Plastics Capital Share Discussion Threads

[glennborthwick] 17/3/2011 23:40

a 40k vote of confidence

[charlesdar] 11/3/2011 09:48

Nice one Glenn - and nice quiet Mr H for a change. Please do keep putting your tips on the LoQ page - I follow them with interest!!

[glennborthwick] 22/2/2011 22:28

blimey mr h - i did tip you off at 20p , you just refuse to listen to my sage like advice.

lennborthwick - 22 Sep'09 - 10:38 - 11 of 179 edit

subsiduaries advertising for more staff - always a good sign;



mr hangman - 22 Sep'09 - 10:45 - 12 of 179

Yes it all depends when the have to re-negotiate the debt, if its soon,
kiss this one goodbye

[glennborthwick] 22/2/2011 22:25

and me mr h. In at a very low price here!!

[chrismez] 21/2/2011 17:21

From this morning's Buy Note from GE&CR:

__________________________________________


"Plastics Capital, a consolidator of plastics products manufacturers focused on proprietary products for niche markets that exports over 60% of its sales, this morning released a positive trading update that has encouraged a further upgrade to our forecasts and target price.

Since the close of the first six month trading period ended on 30th September 2010, trading conditions for this major exporter have continued to improve with sales volumes increasing significantly compared with a year earlier. This has been reflected in new business activity. For example, the group's Indian subsidiary won its first orders for creasing matrix from domestic Indian companies while prospects for plastic ball bearings in this country are also good. Also Plastics Capital has secured seven new key accounts that each should generate annual sales revenues exceeding £100,000. And finally demand for plastic ball bearings generally continues to strengthen, in part due to the return of previously delayed or aborted pre-global recession orders as well as new orders arising from the company's targeted Asia markets.

Despite the persistence of higher raw material prices in some parts of the group's business, margins are generally holding up as a result of effective and prompt management action. Consequently, we believe that our sales forecasts for the financial years ending 31st March 2011 and 2012 are running £2 million low for both years and that our pre-tax profits expectations are respectively £0.2 million and £0.1 million too low despite increasing our forecasts last December following the release of the interim results for the six months ended 30th September 2010 (see our note dated 6th December 2010).

A key investor concern has been Plastics Capital's high debt levels and management has been quick to address this issue, despite the group being an inherently highly cash generative business. During the six months ended 30th September 2010 net debt was reduced by £1.4 million to £14.3 million in spite of increased working capital demands due to the group's rapid growth and expansion. Additionally, last October's sale and lease back agreements shaved off a further £1.2 million and, based on our revised expectations, net debt is estimated to close this financial year ending 31st March 2011 at £12.1 million (£1.5 million lower than previously estimated) and for 2012 at £10.3 million. This means that group net debt will have been nearly halved from the 2009 peak of £19.6 million and gearing (net debt/net assets) will have fallen from a peak of 156% to 56% within three years while the group has expanded internationally at a dramatic rate.

In light of the latest increases in our forecasts, which clearly demonstrate that the group is delivering ahead of expectations, we have increased our EV/EBITDA valuation multiple from 6.63 times to 7 times, which is still about a 10% discount to the sector's average. Based upon our increased 2012 forecasts and applying a 7 times EV/EBITDA multiple our target price increases from 106p to 118p and with the shares trading at 76.5p we reiterate our recommendation of BUY."

[davidosh] 21/2/2011 09:22

hangers....Nah it is turning into a LOQ but thanks for thinking of me !

[mr hangman] 21/2/2011 09:15

Let's hope it does not turn into another MUBL

[penpont] 21/2/2011 07:46

Anybody there? Excellent update!

[sivadnoj] 01/2/2011 21:47

If last year is anything to go by we should be due a trading update in the next 10 days or so.

[masco3] 27/1/2011 09:35

If you are interested in quizzing management, the company is exhibiting at this show in April: www.masterinvestor.co.uk. They have a few free tickets available for shareholders and other interested parties if you email the organisers at [e-mail] quoting 'Plastics Capital shareholder'.

