Northbridge Industrial S... Share Discussion Threads

[smithie6] 13/11/2014 15:04

looks to me like on-going largish buys going thru. (institut ?) ...over recent days...soaking up smaller sell trades...

[davidosh] 11/11/2014 16:24

Just to make sure you all know that Craig Robinson the FD will be presenting at the Mello Monday event in Beckenham next week www.mellomeeting.com

You are all welcome to join us.

[smithie6] 22/10/2014 14:08

-4% today..and down around 80-100p from recent peak..ouch
cut

current price is around where the chairman and Blackrock bt. some more not so long ago
...if they were to get their wallets out again that might help the share price ...

[mark2market] 22/10/2014 12:11

Chart may be turning up

[woodcutter] 22/10/2014 11:17

Beginning to look interesting again. Wait for the chart signal!

[smithie6] 25/9/2014 16:05

hxxp://fulltimeinvestors.com/Northbridge/


Warning. Note
The author is a Northbridge fan !....and has a long exposure to the NBI share price
...and is hence going to the concentrate on the +ve aspects
of course

...the -ve aspects and risks should also be taken into account.

[woodcutter] 25/9/2014 08:32

smithie be careful, errors................i think you mean differences of opinion and then perhaps only on debt and dilution;-)

With this type of business more than most debt needs to be considered based on the business cycle and getting the balance right between growth and that cycle. If they over-extend in buying new hire equipment and the economic cycle changes they can be in big trouble, i've seen it many times before.

The results where pretty much in line so if dilution isn't an issue why is the share price falling? Any PI who bought recently at 600p isn't going to be happy!

i haven't looked at numbers yet too busy playing golf at present. I'll have a look when the share price gets near my chart based re-entry point.

I'm mindful of the difficulties that hire companies get into when the cycle turns, they get hit very hard in a down turn and although we're not in one yet it will come. And the valuation looks fully up to speed for now and may well not improve that much upto the next cycle......who knows?

However I'm sure you're aware of the issues facing hire companies in a downturn; carrying debt, interest payments, loss of hire revenue, depreciation on idle equipment etc. ROCE is a geared play with hire companies it'll drop like a lead balloon if/when the cycle changes.

My concerns are the unknown length of this economic cycle and NBI has had a fantastic run it made me quite a bit of money but i don't want to be holding as large a holding as i had if the cycle changes.

I'll build again from scratch when i'm ready, great business and well run but timing is my driver now.

WC

[apad] 24/9/2014 08:48

Pitch Perfect Woody,
I had a look at the Kiwi company's products (I was a bit concerned that it might be as susceptible to mining companies parsimony as MINCON).
Without looking too deeply it looks interesting, diverse products across a range of activities.
Although it rents drilling tools (and so will be susceptible to the slow down) it is more than a one-trick pony.
I think there might also be synergies as it is management owned so there will be duplicated systems and the owners are selling up, so can go.
Short term I suspect that they will have a better deal but NBI will know this business from soup to nuts so backing management's long-term view seems sensible.
My guess is that a 520p increase-holding target is too low, but it would be nice.
I have 540p pencilled in as a potential increase price at the current state of the market.
However, the sector is not at all attractive.
apad
ps my big decision of the month was to buy GDWN (FWIW - be great if this was an epic code :-)

[topvest] 23/9/2014 21:21

Results were good and a reasonably sensible, if not cheap, acquisition. Think the immediate outlook is cautious given the comments about revenue still needing to be secured in H2. The way I read that was that it was a slight edging down of current year expectations. Still a good company though and happy to hold.

[woodcutter] 23/9/2014 19:33

one thing about discounted placings that's often overlooked by private investors where they're not able to participate is the double whammy of a discount and the additional share dilution

Firstly there's a tendency for the share price to drop to the placing price and then there's the additional dilution. So in NBI case we've seen 7.5% discount and a further 3.7% dilution to raise capital plus around a 2% dilution to the vendor as part of the acquisition deal. On this basis i'd expect the share price to be off around 13% on it's highs before i'd even consider coming back to invest. So a minimum of around 520p just to stand still.

Then you've the added question of whether the acquisition is earnings enhancing and by how much. It looks like the acquisition makes a profit so further analysis needs to be done to ascertain how accretive the eps will be, set against the additional debt incurred and the increased number of shares in issue. If that can be assessed then the share price will maybe stay above 520p. Something to analyse perhaps.

Smithie on the current numbers there's a lot to be pleased about imv.I'll concentrate on cashflow as that's always my main focus.

They are generating cash almost double their profits before adjustments for working capital which is fantastic, albeit with large depreciation of the hire fleet i assume, which is a responsible approach. Also the depreciation is being matched by new capital expenditure so that's a positive too.

Prior to the acquisition I'd like to have seen the debt reduced as that would have a positive impact on the eps but the current assets to current liabilities in strong as was the balance sheet so the debt was not an issue in terms of magnitude. £300K in interest payments is equivalent to an extra 1.5p+ eps.

I'd also like to see the divi increased, 6p out of 32p eps could be much better.
I guess you can't have it both ways divi or debt reduction!

If i get time i'll run through the acquisition figures and see if there's anything further to post.

Incidentally there was almost 2M more shares in issue this year than last year so to do almost 15p eps is a good achivement imv. That's a increase in shares of around 13% so an equivalent like for like increase in eps would have been nearly 17p for H1.

WC

[smithie6] 23/9/2014 17:28

just blinked and DJIA is shelling out cash ! (for bears)

[smithie6] 23/9/2014 16:47

am I the only one that has looked at the numbers ?!

