Carclo Share Discussion Threads

[queeny2] 10/1/2017 10:55

Good stuff 1gw, thank you.

[1gw] 10/1/2017 10:20

Having said all that, I think the recovery from 2.3% to 2.7% may well be enough to allow them to restart dividends, so I've just bought some more at 137p.

In the half-year report they said the move from 3.5% to 2.3% had increased liabilities by £34m [edit: actually "contributed to" this increase - with some due to rising inflation expectations or mortality assumptions perhaps]. So simply pro-rating, a move back to 2.7% should decrease liabilities by about £11m. Net of tax, getting on for £10m back on [edit] retained earnings I would hope. I would also hope that investment performance on the equity portfolio would at least cover liability increase due to increased inflation assumptions.

So maybe around £10m back on retained earnings due to the increase in corporate bond yields.

Retained earnings at end-September were £2.8m and a 2p dividend (for example) costs about £1.5m (73m shares). So given earnings-positive underlying business I would have thought they might already be confident enough to pay a dividend if discount rates stay at this level.

Health warning: my analysis only, to promote discussion. Certainly no advice intended. This is a complex area and I may well have made some mistakes in the above analysis.

[1gw] 10/1/2017 09:14

Update on corporate bond yields (Carclo pension deficit).

Barnett Waddingham have today published their update on corporate bond yields, showing that the ML UK 15-yr AA corporates rate had recovered to 2.7% at year end. While better than the end-September rate (2.3%), it is still significantly below the end-March rate of 3.4%. It is also still below the end-June rate of 2.9%.

Inflation expectations have also increased over the last quarter, adding to upward pressure on pension scheme liabilities, while equity market returns should have been good given general market performance which would tend to increase the asset side of the equation.

On balance, I'm disappointed. I had hoped that the gap to the end-March'16 yield position would have closed a bit more by end-year. I now hope for further moves up by end-March'17 to increase the chances of Carclo being able to resume dividend payments.

The latest BW note is linked below and I have pasted my previous post on the subject for context.


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1gw 16 Nov '16 - 17:41 - 206 of 281 0 0 Edit

I think you need to look at UK corporate bond yields rather than gilts in terms of the pension scheme discount rate issue. I noticed in the results (note 13), Carclo gave the change in discount rate:

3.5% 31st March
2.3% 30th September

In post 134 I gave the 15-yr AA ML Sterling Corporate bond yields quoted by Barnett-Waddingham as possible indicative discount rates:

3.37% 31st March
2.29% 30th September

So it looks like this may well be a reasonable proxy for the Carclo scheme discount rates.

Unfortunately I haven't been able to track down a good source of this rate (i.e. UK 15-yr ML sterling corp) other than the Barnett Waddingham publications - does anyone else have one?

In any event, the next BW publication should be out in early January giving the rate at 31st December. That should give us an indication of where the discount rate is likely to be and therefore what the chances are of getting a material reversal of the recent hit.

[abergele] 10/1/2017 08:21

Rivalado,
sorry,wrong information I printed,another shares performance,,from anybody who read my previous piece..

I mean the piece I typed ,not your last posted information which looks good,,any thanks to you.

[rivaldo] 09/1/2017 13:35

Continuing to creep up slowly, with buying at 137.56p today.

Every independent analyst says Buy now - forecasts for the year starting soon put CAR on a near single-figure P/E and a very good value PEG of only 0.8:

2017 2018
Date Rec Pre-tax (£) EPS (p) Pre-tax (£) EPS (p)
N+1 Singer 06-01-17 BUY 10.60 11.13 12.60 12.45
FinnCap 05-01-17 BUY 10.70 11.30 12.60 12.80
Edison 05-01-17 None 10.66 11.60 12.75 13.10
Peel Hunt 09-12-16 BUY 10.70 11.73 12.97 13.34

[abergele] 08/1/2017 15:12

Good news again Rivaldo,
We have had a bit of consolidation around the £1.35p area,and perhaps getting ready for that P.Hunt recommendation,,,wow,£1.90p..if only eh...gla lth's

[rivaldo] 05/1/2017 11:57

Peel Hunt today reiterate their Buy and 190p target:

[abergele] 04/1/2017 20:13

Thanks for that Rivaldo,nice news and the chart is still firmly positive.gla lth's

[rivaldo] 04/1/2017 09:53

N+1 Singer have this morning released their best ideas for 2017, and they highlight CAR's prospects for 2017 as follows:

"We are still positive on....Carclo (cheap and a potential play on rising bond yields alleviating the pension deficit)".

[jdb2005] 01/1/2017 19:41

Like this company & wish I had bought more CAR when below 120p

Buy on dips !!

[alexx] 28/12/2016 05:55

'116

0-60 in 3.8!

But you'd have to wait at traffic lights for months to be up against something that even managed 6.0 seconds.

[illiswilgig] 21/12/2016 17:21

BigT,

good on you.

you're not alone. Plenty of us have called CAR wrong at some time - I certainly have

Seasons Greetings,

cheers

[bigtbigt] 21/12/2016 17:10

Congrats all holders
Glad to say I was wrong expecting it to fall from 120
Happy Xmas

[amoore70] 21/12/2016 10:44

Glad to see some confidence coming back to this share. Doubled my holding at start of the week.

[abergele] 21/12/2016 09:04

Chart is looking stronger each week,
just a couple of pence short now of passing the 150 dma..
cross over that and the 200 dma is a hop away..about £1.38...quite do-able,imho

[rivaldo] 21/12/2016 08:44

Momentum building here now.

[rivaldo] 20/12/2016 08:30

Amoore70, I am similarly confident re CAR.

Ali47fish, the figures re Henderson's increased holding are all in the RNS via the link I've provided if you read the RNS. I don't really think I can say any more!

[amoore70] 19/12/2016 18:31

I am adding more. Quite confident 2017 will be a good year for Carclo.

[ali47fish] 19/12/2016 16:56

rivaldo- i am interested to know if you calculate the figures you provide or do you get them from somehwre if so can you indicate please for further reference

[rivaldo] 19/12/2016 15:45

RNS - Henderson are buying more. They're now above 11% with almost 8.1m shares (they've bought another 175,000 shares in the last 3 weeks):

[gleach23] 16/12/2016 10:42

Nice to see the move over 130 and to see buying continue.

I guess some must feel they are still extremely cheap rivaldo :)

[mallorca 9] 16/12/2016 10:27

Been watching this one for a while.
Finally bought in.

[rivaldo] 16/12/2016 07:17

Encouraging to see the CEO transferring £20k of his shares to his ISA - he presumably believes there will be profits coming up to protect from tax:

[gleach23] 15/12/2016 11:39

Looking good...a move over 130 would be very positive

[rivaldo] 15/12/2016 09:38

UK government 10 year bond yields are up almost 7% today. They're now 5% ABOVE where they were at CAR's last 31/3/16 year end.

And with further US interest rate rises likely, it would seem that yields are in for a long period of sustainable stability at these higher levels. Which is exactly what CAR require to reinstate the dividend at this year end.

Along with the (imo) likely stellar financials to come for H2, things are looking decidedly good for CAR.