails, not management having collected £1m+ pa in the interim. All that said I feel that world economic growth will keep the UK economy out of the weeds so feel on balance that current consumer weakness will be short lived, but I see it as a close run thing. This morning I upped my holding but still retain only a partial holding stake. I'll only add here on more positive consumer sentiment alongside a rising price trend rather than a falling one. As for drinking real ale out of cans – Nuts! You don’t need a destination pub for that, any doorway, or park bench will do. Londoner7

In a comment on my expectations of 4.5-4.6p EPS for the year I said, "at the half way stage I’m looking for around £3.5m on interest, overall margin with a 12 handle and 4-5% on revenue to back-up my estimate." Interest for 2017 H1 was £3.3m so I’m happy with that. Revenue (excluding eliminations) was £326m, but I don't have a 2016 comparison. However, the old business grew by 3% so a bit light. Margin for 2017H2 was 11% - just about held an 11 handle so I’m a long way out on this! Why? With Hope onboard for the last 5 months of 2016 I estimate the combined margin for that period was 11.84% - close to Berenberg’s 'flat' margin forecast for 2017 of 11.6%. But here we are at the half way stage at 11.0%. The Hope cement works maintenance and upgrade may have been a big factor – nothing in 2016H1 and a 3 year cycle upgrade in 2017H1 – but hard to quantify this impact. For 2017 H1 I estimate Hope EBIT margin at 6.2% (as measured previously) against 9.7% in the final 5 months of 2016. So given a 2nd half recovery in the Hope margin I’ll stick with my 12.5% margin for the full year. However, my revenue forecast needs another look. My last forecast of £674m is bang in line with consensus, but I hadn't accounted for the extent of the eliminations. I suspect the Hope shutdown will impact profits rather than revenue so I'm cutting my revenue forecast for 2017 to £665m. Keeping my forecast for interest costs at £5.7m, and including the recent warrant dilution my forecast for 2017 EPS is now 4.3p. Great news on the two Greenfield quarry sites - I guess building them is cheaper than buying them. Their location with respect to existing RMC sites looks good. Londoner7

"more likely experienced traders/ chartists seeing a short term opportunity." Or, considering the "off book" transactions highlighted by Grasi, it is a transaction between two broker houses to have available stock for the routine "on book" transactions. There may be something to read into sustained "off book" trading but it is beyond the skill and patience of this particulat PI. Londoner7

"wants to preserve the benefits which they derivefrom their Bitish activities,they will have to increase their margins in GB" I agree. But I wouldn't hang my hat on the fx impact being a game changer for WIN. Looking at operating profit and revenue for last year their net operating margin is 5%. If the fx impact is 10% then a foreign competitor may derive a 4.5% equivalent margin. Does that mean they would not compete aggressively for a contract that might run for several years? I doubt it. Currency movements can unwind. Currency hedging is typically used where costs are in a different currency to revenues - in order to maintain margins. I think we agree that is not a key factor here. The squeeze on margins will come from costs higher than antisipated, or revenues lower than antisipated, depending on the detail of the contract. Domestic and foreign companies face similar chalenges. Your insiders may have insight to this. The risk to any business operating in an environment with low barriers to entry, and no "economic moat" is that the resultant small margin disappears entirely. That may be a factor in one part of WIN's business. At the interim stage we will know if the squeeze is contained to this part of the business or not. Londoner7

sultanmerchant, any interesting viewpoint but having taken a look at these products I feel it is a significant departure from Breedon's core business. If they were to go that route I fear it would be interpreted by the market as a sign that acquisitions in their core market of aggregate extraction are not viable. I'm hoping for a quarry acquisition or two and maybe an exchange of assets with Tarmac (as previously highlighted by another poster) Londoner7

SPUP, beyond a price target what are the broker views? Any detail on profit expectations? The Mail tip makes no reference to the recent profit warning in the AGM statement, which is something of an omisiion. I find it hard to believe that the large buys that have come in this morning are based on that tip. Perhaps there's an inside element or more likely experienced traders/ chartists seeing a short term opportunity. One definite inside element is the report of a director sale (Liam McElroy) of 193K shares on Monday. I see this as a traders stock until the interims. As an investor looking to get back in for the long term I'll be looking for evidence of progress at the operating level, and weighing that against my loss in faith in the management, which , for me, can only be addressed by a better explanantion of the sudden change in guidance between May and June. Londoner7

Grasi, thanks for your response. I can understand the fx impact on earnings, but not on margins. A non UK company tendering for the sort of contracts that Wincanton handle will also be using UK contractors so their costs and margins would basically be the same as Wincanton on a like for like basis - there may be a head office component but I suspect against overall costs of a labour intensive business these would be small. It is apparent from some of the messages on this board that people very familiar with the business are posting, but viewing the business from an operational view doesn't necessarily give one an insight into the margins of the business, i.e. the operating profit. That said, a poster who highlighted the option sale a month or so back and has previously given a heads up on new business wins may be sailing close to the wind in terms of financial conduct. (as I'm typing this I can't jump back to clarify the name of the poster) Londoner7

Can we no longer trust him? No! Isn't that the issue here? The reason the share price has tanked. In the final report 2 months into Q1 everything was fine - until the long term bonus is paid and the CEO bails - then less than a month later we have a profit warning on Q1 operating profit that is so bad it will not be recovered in the remaining 9 months of the year. I advise any one attracted to this company on the pullback to wait a positive statement, hopefully at the interims. I bailed earlier but I hate to see uniformed opinion giving the impression things are fine here. It is not! I'll be looking at the interim statement with interest. Be careful out there! "Fundamentally win should benefit from the weak Pound as their Major competitors suffer" Grassi, please be specific and explain why. Londoner7

"Must be a relief to have got out quick." Yes it is. I'm new, been building a stake since the dip in March. As I've posted previously, I liked the way financial costs were coming down with an expectation that rising gilt yields over the new few years would reduce the pension liability – my biggest concern. But I also had an expectation that the underlying business was growing (operating profits), albeit slowly. Today I learn that company comment has switched in one month from "expect Wincanton to make continued progress" to a profit warning based on Q1 numbers which the board does not expect to fully recover over the next nine months of trading, i.e. operating profit will be lower this year than last year. I know how hard this investment game is so I truly hope that the comment at the half way stage is favourable to your investment. But after more than three decades investing I have an instinct for what works best for my portfolio. My cash will be put somewhere else. Good of Canaccord to reiterate their buy recommendation of a month ago and raising their target from 322p to 340p. I guess there were expecting something worse in the AGM statement. It takes many views to make a market. Londoner7