Acal Share Discussion Threads

[superadams] 28/11/2017 20:26

Thanks This is Me - I can see already I'm going to find it difficult to remember this name !!

[this_is_me] 28/11/2017 20:07

new thread following name change

[rivaldo] 28/11/2017 08:20

Finncap have today increased their target price to 405p (from 339p) and say Buy:

[this_is_me] 28/11/2017 08:07

Results continue to progress at our well managed company. I don't see the point of going to the expense of a name change since the customer facing brands will stay the same.

[soundbuy] 28/11/2017 07:35

Well pleased, excellent results and overall sounding very upbeat....


Name change a tad meh.........

[rivaldo] 28/11/2017 07:27

Terrific H1 results today:



Changing the name tomorrow to reflect the transformed nature of the group to own design and manufacturing in high growth sectors.

Very, very confident outlook:

"Nick Jefferies, Group Chief Executive, commented:

"This is a strong set of results. Sales increased by 21%, of which 9% was widespread organic growth across the Group, and underlying earnings per share increased by 24%. The second half has started well and we are on track to deliver full year performance in line with our expectations, supported by a record order book of £111m. Together with an increase in new project design wins of over 30%, with an estimated lifetime sales value of over £90m, we are well positioned for continued growth.

Since 2011, we have been building a Design and Manufacturing business that would transform the Group into a higher margin business. D&M now accounts for 78% of Group underlying profit contribution....

....We have many growth opportunities ahead of us as we drive towards our stated targets, and our ambition remains to repeat the performance of the last five years by doubling revenue and underlying earnings per share through a combination of organic growth and value-enhancing acquisitions."

The highlights section says it all:

"Highlights

· Strong growth in sales, orders, profitability and earnings

o Sales up 21% (+15% CER(2)) on orders up 22% (+15% CER)
o Underlying operating profit up 34% (+23% CER)
o Underlying earnings per share up 24%
o Interim dividend increased by 8%

· Wide spread organic growth across both divisions

o Group organic sales(3) up 9%; orders up 10% in both divisions
o D&M(4) organic sales up 11% - now 57% of Group sales (H1 2016/17: 52%)
o Custom Supply (previously known as Custom Distribution)(4) organic sales up 7%

· Good progress on key strategic and performance targets

o Underlying operating margin increased to 6.2% (H1 2016/17: 5.6 %)
o Cross selling of £4.2m, more than doubled from last year (H1 2016/17: £1.9m)
o ROCE(5) of 14.5%, up 2.8ppts on last year (H1 2016/17: 11.7%)
o Operating cash flow(6) at 95% of underlying operating profit in the last 12 months

· Recent acquisition, Variohm, performing well with strong sales and order growth
· Group well positioned for further growth

o Highest ever period end order book of £111m (+16% CER)
o New project design wins increased by 30% to over £90m(7)
o Acquisition opportunities developing

· FTSE sector reclassification from Support Services to Electronics and Electrical Equipment effective 18 September 2017 reflecting the scale of our D&M business "

[r ball] 28/11/2017 07:15

Why change of name?

[rivaldo] 24/11/2017 12:01

Good new investment overview here spelling out the transition to own customised, higher margin products....

Http ://www.proactiveinvestors.co.uk/companies/news/185617/acal-building-momentum-with-its-higher-margin-strategy-185617.html?utm_source=Sign-Up.to&utm_medium=email&utm_campaign=7163-371381-Proactivity+-+23%2F11%2F2017

"Acal building momentum with its higher margin strategy
11:39 23 Nov 2017

The customised electronics firm said it has generated “good levels of organic growth” in the opening six months of its year, driven by new project wins and “favourable221; market conditions

Broker Peel Hunt is a buyer of the stock

Peel Hunt reiterated its ‘buy’ recommendation after the October trading statement, saying the momentum that started to build back in the fourth quarter of fiscal 2017 has continued through the first half of fiscal 2018.

Organic revenue growth for the first half was 9%, which was thanks to a better trading backdrop, but Peel Hunt noted the group is also seeing an improvement in the quality of the order book.

