||EPS - Basic
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Norish Share Discussion Threads
Showing 26 to 49 of 50 messages
|was a profit made on the disposal
|what happened at the EGM
Paper says motion approved|
|Spoke to new CEO. Interesting times coming|
|Interesting to get such a big placement away at that price in these market conditions? Miton hopefully to a big extra pile. I smell a blog post coming|
|Having a look :)|
|intervention good for norish|
life out there
who is buying
|I am the only shareholder in the universe|
|there is life... a deal|
|is that a spark of interest in the share|
Gervais Williams: How I'm turning round The Investment Company
....The manager is a long-term fan of AIM stocks, and one company which he has recently added to the trust is chilled warehouse operator Norish. 'There is a heavy emphasis on those companies with strong balance sheets, including plenty of tangible assets, along with growing turnover and profits. We believe that the new holding in Norish is especially attractive on these criteria. It has recently raised new capital to acquire the lease on one of its chilled warehouses from a forced seller, which doesn't just enhance its asset value but also greatly increases its ability to grow its earnings going forward.'|
the only out is a sale
but they have been trying for years|
Prior Post(s): 2012 & 2013
Price: GBP 39.5p
I've been consistently bullish on Norish, and equally scathing of its management for the past two years. This bullish view was rewarded early in 2013, with the share price doubling in the space of 7 months. But bad management almost inevitably wins out, and here we are again...the share price is back trading in the 30-40p range it's mostly occupied for the past 5 years. Clearly I had a rush of blood to the head last year, when I highlighted the stock was potentially a triple. Not an incorrect analysis, necessarily, but that kind of upside presumes management's at least willing to consider unlocking (and/or increasing) the company's intrinsic value. But when you're faced instead with apathetic management, and (it seems) shareholders, that upside may never be realized... Obviously one has to presume a binary perspective & outcome here.
On the one hand, we should simply consider the equity tied up in the business. Each year management inevitably promises things can only get better (due to their hard-working efforts, of course), but nothing ever materializes savings always seem to end up absorbed by another set-back. The numbers tell the real story, as usual cold storage revenue's up a pathetic 6.5% in the past 4 years, while profitability's consistently declined vs. a paltry 2009 profit of GBP 0.8 million. [I tell a lie - profitability's stabilized now at GBP (79) K pa in both 2012 & 2013!]. A 1.0 P/B multiple (on equity of GBP 8.3 M) seems more than adequate in fact, it's damn generous when you consider Norish's negligible returns on equity. But management has again promised a decent return next year (and the 2013 continuing ops profit seems to confirm it), and fortunately equity's mostly composed of land & warehouses which should be fairly valued & readily saleable.
On the other hand, the company's worth far more if the cold storage business was simply liquidated & the commodity (meat) trading business was run (or sold off) as a stand-alone business. Let's simplify the liquidation & assume total PPE of 15.4 M can be sold off (for book value) & used to retire net debt of 7.8 M that's a realized NAV of 7.6 M. We also need to value the Townview Foods meat business: Unfortunately, 2013 was the year of the horse meat scandal (er, what's wrong with horse meat?!), so revenue fell (say) 35% to 11.4 M (from an estimated 17.5 M in 2012) & the operating margin fell to 3.7% (compared to an historical average of about 6.7%). I think it's fair to presume the most recent figures are distorted, so let's presume an average operating margin of 5.2% this deserves a 0.45 P/S multiple. In similar fashion we'll apply this multiple to an average revenue figure of 14.5 M.
Now, let's average the two approaches which seems the only fair way to nail down a valuation here. It also reflects my renewed ambivalence regarding management. When the 2013 interims were published, I was enormously encouraged by the plan to sell the York & Leeds facilities. Surely this was sanity & a first/tentative step towards liquidation... But since then, we've seen two dilutive share issuances (at 40p & 35p) & a purchase of the company's Birmingham site certainly not the actions of a management team which seems at all interested in protecting & realizing shareholder value. Finally, before we lay out our valuation, we should note the latest 2.2 M placing/open offer is still in process but it's obviously dilutive, so we'll assume it gets completed & include it in our valuation to be conservative:
((GBP 8.3 M Equity * 1.0 P/B + 7.6 M Cold Storage NAV + 14.5 M Meat Revenue * 0.45 P/S) / 2 + 2.2 M New Equity * 95%) / (11.2 M Old + 6.3 M New) Shares = GBP 76p
Norish remains substantially undervalued. But remember this upside's only an average: If management's really that dreadful, they'll continue to pour good money after bad into cold storage & the superior Townview business is sure to end up caught in its clutches too. On the other hand, the upside may be much higher, if management: a) finally realizes the only value in cold storage is the actual sales value of the underlying property portfolio, and b) focusing all investment on Townview, which I suspect is capable of delivering on a multi-year high growth revenue strategy. An aggressive share buyback programme wouldn't bloody hurt either..!
Price Target: GBP 76p
|nowe we know why
push the price to get a placing away|
|stirrings of life?|
|still the only one|
|Why am I the only one intertested in this company|
whats going on
price rises but no shares trade
whats in this|
|Well, the share price jump came before, so it wasn't their results. I guess somebody was a buyer, and didn't mind paying up to get shares.
Unfortunately, this has always been a terrible spread/volume share, and management don't really seem to care. If you were a buyer, you'd probably also have to pay the offer & higher, or choose to be v patient in building your holding (and risk the price running away from you). Obviously, you may then face the same problem (and the spread) if you wanted to get out...
To compensate, Norish is one of those shares you should either avoid, or you should treat it as a potential long-term holding. Demanding a higher upside potential than usual also improves your margin of safety with shares like this.|