The next focusIR Investor Webinar takes places on 14th May with guest speakers from Blue Whale Growth Fund, Taseko Mines, Kavango Resources and CQS Natural Resources fund. Please register here.
Perhaps this announcement today has something to do with it, old fashioned book building....
"Deutsche Bank initiates Telecom Plus with 'buy' - target 2,950 pence"
I think they may have got the 'big figure wrong' as we used to say 1,950p would be bullish enough
ULVR
As I write I am listening to the Q&A part of this morning's web presentation. The tone from the analysts is good and the figures support the "modest progress". The "laser focus" of cost savings and margin growth as part of their Growth Action Plan should see savings of 600m Euro a years. This will results in redundancies but the word is not used, ("laser focus" is the current buzz phrase, I hear it everywhere). It is one of the giants of consumable products and you aren't going to get big jumps in profits but as long as they can avoid the banana skins (e.g. RKT) you will see dividend and share price growth. The €1.5 billion share buy-back programme probably starts in the current quarter.
Dialled into the Q1 results presentation. Not impressed enough to want to stay with this one. The results were OK and the bounce back has started........finished? So actually I'm OUT now with a profit. (karlo90 I would be back in before 1000p)
RKT
What an incredible fall for a major stock we have seen in the last five week. Having sold on 13 March at 5207p. I put the same money back in at 4123.4p first thing this morning. I got 25% more stock after expenses. Have to recognise that this is catching a falling knife but on these terms I'm happy to take it on. When the selling dries up this stock will bounce, helped by the share buy-back programme.
Sold my tiny holding this morning at 13.67p. A 14.4% profit between the 12th and 15th April. More an exercise in reading the market in CTL than making any money but it will pay for tonight's fish and chips. I have no idea whether the Lithium extraction will be profitable or not. I may look back at this share price in two year's time and see that its 136.7p or it may be..........
I tuned into the Capital Market Event on Tuesday to hear the new CEO say they were on the brink of a bright new world ! His thesis is that because they now have close collaboration with customers on long term projects in highly regulated markets they enjoyed significant barriers to entry. Having completed project Albert (selling off Stadium and a site in China) they can improve margins overall because the remaining business has higher margins. Peter France repeated the old mantra that they were in markets growing at above average rates and disassociated himself from all the others who were going to get margins up. (Old lags like me will remember Geraint Anderson and Richard Tyson saying that for the last fifteen years.) But actually we have seen significant write-offs and restructuring costs over those years, Albert cost shareholders £32.5m. It is not surprising that the analysts were sceptical in the Q & A session.
So now its "Project Dynamo" which is going to deliver, wait for it, 12% margins by 2026. By loosing the three operating divisions (P&C, GMS and S&SC) and operating as one "TT" in three regions North America, Europe, and Asia they will unlock "Efficiency", "Growth" and "Innovation"....just like that! Leading to ROIC in "mid to high Teens" and have cash conversion of 85%+. In fairness if they do get those margins to 12% without Cap Ex. exceeding depreciation and only modest working capital increases they will raise ROIC. Actually 10% margins in '24 is quite realistic (not over the first half) because Albert raises overall margins and, hopefully, there is no repeat of the very costly ventilation and air-con break down this year. They did produce a slide showing how they would get to 12% but I wasn't convinced. Yes, a full year without Albert will add a bit and even less pass-through helps but all the rest is expected to come from Efficiency (both factory and SG&A) plus growth. Well, if there are barriers to others entering your market, you raise your prices but they didn't add anything for that.
Mr France never underestimate the difficulty of changing the way people think about the business. He agreed that if one was starting with a clean sheet of paper TT wouldn't have as many plants around the UK and US but as he put it we will work with what we have. When asked how they would be able to acquire bolt on business in a couple of years time he said he would by something lowly rated like TT ! Yes, TT is cheap because it is too small and has been accident prone for nearly two decades. Get the margins up to 10%, nudging 11%, sometime in 2025 and then put the business up for sale. You should get around 220p a share (at today's market multiples) and everybody will be happy but lets see you get there first. Oh, I nearly forgot to add that they plan to reach Net Zero in 2030. five years earlier than previously declared.
Tried to buy 20,000 this morning at the opening but the market wouldn't take me on. Had to settle for a lesser number and paid 11.95p. The resignation and consultant contract seems a good compromise. Get the current applications through and and in the meantime find someone else to take on the CEO position. Future funding for their ambitious plans remains a mystery to me.