[icarus4123] 26/1/2011 19:44

60p ish would make a nice entry price - The next few years looking good.

[bozzy_s] 07/1/2011 00:49

Great shout Glenn, incredible LOQ-like performance these past months. My latest LOQ-esqe investment is AGL. Wish I'd had the guts to buy into PLA, with the horrible balance sheet, at 30/35p!

[daz] 07/12/2010 16:50

More like the end of the week at this rate :)

[glennborthwick] 06/12/2010 22:55

great buy this has turned out to be. should be threefigures within 6 months

[daz] 06/12/2010 17:38

Not that many shares traded today so not sure what caused the surge.

[stegrego] 06/12/2010 14:19

Share up 20% - board totally quiet.

Fantastic share.

[sivadnoj] 06/12/2010 11:11

There are 3 eps figures in the release. 7.0p, 5.6p and 4.6p. That's what happens when the CEO is an MBA and not a Chartered Accountant. The one that matters is 7.0p because that is the one that has been calculated in accordance with International Financial Reporting Standards (IFRS).

5.6p is based on Profit after Tax of £1,536k and shares in issue of 27.4m. The IFRS profit after tax is £1,886k. The difference of £350k is attributable adding back amortisation of £559k and exceptional costs of £63k and stripping out unrealised forex and derivative gains totalling £972k. The rationale for these adjustments is that these are cost which are either (1) non-recurring or (2) can't be controlled by management.

4.6p is based on a tax rate of 28% - presumably the rate the company will pay when all reliefs/allowances etc have been exhausted. ((1750 x .72)/27.4m).

All of that said, EV/EBITDA is a better valuation metric given the debt levels. See GE&CR note above posted by windass.

[windass] 06/12/2010 10:28

From GE&CR

Plastics Capital: Interim Results Confirm Strong Organic Growth; Forecasts and Target Price Increased from 81.6p to 119p; Stance Remains Buy



Plastics Capital, the AIM quoted consolidator of niche plastics products manufacturers, has this morning released strong interim results for the six months ended 30th September 2010 that have prompted us to increase our forecasts and, consequently, our target price.

The coincidence of global economic recovery coupled with earlier internal measures, (new product introductions and an expanded sales team) resulted in sales revenues increasing by 26.5% to £16.302 million. The principal component of this 26.5% increase was volume of 21.3%; which can be broken down as 10.3% from underlying volume growth and 11% from new business generation while the rest is primarily accounted for by the "pass-through" of the raw material price increases which have been a feature of the polyethylene market during the last six months. We believe that it could be at least another year before the increased sales team are operating at their full potential.

Gross profit before foreign exchange and exceptional items increased by 25.3% from £5.103 million to £6.396 million and resulted in a modest 0.4% point margin contraction to 39.2% due to further upward raw material pressure which was not fully recovered by earlier price increases and improvements in productivity. The increase in distribution expenses was contained to a relatively modest 9.2% or £0.782 million as the benefits begin to arise from the earlier site consolidations and new strategically positioned plant openings, e.g., Thailand. While the continuous focus upon productivity and tight cost control limited the increase in administration expenses to an 11.1% rise to £3.612 million, which resulted in a 76.2% increase in operating profit before foreign exchange and exceptional items from £1.136 million to £2.002 million and margin widening by 3.5% points to 12.3%.

Reported net finance income fell by £0.040 million to £0.366 million but this was after foreign exchange hedging benefits increased from £0.393 million to £0.870 million and resulted in reported pre-tax profit increasing from £1.496 million to £2.1 million, an increase of 40.4%. However, the increase in underlying pre-tax profit (i.e., before foreign exchange hedging and exceptional items) was from £1.149 million to £1.561 million, a still healthy 35.9% increase and a widening of the margin by 0.7% points to 9.6%. Earnings per share increased from a reported 4.8p to 7.0p, an increase of 45.8%.

