|FWIW... all things considered, I think this is now going below 100
Just too many thing 'not quite right' with CAR, and a backdrop where the main stock markets are due a big correction|
|My dividend waffling was if a round numbers £10 deficit causes a £1 annual payment (plus all admin costs of £0.6) world a £25 deficit cause a £2.5 payment, more, less, or what.
It won't happen until 2019 so who cares.
I thought LED was slated to be faster growth, and had allowed my lifelong learning of despising OEM motor suppliers to slip.
Margins - I've written enough of my thoughts on ctp margins being very firmly capped.|
You know we will be, so a mercy killing now.|
|I suspect we'll have another year without dividends - If that allows CAR to fully fund their growth opportunities and bring forwards the fruits (cashflow) of that growth it's not necessarily a bad thing.
Of course, we may still be here in a years time debating the same position. If that happens, then Queeny please shoot me!
|Good new note out from Edison - here's a direct link:
They go for 11.6p EPS this year and 13.1p EPS next year.
Edison have increased their valuation range to 148p-156p, talking about more to come given continuing positive trading etc. On a forward P/E of only 9.4 at the current 123.5p, a P/E of just 11.9 at 156p would still be pretty cheap imo.
Both CTP and LEDs look incredibly strong growth stories going forward for a number of years. And both have secure continuing revenues given that in both cases CAR's blue chip customers are locked in due to the reliable and specialist nature of CAR's supplies.
And bond yields have already recovered well to 2.87% per the note, so are not far off the 3% at which CAR would reinstate the dividend.|
yes I think they agreed at least 10years payments.
Not sure where your pension thinking gets you? Any pension fund recalculating its deficit this summer got hit by the downwards spike in bond yields and the IAS19 unreal accounting.
Don't know why you are seeing LED as the main growth story? Are you sure? I like a nice electronic tech story as much as most people but the medical device market has much better barriers to entry and margins so I'd see CTP as a better bet? You are quite right that CTP continues to cost a fortune in capex swallowing its growh whereas LED has some of its upfront costs paid in project fees. It all comes down to whether that pays off in the next year or two.......?
|November 2015: "The pension scheme is currently undergoing the March 2015 triennial valuation and it is expected that this process will complete shortly. Since the start of the current financial year, the corporate bond yield, which is used to discount the group pension scheme liabilities, has increased but equity markets have weakened and this, alongside the adoption of more prudent mortality assumptions, has resulted in a pension deficit of £18.7 million as at 30 September 2015 compared to a deficit of £12.1 million at 31 March 2015"
Feb 2016: "Subsequent to the March 2015 pension triennial valuation, we have agreed a new recovery plan with the pension trustees which results in a broadly similar level of annual payment to the previous agreement."
June 2016: "Pension contributions of £1.1 million (2015 - £1.0 million) were made during the year in respect of the previous recovery plan agreement with the pension scheme trustees. The group also paid the pension scheme administration costs of £0.6 million (2015 - £0.65 million)."|
|Yes, you rightly mentioned that the aggregate liabilities, despite the placing to cover the M&A, are reasonably large, and CTP in particular seems to demand Capex equal to Depn plus a bit of running to stand still in a competitive world plus a bit of expansion.
Another (apologies, bearish) q: I had become quite expectant that LED had become quite the growth story, ie we might expect quite a few percent H by H of topline and profits as the labour bears fruit - so given that higher expectation it seemed a little limp to me, and less bullish language? But I haven't studied it to death.
When they agreed the last triennial extra annual cash payment to the pension fund, do you recall how many years payoff roughly that was? ie just the deficit then divided by the extra annual payment? I guess it's in the March 2015 annual or September 2015 half-year.|
hard to rebutt your points. Indeed I'd almost go so far as to say you're stating the bleedin' obvious!
Call me a sceptic but given the remarkable acquisition binge that CAR have just embarked upon perhaps the pension monster eating the retained earnings right now is quite convenient?