WG. I tuned into the webcast and Ken Gilmartin (CEO) was very pleased with the progress they had made and, in his view would continue to make. What struck me was the scepticism of the analysts. The "Simplification Programme" costing $50m this year and $20m next to save $60m a year was simply not believed. They had heard that type of talk before although Ken was quick to disassociate himself from previous efforts they were not buying it. They are in the right areas and they are improving but it always seems that its Cash (jam) tomorrow. My instinct is to buy more but somethings says "resist the instinct". Its been a busy day on this noticeboard and a terrible day for the share price.
Simon O'Regan (NED) has spent £58,586.84 on buying 13,000 shares at around 451p. I hope he makes money !
SMIN. Surprise change in CEO. Sales, profits, margins and cash generation all look OK. Dividend up 5% and a share buy-back programme. No need to worry here; will come back if the webcast has anything noteworthy in it.
WG. First impression is that their recovery is on track, perhaps a tad, ahead but the old problem cash flow is still there. We knew payments had to be made but now there is a self investment (improvement) programme which in going to require cash before it starts to save money. I will come back if there is anything worth saying after the video presentation at 9 a.m. I see they are getting a new CFO.
Well, they did slip a bit further and I bought half a unit at 81.35p. There is only one thing worse than backing your judgement and that's not backing it ! Half a unit because DWL may have further to fall and I can average down. I am taking a year's view here; it doesn't have the the quality to be a long term, core growth stock.
I dialled into the online presentation. The sound broke up halfway through the Q&A session so I may not have got everything. It was a good year but so it should have been given the bounce back in industry sales. Their growth was actually below the global rate. Liam Butterworth (CEO) was positive about what they had achieved and would achieve going forward, I couldn't get excited. By Division Automotive: steady progress and the plant reorganisation is done. Powder Met(alogy): the long term profit projections have been down graded, hence the write down, but it is still a growth market in their view, Hydrogen: They need a partner or a sale, expect continued loss and cash outflow. Balance sheet is OK, gearing at 1.4x is within their self imposed range and this year's cash flow will cover the buy-back and divided so no increased gearing (Note: There cant be any projects that give a better IRR). So with small a revenue increase all be it second half 2024 weighted, and better margins, eps should be modestly up this year say 15p which puts them on a prospective p/e of 5.8x and yield of say 5.1% . This looks cheap to me but such stocks have a habit of remaining cheap. If they slip much further then I might buy a few.
RKT
Wow! It fell like a stone this morning despite the buy back programme. Not tempted to try for another dead cat bounce, there is a serious seller lurking in the wings.
Well, this looks like the bounce. I'm out at 5246p having made more in two weeks than I would have if kept the cash on deposit.
Glaxo. Here is an extract from their 4th Quarter statement in late January this year :-
"The Board has declared a fourth interim dividend for 2023 of 16.00p per share (Q4 2022: 13.75p(3) per share).
Dividends remain an essential component of total shareholder return and GSK recognises the importance of
dividends to shareholders. On 23 June 2021, at the GSK Investor Update, GSK set out that from 2022 a progressive
dividend policy will be implemented guided by a 40 to 60 percent pay-out ratio through the investment cycle.
Consistent with this, and reflecting strong business performance during the year, GSK now expects to declare an
increased dividend of 16.00p for Q4 2023 and 58.00p per share for full year 2023. The expected dividend for 2024 is
60.00p. In setting its dividend policy, GSK considers the capital allocation priorities of the Group and its investment
strategy for growth alongside the sustainability of the dividend."
I personally think they will modestly exceed the 60p divided forecast for this year.
DARK
I'm all out again too (at 422.59p). A second, more modest, profit but OMG what a rollercoaster ride. It was down at around 250p a year ago. Accounting accusations, shorters, constant super-bulls and a dose of market manipulations. The uncertainty and volatility was not worth the profit. it may be the best AI stock in London but I will try not to be temped back in !
I tunned in to the webcast and got a bit of extra flavour. 2023 was an inflection year with strong cash conversion (92%) which has reduced gearing to 1.7x and, when the proceeds of the sale to Circo Group come in, it falls to 1.5x with further progress to the bottom end of the target range of 1 - 2x by the end of the 2024. The write down on this sale of £32.5m was taken in 2023 resulting in negative statutory accounts again. The loss on the HVAC breakdown was C£3.0m compared with £2.0m previously estimated and, hopefully, will not be repeated this year. Looking forward they are confident of making a 10% margin this year, all be it on near flat sales, so we should see some eps growth by the end of the year. Mark Hoad did much of the talking. Peter France, as he said himself had not given this type of plc presentation for some years and confined himself to good sounding generalities, in my view. He will reveal more at the open market day (April 9th) and has ideas for changing the management structure. The company is in good shape and I came away with the impression that they will get the business in a strong, low leveraged position by the end of this year. Do they then want someone to buy the whole business? I suspect so and we will see an honourable end for this little company with the shareholders making a decent return.