Trading has continued to improve although the pace is moderating somewhat as the group moves further from the very low 2009 recovery point and more closely reflects the global demand. Nonetheless, the underlying growth rate for the group will remain closer to double digits due to its increasing penetration of high growth Asian economies as well as new product introductions. While the full earnings potential of the expanded sales team and rapidly increasing numbers of new customer accounts (18 major accounts over the past 18 months) are still some 12 - 18 months away. Consequently, we are increasing our forecasts for the financial years ending 31 March 2011 and 2012; however, we are moderating those increases because the group is still building towards peak efficiency. We have increased 2011 and 2012 sales revenues by £1 million each to £30 million and £33 million respectively. Pre-tax profit (before amortisation, exceptional items and unrealised foreign exchange/derivative movements) for 2011 and 2012 increase from £3.125 million to £3.3 million and £3.8 million to £4.1 million respectively. However, we would not rule out the possibility of increasing those forecasts further in the new year if the global economy, particularly the Asian economies, shows no signs of slowing.

A key investor concern has been Plastics Capital's high debt levels and management was quick to address this issue, despite the group being a highly cash generative business. During the six months ended 30th September 2010 net bank debt was reduced by £1.9 million to £14.3 million while managing to control working capital demands arising from rapid growth and expansion of the business. While last October's sale and lease back agreements have shaved off a further £1.2 million and from our revised expectations net bank debt is forecast to close this financial year to 31st March 2011 at £12.1 million and 2012 at £9.5 million. Consequently, the group has cut net bank debt by £5.3 million from 2009's peak of £19.6 million.

We have valued Plastics Capital using an EV/EBITDA valuation metric, which we believe fairly values this inherent value creating group. With the shares trading at 67.5p, the market capitalisation and Enterprise Value for the financial year ended 31st March 2010 would be the equivalent of £16.83 million and £35.56 million respectively, which places the company on a modest EV/EBITDA multiple of 7.03 times that year's reported EBITDA of £5.06 million. However, we estimate that by the end of the 2012 financial year net debt (including deferred consideration) of £16.69 million as at 31st March 2010 should have fallen to £9.5 million. Consequently, were the shares trading on the same EV/EBITDA multiple as today, then, based on our 2012 forecasts, the share price should trade at 119p and, therefore, we reiterate our recommendation of BUY.

[penpont] 06/12/2010 10:03

The confusion in the two eps figures may not be helping. Even 4.6 is a good result and should give a good chance of beating forecast earnings for the year.

Here is Hoodless comment - they have a hold stance but also say upgrades to this years eps are poss.


'Plastics Capital (PLA, 67.5p, £18.56m)

Plastics Capital (PLA, 67.5p, £18.56m) the niche plastics group, reports interims to 30 September 2010 are ahead of full year expectations. Revenue recovery drove group sales to grow by 27% to £16.3m (H109: £12.9m). The latter coupled with lower overheads drove adjusted PBT and EPS up by 40% and 46% to £2.1m (H109: £1.5m) and 7p (H109: 4.8p) respectively. Most importantly, strong cash generation has reduced net debt by 19% to £14.3m (H109: £17.6m). The outlook statement is positive with the business focusing on developing new accounts, products and expanding into new territories. Raw material prices are likely to continue to put the margins under some pressure for the remainder of the year. We believe there is scope for the market to upgrade 2011 earnings estimate of 8.8p. The market forecasts 2012 PBT of £4.1m and EPS of 10.7p. We believe the prospective PER of 6.3x is fair given the high debt. We have been buyers of the stock since April 2009. Since then, the share price has risen by 1.6x. We now believe the stock is fairly valued and reduce our recommendation to a HOLD. (Amisha Chohan)'

[daz] 06/12/2010 08:39

I think there maybe an error in the summary, they quote underlying EPS of 7p but in the chairman's statement it refers to basic EPS of 7p and underlying EPS of 4.6p.

[daz] 06/12/2010 08:16

Agree, plenty to go for. Results last year had a 2nd half bias, so if they continue organic growth, they could do better than 14p for the full year.
Company is substantially undervalued and I'm tempted to buy more.
[edit] underlying EPS ought to be around 10p, not as amazingly cheap but still very good value.