Shares in Acal PLC (LON:ACL) rose sharply at the opening bell on Monday after the customised electronics specialist revealed it expects full-year earnings to be ahead of expectations after a strong first half performance.

The Guildford-headquartered group said it has generated “good levels of organic growth” in the opening six months of its year, driven by new project wins and “favourable221; market conditions, particularly in continental Europe.

“As a result, full year earnings are now anticipated to be slightly ahead of our expectations,” read this morning’s statement.

The solid start is a continuation of the momentum Acal has been building in previous quarters.

First-half total revenue jumped by 21% to £190mln for the six months ended 30 September compared with the same period last year (H1 16/17: £157mln).

Organic sales in the Design & Manufacturing business – which accounted for 57% of the total revenue during the period – grew by 11%, while the Custom Distribution division saw sales rise by 7%.

Group orders increased by 15% in the half, taking Acal’s forward order book to another record period end high.

The group margin stabilised and was in line with the final quarter of last year, the company added.

“The board is confident of making good progress through the rest of the year, continuing its established strategy of seeking high-quality revenue opportunities in our target markets, along with value-enhancing acquisitions.”

Earlier this year, Acal agreed to buy out UK-based components manufacturers Variohm Holdings Limited in a deal which could be worth up to £13.85mln.

Acal paid £12mln upfront, with a further £1.85mln payable should the new addition achieve certain growth targets and conditions.

It is all part of a strategy to grow its design and manufacturing division with differentiated niche and customised electronic components.

It is clear that Acal expects acquisitions (M&A) will continue to augment organic growth as it recently created a new role of M&A director in March, to which it appointed Jeremy Morcom.

“Given the positive underlying momentum in the business, we anticipate further positive news flow as the year progresses and still see upside risk to forecasts,” Peel Hunt said.

With net debt around 1.2 times underlying annual earnings (EBITDA), there is plenty of headroom for further bolt-on acquisitions.

“Management217;s long-term strategy of transitioning to a higher growth, higher margin business both organically and through acquisition remains firmly on track, and we see plenty more to go for,” Peel Hunt said, as it stuck with its 360p target price."

[rivaldo] 16/11/2017 12:40

Yesterday's fall was just general market conditions. It wouldn't surprise me to see a quick bounce here.

More news - another example of ACL's innovation:



"A breakthrough, new design process for Powder Core Inductors

Acal BFi advances technology through innovation by supporting designers with their applications and developing new, custom solutions. Our internship programme sees the next generation of engineers complete their academic studies with real-world experience at our Custom Services for Magnetics Components centre in Germany.

As part of the programme, our most recent intern, Enes Erdoel, successfully developed a pioneering new tool for the design of Powder Core Inductors. By taking into account external factors omitted by the traditional analytical approach, Enes’ solution enables CSfMC engineers to increase design accuracy, improve development timescales and reduce overall costs.

etc"

[soundbuy] 16/11/2017 09:16

Lacking traction .........again

[rivaldo] 14/11/2017 11:47

Reads well re a new thermal imaging customer:



"Pan-European thermal imaging specialist, Acal BFi, opens the potential of FLIR’s new Lepton 3 micro-camera

Pan-European thermal imaging specialist, Acal BFi, opens the potential of FLIR’s new Lepton 3 micro-cameraAcal BFi, thermal imaging specialist and European leader in advanced technology solutions, is helping enable customers to easily access and design with FLIR´s Lepton® micro-thermal camera series, including the new Lepton 3. Joining Acal BFi’s range of FLIR solutions, including Boson™ and Tau® cores, the recently announced thermal micro-camera offers outstanding performance in an ultra-compact package.

As the pan-European technical design specialist for FLIR’s thermal camera cores, Acal BFi is a true “one-stop shop,” providing direct support and design consultancy services to customers. Acal BFi enables customers to develop customised designs for their innovative applications and products.

Designers and engineers are now able to add the features, advantages and benefits of thermal imaging to applications and products which were, until now, unreachable due to size, weight, cost or power requirements. Combined with Acal BFi’s expert support and leading technology portfolio, thermal imaging and detection is now available to more sectors than ever before....