41% increase in yearly PBT (if NZ repeats prev. results....expected to fall)
while number of shares is up around 6%

if ignore finance costs for a moment (since low cost wrt income, one hopes/assumes...and the high NBI cashflow can be used to pay off any new bank loans (only around +3M-6M from what I can see)....then surely the EPS has just jumped up as a result of this acquisn.

and hence Woody should get his wallet back out !...imo !

----

nice deal imo....

as the NBI machine keeps on growing globally and increasing its EPS

(and imo as a result of the acquisition ...a strong buy....although the mkt does not seem to think so.....perhaps few buyers until some tipsheet or newspaper suggests to muppets without a calculator whether to buy or sell !)

[smithie6] 23/9/2014 16:22

is it 2.9M extra PBT

from acquisition that raised 3.5M from share issue ?

and cost was it 13M

surely the return is much much higher than the interest cost on the loan so surely the EPS has just jumped up ??

although the text does say that only small +ve increase in EPS I think....
(need to check exact words used)

[smithie6] 23/9/2014 15:55

just had quick scan at the results...

good imo

loadbank mfr set for record yr

3M invested in new hire equipt.

EPS up arounbd 17%

etc
----

sp held up quite well imo

-----

Keep on trucking ....imo

[smithie6] 23/9/2014 15:42

Woody
....interesting to read your views....

but taking a 2-3 year view ..for me NBI looks like one of the better shares

sitting on cash is another option....but personally I reckon that that cash would buy you less of NBI in 2-3 yrs time that it would now...

for reality ....we have to wait to see.....

(btw I just made some cash shorting USA indexes.....
another way to play the game at present imo
x8 pocketted in 2 trading days....(reducing my previous shorting losses !))

[woodcutter] 23/9/2014 13:05

perhaps not so heavily discounted in the context of some businesess where they're trying to survive but NBI is a growth business and the institutions clearly weren't prepared to offer the current share price Under those circumstances it tends to look as though the placing wouldn't have been fully subscribed at the prevailing share price

as we know it's not unusual for placings in growth companies to be both oversubscribed and at a premium so with that in mind it looks quite a discount, imv.

We also have to be mindful of the existing market conditions which seem to be consolidating. Many companies are releasing decent results and appear to be fully valued, the share price pops up for a few days and returns to previous levels or lower. A lot of investors seem to be using any share price rise on results day to sell into strength. For a lot of businesses the forthcoming earnings are already in the sp, in some cases two years out.

The risk reward at present is very much to the downside and finding anything that's remotely undervalued isn't easy. So in NBI case with results in line with expectations the share price most likely would have been flat but the placing will hurt in the short term.

Another point worth noting is if/when we begin to see a decline in economic growth NBI may see some difficulties with hire equipment standing idle. So with the current share price built on forward earnings and at some point the economic cycle due a change of direction i'm a little cautious hence selling my holding recently.

Added to that the TA at the time was very much forecasting a fall in share price and a sell.

aimho

woody

[alter ego] 23/9/2014 13:00

" The Acquisition is expected to be modestly earnings enhancing in the first full year after Completion

per the RNS

[nurdin] 23/9/2014 12:00

It is hard to judge if they have paid a good price or not, specially as the company is not expected to repeat the financial performance achieved in 2013 and 2014. EBITDA in 2014 was £3.5m.If we assume that this will drop to £2.5m(harsh I know) in 2015 then they will have paid an EBITDA multiple of 5.2x.That seems a bit on the high side in my view, specially as the company is expected to show declining revenues and profits going forward.Happy to hear any counter view

[apad] 23/9/2014 10:01

Nor me, however I think Woody's "drifting" prediction is likely to be correct.
It's all about whether the company proves to be a good buy or not.
The new ROCE could be pretty unimpressive.
apad

[nurdin] 23/9/2014 09:55

Heavily discounted? 7.5% discount....wouldnt call that 'heavily discounted'

[woodcutter] 23/9/2014 08:12

pretty decent results but no more than i expected. Looks like a heavily discounted placing in favour of the institutions. Private investors shafted again.

i would expect it to drift towards the placing price over the coming months, at which point i may re-enter.

Decent support around 550p

Woody

[woodcutter] 22/9/2014 14:49

smithie sorry it's taken me a while to come back, not been doing too much in the markets at present still largely in cash, even more so now.

i think eps will be around expectations, 32p or there abouts for the full year but i don't expect any improvement in the share price The per is historically high, even allowing for next years forecast. We'll get a better idea from the interims.

There are many companies issuing good results at present and the share price is spiking and then returning to current levels. Anyone missing forecasts on a historically stretched per is getting hammered XAR for instance.

There has been much written on how over extended the markets look and i'm still cautious.

From a TA perspective the price/oscillator divergence has played out as i expected and the share price has fallen back a little. My view is if they achieve forecast then the share price will drift down slowly, perhaps back to around 560p.
If they exceed forecasts then i'd expect it to hold it's current share price but unlikely to advance much, depending on the outlook statement. AS i sadi the interims will tell the story. They'll have to hammer forecasts for the share price to move appreciably.

The momentum oscillator is currently showing a very strong -ve divergence, more so than MACD and RSI so i'm happy to sit on the sidelines at present. If it blows through 600p i might trade it short term, equally if it falls to around potential suport a 560p then i'll build again for ltbh.

Woody

[smithie6] 20/9/2014 17:49

...well...good results expected....but already in the price probably/perhaps....
key factor will imo be what P/E the mkt wants to give to NBI
..and in any case some movement of shares likely in coming weeks between old and new investors...(some profit takers may look backwards...while some may look forward at hopefully higher EPS in future..or maybe the profit taking has already taken place.....)

imo in 2 or 3 yrs time (and then 5) the share price has a good % chance of being higher...growth story looks like it has more to run....(while the share price may rise and fall along the way)