Tex Share Discussion Threads

[doubleorquits] 11/10/2003 23:39

I see that there is a resarch note on www.brokerlink.co.uk. It reckons the company will post earnings next year of 15.5p with a dividend of 10p.

"Even without such contracts, the group's stated initial sales target of £30m per annum looks achievable over the next few years given a continuation of recent trading conditions.

Management have stated that this target will only be pursued if it can be achieved without hitting margins and costs so a pre-tax profit figure of over £2m and earnings
per share of in excess of 22p look possible.

Even so, this outcome would still be less than 2000 when the group achieved a record profit of £2.2m."

[lasmo] 09/10/2003 12:02

I think that this time things are a little different. The statements were bullish, which is very unlike tex. I believe many years ago they were accused of trying to hype the price and now are extremely nervous abouty how / when they release possible price info.

[doubleorquits] 05/10/2003 23:07

tiltonboy,

You seem to know the stock quite well and I shall take on board your query about where we are in the cycle. Just seemed that we were poised for a breakout and the news seemed quite bullish looking ahead. a case of wait and see for me for now but I shall certainly look for any downtrend that may be beginning.

Thanks.

[tiltonboy] 05/10/2003 21:53

d or q,

The problem with Tex is that it has one good year and then one bad year. It cuts it's dividend one year and puts it back up the next. So where are we in this cycle?

I think it is unfair to compare the p/e on these against others in the sector, because the earnings profile is more volatile.

If you buy these at 80p and sell at 130p you will have made a lot of money in the past few years. As they are now at the top of the range, I think you are being brave, but Tex might surprise us and have two good years on the trot.

tiltonboy

[doubleorquits] 04/10/2003 11:36

I have to admit to expecting a little more action here. I suppose we might begin to see some action as the results approach - Nov 20th last year so I guess they will be around the same date again. Until then I'll watch the paint......and then hopefully it will come alive!

The dividend will be a sweetener when it arrives the week after next, I suppose.

[lasmo] 22/9/2003 01:21

NTV,

Not a stock to be traded. Spread too large.....stay in for dividend !! and upside if Far east deals come off.

[ntv] 17/9/2003 19:02

out ,but will be back

[doubleorquits] 10/9/2003 09:49

Tex Holdings is a fairly illiquid stock with a market cap of only £8.5m at a price of 137.5p. It does, however, have a full listing on the stock exchange in the Engineering Sector and can, therefore, be held in an ISA. It has three main divisions: engineering, plastics, and construction. There appear to be five arms to Tex covering these areas: BSP, Tex Engineering, Tex Plastics, TICS, Tex ATC and Quinton and Kaines. These are all outlined along with their businesses on the new website at www.tex-holdings.co.uk/groupstructure.html

Like many other companies, particularly in the Engineering sector business has been hit over the last couple of years but recently the corner appears to have been turned and a number of Engineering companies appear to be seeing an upturn. Manufacturing figures tend to suggest that things are now a lot more positive and I feel that this company is in the driving seat to provide growth. Volumes of sales are still relatively low and many overseas contracts that Tex have, although still "live" are unfunded. The outcome for this year is still a little dependant on the number of overseas projects that can come on line but the recent AGM appeared to suggest that things are happening because the statement was much more bullish than recent updates.

At the announcement of the full-year results there were signs of cautious optimism:

"The new financial year has opened firmly, partly as a result of project shipments and order prospects are in line with expectations in most trading units."

However, the recent AGM added to this with a more upbeat comment:

"Trading in the year to date has been profitable in all three divisions, and turnover and profitability in the half year to September 30 are expected on current indications to be comfortably ahead of last year."

It is true to say that the share price has already reacted positively to this and has doubled since the beginning of April. So is there any value left?

Gearing is 27% and cash on deposit is down to £334k although a payment has been made to cover some of the pension deficit. The dividend has been increased significantly this year (double from 4p to 8p) although this has to be offset by the fact that it is only just covered by earnings reported last year and the fact that the dividend was cut quite savagely last year. However, the present dividend shows an increase of about 7% on 2001 so appears to presume that there is a confidence about current trading. As the dividend was announced in July it should be fair to assume that the confidence has been endorsed by the AGM statement and trading update. Using the dividend alongside other factors, historically cover has been around 2, although recently this has been quite erratic as has earnings. Assuming that things are back on course and that the dividend cover can be a reasonable guide along with the trading statement, I feel that the interims could show a significant gain over the 5p posted last year and that this will continue into the full-year EPS which tends to reflect the EPS of H1 (just marginally lower). On a dividend to cover basis I expect full-year figures could approach EPS of 17p with the interim dividend nudging up as well. This is in line with my thinking on earnings growth which, as they are comfortably ahead of last year, suggests that 7p might easily be on the cards at the halfway mark. The last time the dividend was 8p the EPS came in at 20p (1998) and although a repeat is not necessarily going to happen it may well reflect the thinking of the management that this figure has been reached for a full-year dividend this year. (The fact that the final dividend has increased from 2p to 5.5p adds weight to my own feelings on this one). If the halfway figures are merely doubled then the EPS figure will be around 14p for the full-year.