.....“With Acal BFi’s design support, customers can efficiently integrate the latest thermal imaging technology”

Alex Schneider, Business Development Director of Acal BFi’s Photonics & Imaging Business Unit commented; “We are delighted to add Lepton cores to our portfolio of FLIR thermal camera solutions, alongside the Boson and Tau cores. Acal BFi technical support engineers will help OEM designers from more sectors and industries select the right thermal core, integrate it into new, innovative solutions and efficiently bring these to market.”

[rivaldo] 10/11/2017 10:51

The price is up on a £322,000 share trade at 322p. Clearance of an overhang perhaps.

[rivaldo] 08/11/2017 10:28

Edison produced a report last month whilst I was on hols - it hasn't been posted here before, so FYI....

The suggested 35% discount to peers implies that ACL should be trading at almost 500p, compared to the current 320p:



"Acal Trading update
Sustained uptick in orders drives upgrades

Acal’s H118 trading update confirms that strong demand continued into Q218. Both divisions saw a positive trading environment in H1 resulting in group organic revenue growth of 9% y-o-y and group reported revenue growth of 21%. We have raised our revenue forecasts for FY18 and FY19 to reflect stronger trading, which results in upgrades to our normalised EPS forecasts of 3.8% in FY18 and 3.7% in FY19. In our view, the sustained improvement in demand is not reflected in the share price."

"Valuation: Discount to peers has widened

On an FY18e P/E of 15.4x and FY18e EV/EBITDA of 9.3x, the stock is trading at a
c 35% discount to the peer group average for both multiples, compared to a 25%
discount when we last wrote in July. The share was recently reclassified from
Industrial Support Services to the Electronic & Electrical Equipment sector, and is
trading at a c 30% discount to the new sector P/E. The strong order book, combined with good progress in the strategy to grow the Design & Manufacturing side of the business, provides confidence in both the near-term and longer-term outlook for the company. Continued growth in the proportion of revenue generated from design and manufacturing should support operating margin expansion, and should help to reduce the valuation discount. The stock is also supported by a dividend yield close to 3%."

"Valuation

After this upgrade, Acal is trading at a 35% discount to its peer group on current fiscal year EV/EBITDA and P/E multiples. This has widened from the 25% discount when we last wrote in July."

[rivaldo] 07/11/2017 13:49

Here's a couple of snippets from Finncap's note of 16th October.

Note that at 319p, on their 25.2p EPS forecasts for the coming year starting 1/4/18, ACL are on a P/E of only 12.7:

"In a positive H1 update, Acal has highlighted that trading has remained strong in Q2 and full-year earnings are now anticipated to be slightly ahead of management expectations. Our FY 2018E EPS forecast is 6% ahead of consensus and we leave our forecast of 19% EPS growth this year unchanged. Acal is set to report H1 organic sales growth of 9% supplemented by a further 6% from acquisitions and 6% from currency.

With the short term P/E of 13.7x and dividend yield of 2.9% still attractive
against the significant long-term market potential we remain positive on the
shares."

"Attractive valuation against long-term potential. We remain focused on the
long-term potential for growth in a £20bn market, but the short-term metrics
also remain attractive with a 13.7x P/E and 2.9% dividend yield. There is scope
for us to increase our target price alongside our review of the results on 28
November."

[rivaldo] 03/11/2017 09:38

Peel Hunt today reiterate their Buy and 360p target:

[rivaldo] 02/11/2017 12:14

Looking set to push for new highs methinks.

News - good to see ACL positioned for the Internet Of Things:



"The programmable IoT gateway that sets a new standard for IoT embedded platforms

The Sierra Wireless FX30 is the industry’s smallest, most rugged, programmable, cellular gatewayThe Sierra Wireless FX30 is the industry’s smallest, most rugged, programmable, cellular gateway. Providing a secure, integrated, embedded application environment, the FX30 enables swift, scalable, global deployments of IoT applications utilising the 3G/4G LTE network.

