Airea Share Discussion Threads

[arthur_lame_stocks] 12/11/2014 18:41

Hi Glen

I am also an AIEA shareholder and believe you'll be rewarded in time and you can bank an attractive dividend while you wait. They are on a low multiple of operating profit at a time when their markets are depressed, have property zoned for housing in the local plan, have net cash on the balance sheet etc. I would imagine they are in a stronger financial position than many similar sized manufacturers.

When thing that I noticed about the pension fund a couple of year ago is that the total liabilities actually went down (from memory). That made me wonder whether it was in fact a fairly mature fund and that the size of it would gradually start to reduce as pensioners drew on it. Presumably the purpose of a closed fund is for there to be no money left on the day the last pensioner dies. The downside is that the deficit is currently sucking up quite a bit of cash.

I notice that you have also bought HDT. Personally I've never liked them as I can't see an outer for them and most of the value appears to be tied up in inventory (maybe you could say the same about AIEA, but AIEA appears to be a far more viable business) and I doubt whether it would be worth it's book value in a liquidation.

Just a couple of thoughts.

Arthur

[profdoc] 12/11/2014 09:48

I have bought Airea for my "Deep Value Shares" portfolio at 11.7p. While it does not quite qualify as a NCAV share on the strict quantitative BS rules there are two factors which more than make up for its BS shortfalls, (1) the property (2) the income flows over the past years (especially the owner earnings form of flow - a favourite of Warren Buffett). It scores pretty well on the qualitative factors (business prospects, management quality and stability).
A possible major negative that had me scratching my head is the pension deficit - I think I have got to the bottom of it, or at least formed a judgement: much hinges on life expectancy(I do not think the trustees are being unreasonable) and on the discount rate used to estimate the present value of the liabilities (4.25%, the corporate bond rate. In a couple of years could this be revised upwards, pushing down the liabilities and eliminating the deficit?). Thank you PUGUGLY and others for pointing out that the deficit needed analysis.
I would appreciate it if anyone has any further knowledge or alternative views on the deficit if you could write about it here or in the comments section of the "Newsletter"(
Other questions which I think need on-going discussion (can you help?):
• Am I right to be optimistic about the pick-up in carpet sales as economic recovery takes hold? A major doubt is caused by the continued public expenditure constraints.
• What are competitors doing out there in the market place? Are they better or stronger than Airea?
• Can we trust the inventory figure? A lot hinges on it.
• What is the property really worth?
My analysis runs to over 2,000 words so I have split it over 5 blogs on my newsletter, so unfortunately I cannot spell out all my findings here (ADVFN won't let me)
Glen

[cwa1] 22/10/2014 15:27

Just had a wild punt at a few of these. Paid 11.45, which is well inside the spread. Obviously MMs have plenty of stock and looks like they've been landed with that 100,000 which they generously took at 10.5p :-/

Clearly the pension is a BIG concern but wouldn't take too much of a turnaround to make these look attractive again looking towards the medium term, meanwhile there's a .6 of a penny dividend going ex a week tomorrow. No more than a "punt" sized holding overall though.

GLTA

[pugugly] 27/9/2014 16:29

Pension shortfall still horrific for such a small company (imo)

Had been on the watch list and looked at after the results but decided against because of this.

[hastings] 27/9/2014 16:24

A few thoughts that may be of interest http://www.privatepunter.co.uk/News/thoughts-on-two-27-september-2014

[irenekent] 26/9/2014 07:59

On the mend at last. Once people have a bit more4 money they will start renewing. Then hopefully these will motor.

[garbetklb] 26/9/2014 07:52

Rather surprisingly large increase in the dividend - 0.6p up from 0.4p.

[playful] 26/9/2014 07:25

Results not too bad and we get a nice dividend of 0.6p

[coolen] 06/8/2014 22:37

Thanks Red Army for kindly confirming.

And you're probably shrewd to be aiming for liquidity !

[red army] 06/8/2014 15:34

I have to confess to selling some of my holding this morning to help achieve a 50% cash holding in my portfolio of investments.

[coolen] 06/8/2014 15:04

There are no marks, but something happened at 10.59 am.

My guess (and it is only that) is that on Friday we shall see a delayed trade being reported in up to 50/- at 11p, timed 10.59 6/8/14.

[irenekent] 06/8/2014 13:32

Sudden drop - anyone know anything?

[coolen] 22/2/2014 22:32

Any scope for acquisitive-minded Victoria Carpets to go for this one ?

[red army] 22/2/2014 11:51

Very disappointed and a little surprised to read a not so positive outlook when you consider the activity with housebuilders etc.
This is ripe for a takeover IMHO at these levels and for the time being am prepared to hold as the prospects are good and target (albeit longer than anticipated) is still 20p.

[chrisis33] 21/2/2014 18:02

I bought on the basis of the discount to NAV, hoping for improved trading. Hasn't materialised yet - and disappointed today by the results. Will continue to hold my relatively small holding.

[hastings] 21/2/2014 13:52

Of course you have a good point re-pension liabilty's Pugugly, but I think there are far worse situations than this one. And, If you take the freehold assets, cash, brand in conjunction with that pension deficit then the break up price is a lot more than the current value Imo. Extracting the value is obviously another thing and it would be preferable to see some progress on the trading side. Whether this management arn't up to it or previous changes will eventually present upside I guess time will tell.

[pugugly] 21/2/2014 13:02

Pension liabilites are a poison pill [imo]. Pension liabilites almost the same as the market cap. Do the sums

Another zombie company having to be run for the benefit of the pension fund.

[red army] 21/2/2014 11:20

At this price it is ripe for a takeover.
Why wouldn't you buy something for £5m and half of that in cash??
New blood required at the top me thinks.

[hastings] 21/2/2014 09:20

Must say surprised by the apparent lack of progress, even allowing for the fact that the board is hardly renowned for being upbeat.Shares back a tad lower than my original entry point, so will not be joining those exiting. Should be interesting to see if the Directors dip their toes in for the first time in a couple of years and whether they retain a final div later in the year, which they appear fond of!

[mudbath] 21/2/2014 08:47

"the share price now reflecting reality rather than hope."

My post from Dec 1st 2009.

Nothing has changed in the meantime except that the competition is fiercer.
Ephemeral "hope" might keep some here,but not me.

[21trader] 21/2/2014 08:47

Some seem to be doing better than others. United Carpets business is booming
but not the case for Aeria.

[chrisis33] 13/1/2014 23:44

hxxp://www.constructionenquirer.com/2014/01/13/construction-rebound-to-be-stronger-than-forecast/

Should see this feeding through to floor covering demand I would hope.