So where does that leave us? Based on dividend cover and historic earnings models (crude alongside some of the thing the professionals come up with, I know but sometimes a lot simpler to get to grips with – i.e. easier to agree or disagree with me because my figures are basic and not wrapped up in broker speak and complex mathematical formulae and algorithms etc.) and put alongside director comment, it is reasonable to expect that EPS could be anything between 14p and 20p for the full-year. I expect the figure to come in nearer the middle of these on 16-17p but it does allow a range to be applied once we settle on a realistic PE.

For comparison, two other stocks in the sector, Fenner (FNR) and Syltone (SYLT) operate on forward PEs of 10 and 12 respectively so the current rating for Tex does not look too demanding if we apply these figures to the company. At the low end a PE of 10 and EPS of 14 would appear to justify a price of 140p. Taking the mid-points of EPS 17p and PE of 11 a price of 187p appears to be fair value with an ambitious 240p at the top end. I feel there is a minimum of 35% gain possible in Tex with little downside, maybe 118p where the price was before the trading update. That puts the reward to risk ratio comfortably in favour of the investor IMO on something like 3.5 to 1.

On a TA matter there does appear to have been a significant breakout to the upside and the long-term downtrend has been broken from about 80p. There appears to be some historic resistance in the 140-145p area which might take some breaching but then this share is quite illiquid and, consequently, perhaps not the best to do TA on.

I realise this has been a somewhat rambling post but I hope it makes sense. The share goes ex-div on 17th September so anyone buying before then qualifies for a not insignificant payout of 5.5p immediately (a yield of well over 4% on that payment alone).


Needless to say I hold a few of these shares and, therefore suggest strongly that you DYOR because I am probably very biased. This is my interpretation only of company information available in the public domain and from the company website. It is not an invitation to buy shares in the company but an analysis carried out for my own benefit and made available through these boards for others who may be interested.

[ntv] 09/9/2003 10:20

bulletin board

[ander] 24/8/2003 21:00

colonelA:
Thank you very much for that information and I will heed your advice.Oh, by the way what does BB mean?Thanks again.

[colonel a] 23/8/2003 14:09

ander:
MM's don't systematically hold stock.
If the price of a stock has moved considerably you can try to guestimate the MM's net position (long or short) from historical trades.

What is generally being refered to above is the liquidity of a stock - the relationship between trades and price.
Generally, the smaller the market cap of a company the less liquid its shares will be.
If the percentage of shares held by big (by implication non-trading) holders is higher than normal then the shares are likely to be less liquid.

However in times of flux a company's shares are likely to become more liquid than normal.

TXH is quite a small company to have a full listing.
Looking at it now the only obvious issues are that the price has already risen on good results and (in my opinion) they've paying a large percentage of profits in dividend.

To a new trader:
Everybody on a BB has a position.
Most posters are genuine but there are some real chancers trying to influence the price of shares they have an interest in.
Do dyor.
Until you speak the lingo and unserstand the risks (12 months say) trade slowly and carefully.

[ander] 22/8/2003 21:34

I am new to trading and wondered if someone could please explain how you know how much stock the mm's hold.Also how do you know how many shares in total a particular company has in circulation.

[boobly] 21/8/2003 13:56

TOLD YOU THERE WOULD BE MORE TO COME......

.......AND THERE`S STILL MUCH MORE TO COME...........

[lasmo] 01/8/2003 09:43

NTV
Main problem with these shares is the MM's hold very little stock. Hence small amounts of buying or selling, have a large effect on the price. If TEX pull off the big Asia deals, their profits will be secure for 2-3 years, price will easily jump to £2 - £3. Note though, these Asia deals have been a round for a long time, hence they are definately not in the price at present.

My broker put me into TEX more than 10 years ago. Between his clients we hold around 20% of the company. The chairman has another large slice (around 40% I think). Hence there is very little free stock around and very little trading. Share price has been all over the place, but I've been very pleased with the yield. Indications are that next year's yield will be as good if not better than this year. I believe you have a sound investment.

[ntv] 29/7/2003 00:31

looks interesting for a one year outlook with good yield
bought a few today and will now wait and watch to see which way it goes next

[boobly] 19/7/2003 00:13

NICE RESULTS...........NICE TICK UP !

MORE TO COME.......

[boobly] 13/7/2003 16:32

Whispers are that delayed results will contain long awaited pleasant suprises,

this will certainly precipitate the rerating.

[empirestate] 13/7/2003 15:11

results should come in at the pretax £1 million and way overdue a re rating imo

[boobly] 02/7/2003 11:20

We should be due for some news here........Good I hope :-)

[lasmo] 19/5/2003 14:03

Chart looks promising. Results due out in June. Last statement was positive on future trading.....so let's wait and see???

[saskatoon] 25/11/2002 13:53

Lasmo......these have gone up almost vertically.....and fully justified in doing so....i still feel these are still very cheap at a P/E of just 6

[lasmo] 25/11/2002 10:31

Don't know if anyone read my above posting.....But Up 6% today already.

[lasmo] 25/11/2002 10:31

Don't know if anyone read my above posting.....But Up 6% today already.

[lasmo] 25/11/2002 10:26

Don't know if anyone read my above posting.....But Up 6% today already.

[lasmo] 24/11/2002 23:30

See latest results....next 6 months look promising.