If I was a bank reviewing covenants or an Insti coughing up funds at 120p a share I might well be demanding the dividend cancelled to conserve cash.
Not very pretty. The growing businesses are doing well but devouring yet more cash to grow. I can see why you would not want to buy....safe and conservative it certainly isn't! But.......the flip side is that the growth is being discounted because of the mess and the pension is just another distraction.......
|The accounts in the full half-year statement are making my head spin.
Is it true to say that they would have been able to pay dividends if they hadn't lost quite so much money in mainly touch and also diagnostics? They bled so much cash and p&l in those over so many years.
I found the whole statement not conservative, reliable, and trustworthy as one would hope, rather the reverse.
So I'm out, as they say, in terms of my contemplation of buying some.|
|Update from Edison:
|Only recently the analyst recommendations were indeed a mix of holds and Buys.
It's following the recent excellent interims that one or two brokers have upgraded to Buy.
I also seem to remember that CAR were certainly at the top end, and perhaps beat, forecasts for the last year end.
I prefer to concentrate on what's happening in the here and now - where it's likely imo that CAR will beat forecasts due to:
- the strong H1
- the new acquisition
- favourable currency movements
- and above all, the terrific growth being experienced in CTP and LEDs|
|Thank you rivaldo.
Do they have a track record of beating eps forecasts? If not, then likely they won't.
(fwiw my old rule of thumb on 'Buy' recommendations is that if they are all Buy it means little, and they have nowhere to go except less bullish, I prefer mixed recommendations which have much more room for upward surprises.)|
|Looks like they have taken them from Old Mutual who have gone below 5% with a shareholding down from 5.6m to 3.5m.
Quite a hefty drop so let's hope they are cleared out soon if that's their intention.|
|RNS - Henderson Group have been buying and have now gone above 10% with 7.88m shares:
|Queeny2, the consensus EPS is:
this year : 11.16p EPS
next year : 12.75p EPS
IMO given the terrific H1 outlook the results will at worst be at the top end of forecasts, and at best could be some 10%-15% ahead of forecasts.
All the individual forecasts are nicely in line too, with all the big names saying Buy:
Date Rec Pre-tax (£) EPS (p) Pre-tax (£) EPS (p)
N+1 Singer 25-11-16 BUY 10.60 11.13 12.60 12.45
Edison 24-11-16 None 10.66 11.20 12.75 12.70
FinnCap 21-11-16 BUY 10.70 11.30 12.60 12.80
Peel Hunt 17-10-16 BUY 10.65 11.15 13.00 12.94|
|I concur yump...before the dividend announcement this was heading back towards resistance at 160 based on positive news flow...the news flow since then has only reinforced my view that we will head back to that level in the coming months|
|rivaldo could you kindly post again the various eps forecasts for the year ending 3/17 and 3/18? Many thanks|
|Or it could just be that its on a p/e of around 10, with some positive announcements and some growth forecast and the bond yield likely to have at least bottomed out and CAR share price hitting previous support.|
|or this could be a bull trap
tread carefully imo|
|Most likely simply a case of one institution buying a load of shares from another and thereby clearing the dead weight which has been holding back the share price.
The rapid movement upwards since the transaction was reported backs this up.
On a P/E almost in single figures, and with the pension issue quickly clearing given that bond yields are now back to levels seen earlier in the year, CAR is an out and out bargain imho given the prospects already outlined for H2 and beyond for the core businesses.|
|Thanks for highlighting rivaldo - prompted me into a top up I had been mulling over.|
|Nice - 1.97m shares just reported bought at 120p. Should clear any overhang nicely.|
|Thanks illis... whatever the motivation for acquiring, it seems to be a reasonably established and lucrative business... rather than any new ground breaking tech... not sure what it brings to the table but presuming it has 'in house' benefits in the designing of CAR's plastic products... hopefully even Carclo won't be able to balls this one up! :)|