Chemring Share Discussion Threads

[blanketstacker] 22/10/2013 20:46

Back again! Just a few points. Sales are NOT down, although margins, and therefore profits are. Profits are also being adversely impacted by the exchange rate. A further problem is manufacturing in the US flares section, where local management seem to have a limited level of competence. However measures are already underway to bring down costs (some of said management are getting their cards), and market research and consolidation are new priorities. I am not sure why a rights issue would be necessary, or what it would achieve. Funds are NOT needed in the business beyond what is generated, unless further acquisitions are planned. Covenants are not all that near to being breached, so the banks should be happy enough without dilution.

As others here have said though, and I myself fear, shares are too often driven by sentiment and momentum, often with one feeding off the other. I remain confident, but realise that there are potential shorter term problems here. Good luck to us all.

(If I was a removal man my nickname would be 'removal man'. I used to be a blanketstacker, so it is 'blanketstsacker').

[philanderer] 22/10/2013 10:01

I think on balance a rights issue is more likely than not, and this is what`s still causing the shareprice weakness, seen yet again this morning.

[bookbroker] 22/10/2013 09:46

Maybe, but with the operating issues and declining sales the financial stability of this co. is being questioned, off course problems will be resolved, but right now the covenant issue is problematic in terms of confidence as regards the cos. ability to manage these issues without impacting their ability to cover short term funding issues.

[kiwihope] 22/10/2013 09:40

I think it's a bit premature to talk about a fund-raising. Of course it could happen but on balance, with the available data we have, I don't think so.

[philanderer] 22/10/2013 08:48

bookbroker , I agree and even now it`d have to be very heavily discounted to get it away.

Unless of course the big boys are already in the know and have been dumping shares for the last week knowing they can buy back in much cheaper at the fund raising not too far from this price ?

[hvs] 22/10/2013 08:43

lol !!!!!

Thus stinks.

Directors have made millions here.

[bookbroker] 22/10/2013 08:41

Big rights issue here on the horizon, balance sheet has to be repaired with so much uncertainty, best get it out of the way before it becomes impossible to price.

[kiwihope] 22/10/2013 08:38

A lot of share price movement is by momentum. In my experience worse than expected news is never fully priced in. If the Nov statement is bad then the price can still fall from where it is.

As regards the dividend, it all depends upon how close they are to breaching covenants. Finals are usually announced late Jan so we will find out then, if not in Nov trading statement. If there was any danger I would expect sensible management to cancel the dividend. That would almost certainly trigger another fall in the share price

[thelongandtheshortandthetall] 21/10/2013 19:41

blanketstacker

intersting nick name

my guess is you are a removal man?

[blanketstacker] 21/10/2013 19:19

I also meant to say a takeover is perfectly feasible now, as the company is currently being valued (sub 220) at far less than the sum of its component parts.

[blanketstacker] 21/10/2013 19:14

This is my first post on ADVFN, but thought I would chip in as I formerly worked for a large CHG customer, know the sector a little, and still have mates who work in it. The company at under 220 a share represents a bargain, I believe. Management has not done a good job lately, and some of the recent acquisitions have cost more than they can ever be worth, but the sales force are DRIVEN, and the CLA and countermeasures sections of the company are showing good profits and have very secure markets. As a whole the company is very well connected and thought of, especially in the Middle East. Sections of the company have been acquired to ensure US 'aid' spending is available to CHG, and this concept has proved successful. The debt that has been accumulated is well covered, so this is not a problem.

The trading update next month will not be good, and we have been softened up for it with the ridiculous comments about the US shutdown impacting on sales. This means a fall has already been factored in, and if anything overdone. I have bought in here twice since the fall, and am happy I did. I formerly held CHG, but sold in the 280s, as I believe that is fair value and wanted the money for something else. I would hope to see this at c270 again before Christmas. Even if it does not quite make it that far, the spring will bring a very decent dividend. In short this seems a tidy place to have your money. (I have posted similar comments on II).

[yorgi] 21/10/2013 17:52

Philanderer,

We know that the trading update is almost certainly not going to be good but the present share price has more than factored that in but of course what is not factored in of course is any new orders that have yet been won but CHG is quality company and there is little doubt in my mind that they will be winning contracts over the coming months.

[hvs] 21/10/2013 17:23

a $10.8 Million order

lol!!!!!!

Directors laughing all the way to the BANK.

[yorgi] 21/10/2013 16:58

Interesting and good news as well, well spotted Philanderer :-)

[philanderer] 21/10/2013 16:49

No RNS but just up on the company website:

"CHEMRING COUNTERMEASURES USA ANNOUNCES $10.8M UNITED KINGDOM SPECIAL MATERIAL DECOYS ORDER"

21 October 2013

Chester Township, PA-- Alloy Surfaces Company, Inc. of Chester Township, Pennsylvania, a Chemring Group PLC ("Chemring") subsidiary, announces award of a $10.8 Million order for the manufacture of BOL IR L5A2 infrared decoy devices for United Kingdom Royal Air Force Fighters. Special Material Decoys are a key part of the Aircraft Survivability Systems protecting helicopters, fighters and transport aircraft. The BOL IR Covert Multi-Spectral Special Material Decoy dramatically increases fighter aircraft protection levels against legacy and the latest generation of IR missiles (Air/Air and Surfaces/Air). This is a multi-year contract with delivery ending in December 2015. All work will be performed at Alloy Surfaces' facility in Chester Township, Pa. The Chemring Countermeasures USA division is comprised of Alloy Surfaces Co. and Kilgore Flares of Toone TN.

ASC's President, Lawrence D'Andrea, stated, "We are very pleased to receive this contract order as the Royal Air Force continues to express its confidence and trust in our Special Material Decoys (SMDs)." BOL IR decoys are used to protect United Kingdom fighters against Man Portable Air Defense Systems, commonly known as MANPADS.

[philanderer] 21/10/2013 16:10

Agree kiwi, I don`t think we`re going anywhere significant in the next five weeks until that`s out in the open

[hvs] 21/10/2013 12:27

lol !!!!!

FLARES galore its hallowen.

[kiwihope] 21/10/2013 12:24

The most important thing first of all is the 2014 trading update sometime in November.

[yorgi] 21/10/2013 12:11

At this level CHG is clearly oversold Philanderer and as one or two comments yesterday a decent order or two signed and the share price would I'm quite sure respond accordingly.

[philanderer] 21/10/2013 11:56

Citigroup this morning on the sector...

"... We expect defence budgets in the US and Europe to stay roughly flat over the coming years. The recent US debt ceiling deal has removed some immediate risks overhanging US defence, although these are likely to re- appear early next year. Given tough budgetary conditions in the US and Europe, large export contracts are likely to become important catalysts for Defence share price performance, in our view."

[dewtrader] 21/10/2013 09:29

moving up nicely

Lets get ready to rumble!

[dewtrader] 20/10/2013 17:34

A new order and this will be over 300p in a jiffy