The flexible expansion card slot enables the use of multiple local area technologies to connect machines and infrastructures to the Cloud.

Acal BFi are uniquely positioned to embedded these technologies in the FX30 during the production process, providing you with a true plug-and-play solution.

Acal BFi have teamed the new Sierra Wireless FX30 with the Acal BFi Environmental Sensor Platform to produce this demonstration video of this new cellular gateway. See how quick and easy it is to send data from a field based location to the Cloud using just the FX30 in our video below....."

[hawaly] 26/10/2017 14:31

Thanks rivaldo

[rivaldo] 26/10/2017 11:52

The IC's Buy tip can be seen here, noting upside from the then 333p share price:

[rivaldo] 26/10/2017 09:40

I'm surprised that ACL's share price has barely risen since the "ahead of expectations" update.

Numis have a 370p target and Peel Hunt have a 360p target. Finncap go for 339p, but say there's scope to raise that target post-results on 28th November. They currently go for 22.9p EPS this year and 25.2p EPS next year.

The steady re-rating here will hopefully gather pace soon.

[mfhmfh] 17/10/2017 12:06

Buy rating today re-iterated for ACAL in IC's tip updates section.

[hawaly] 17/10/2017 07:23

Today's Times:



Acal

This time last year Acal was emerging from a patch of difficult trading. It supplies customised electronic components to a range of industries. Orders are reliant on customers’ willingness to invest in new ranges, which itself has been dependent on factors such as pre-Brexit uncertainty in the UK, a new president in the US and concerns about the eurozone recovey. The lower pound was making products sourced in dollars more expensive, hitting margins.

A year later it looks quite different. The first-half trading update to the end of September notes an improvement in end-markets, particularly on the Continent. Acal’s organic revenue grew by 9 per cent, stripping out currency movements, with earlier acquisitions chipping in another 6 per cent. The past year has added only one of these but the company has the balance sheet strength for more.

Design and manufacturing, key to performance as it is a higher-margin division where Acal collaborates most directly with those customers, was ahead by 11 per cent. Group orders are ahead by 10 per cent. The shares, up 20¾p at 334½p, have come on by about a pound since the start of the year, but, on 16 times earnings, look good long-term value.

My advice Buy

Why Acal is heading for a significant period of growth

[rivaldo] 16/10/2017 22:09

"This company is cylindrical" :o))

I'm only interested in the share price graph, which is going vertical and should continue to do so for some time to come.

[walbrock82] 16/10/2017 14:00

Here are some quick views on Acal

Is this a competitive company?

When a business talks about customise design and manufacture of electronics, you think of a high margin business. But operating margin is around 4%, which is small.

Acal has two divisions and their profitable division is business design and manufacturing, which accounts for 52% of revenue £175.6m (2017) and employ 3,299 staff.

Their custom distribution turnover £162.6m, but employ 443 staff.

The division with the most staff earns the company a higher margin than the high expertise division where the staff are the high earners.





The company is cylindrical and can suffer from falling demand. For example, sales can fall by 30% and the share price gets a pummelling.



Have sales peaked?

Sales haven’t peaked because Acal has been acquiring businesses in the last four years, as acquisitions total £87m.

And that has shown in first-half revenue increasing by 21% (£33m) to £190m compared with last year (H1 2016/17: £157m). The question is: Will profit margin suffer due to numerous acquisitions?


Valuation

Looking at the PER (PE Ratio) is slightly above their 10-year historical average of 15 times comes to 18 times.

Using the CAPE ratio (Cylindrical adjusted PE) this came to a record high of 30 times earnings. The 15-year average is 12 times.

With revenue rising the market is expecting higher profits, so it is no wonder the share price is rising.


Final Thoughts

This isn’t a sector I specialise in, so can’t make any share price projection.

Interested in other companies’ updates and results, then click

[mfhmfh] 16/10/2017 12:08

buy rating re-iterated in today's IC.

[rivaldo] 16/10/2017 11:18

Lovely stuff to read whilst on hols!

The rerating still has some way to go given tne transdormation to in-house products, and acquisitions are also highly likely.

More to come......