Acal Share Discussion Threads

[rivaldo] 19/6/2017 11:20

Finncap has today issued its quarterly note on the Support Services sector. ACL is one of its 7 favoured picks (amongst the others is RNWH, which I also own), with a Buy and a 339p target price:

"Take advantage of the weakness of the pound

Buy overseas earners. Our favoured picks are:

Acal – 82% of sales are outside the UK, with the largest markets being the Nordics at 22% of sales, Germany at 18% and France at 10%. Acal designs, manufactures and distributes electronic components and assemblies. It has virtually no cross-border trading between the UK and Continental Europe."

[soundbuy] 15/6/2017 08:39

ex-divi today, 6p and bits.......

[rivaldo] 14/6/2017 13:03

Good to see the first buy just now at 300p.

[rivaldo] 14/6/2017 06:37

Peel Hunt today reiterate their Buy and 360p target price:

[rivaldo] 13/6/2017 14:51

ACL seems to be specialising in afternoon buying surges at present - I wonder if this suggests American interest?

[rivaldo] 12/6/2017 22:16

Great close today - lots of AT (institutional?) buys at 300p and another 2k buy at 298p.

The re-rating is beginning.

[soundbuy] 12/6/2017 14:58

Hmmm........must be a few delayed trades...... Nice :)

[rivaldo] 12/6/2017 11:15

Finncap's summary in their note from last Wednesday reads as follows FYI - they say Buy with a 339p target:

"Strong H2 backed by cash flow, strategy delivering BUY

Acal reported FY 2017 adj. EPS up +13% (our forecast: 11%) driven by H2
organic sales growth of +6% (up from a -7% decline in H1), a continued rise
in margins, a strong contribution from acquisitions and favourable FX
translation. Cash flow was also strong, with pre-exceptional operating cash
conversion of 151%. With the year-end order book up +22% CER (+13%
organically), the outlook remains positive. We make no changes to our
PBT/EPS forecasts and reiterate our view that Acal has the market
opportunity and services to build a significantly larger business.

Underlying sales accelerating. H2 organic sales grew +6% (+3% in Design &
Manufacturing and +9% in the more cyclical Custom Distribution) up from a
-7% decline in H1.

Restructuring benefiting. £4m annual cost savings are being targeted, with
£1.7m realised in FY 2017. The exceptional cost of delivering these was £6.4m
(lower than the originally anticipated £8m).

Margins continue to rise. Gross margins increased to 32.8% from 32.2% in
the year and EBIT margins to 5.9% from 5.7% despite the weakness of sterling,
affecting purchase pricing in H2. Overall, we continue to expect progress at the
Group EBIT margin level, aided by the cost savings and improved organic
growth.

Stronger than expected cash flow. Net debt of £30m was better than our
forecast £41m. While some of this difference is beneficial timing, we have
improved our net debt forecasts and highlight that with our forecast of 0.9x net
debt/EBITDA in FY 2018 (falling to 0.4x in FY 2020) enhancing acquisitions
remain likely as the group strengthens its market position.

£20bn opportunity. The addressable market in niche electronic components is
worth £20bn globally. Our view remains that Acal’s true potential value lies in
taking advantage of the digital transformation of industry. With its growing
expertise in power supplies, fibre optics, wireless and sensors (amongst others)
and its design to delivery services, Acal is very well placed to produce
significant long-term growth.

Modest valuation against the opportunity. FY 2018E P/E of 12.4x
represents a 30% discount to our peer group and the 3.2% dividend yield a
47% premium."

[rivaldo] 09/6/2017 08:24

Nice £25,000 buy at 286.53p this morning has sent the price up.

And ACL have been tipped in today's IC:

"The management team at Acal (ACL) have their eyes on acquisitions. Since 2009 the supplier of customised electronics has bought 13 businesses, 10 of which have been in the design and manufacturing division, which contributed three-quarters of group revenue growth during the period. Reported profits were held in check by £6.9m in exceptional items, including a £4.8m restructuring charge for Acal BFi, but underlying pre-tax profit was up 19 per cent to £17.2m.

Those acquisitions have not only broadened Acal's commercial offering, but have resulted in a significant increase in cross-selling revenues, a process augmented by the group's latest acquisition Variohm Group, a maker of braking sensors. Meanwhile, the group’s efficiency plan, which saw a layer of management stripped out and some manufacturing moved to cheaper countries like Poland and Sri Lanka, is expected to save £4m annually at a one-off cost of £6.4m.

Analysts at Peel Hunt expect pre-tax profits of £20.7m in the year to March 2018 giving an EPS of 21.3, compared to £17.1m and 18.7p in FY2016.

IC VIEW:

It appears that Acal can afford to continue ahead with its acquisition plans - net debt fell from £38.1m to £30m over the year, giving a gearing ratio of 1.2 times net debt to cash profits, below the company’s 1.5-2 times target range, and operational cash flow was up 66 per cent. Shares are trading around the mid-range of their five year historical valuation at 12 times earnings. Buy."

[rivaldo] 08/6/2017 09:10

It was good in the interview link posted by SoundBuy to hear Nick Jefferies talking about more acquisitions being likely this year, which would presumably push up forecasts still further:

http ://www.proactiveinvestors.co.uk/companies/stocktube/7582/acal-plc-firing-on-all-cylinders-ceo-nick-jefferies-7582.html

[rivaldo] 07/6/2017 11:07

The IC also say Buy - hopefully a fuller Buy tip still to come:



"Custom electronics supplier Acal (ACL) reported that revenue was up 6 per cent on a constant exchange rate basis in the year to March on the back of a strong second half of the year where organic sales grew 6 per cent and orders by 7 per cent. The company’s efficiency programme generated £4m of annualised benefits, giving a 23 per cent boost to underlying productivity. Shares fell nearly 4 per cent in early trading, but shareholders can look forward to a 6 per cent higher dividend payment. Buy."

[rivaldo] 07/6/2017 06:48

Good coverage of the results here:

Http ://www.proactiveinvestors.co.uk/companies/news/178827/acal-well-placed-to-produce-significant-long-term-growth-178827.html

Extracts:

"Acal well placed to produce significant long-term growth
11:44 06 Jun 2017

The addressable market in niche electronic components is worth £20bn globally, and finnCap thinks Acal is well placed to take advantage of the digital transformation of industry and grab a larger share.

A strong second half brought full-year results in slightly ahead of expectations at customised electronics specialist Acal PLC (LON:ACL).....

....Broker finnCap reiterated its view that Acal has the market opportunity and services to build a significantly larger business.

“The addressable market in niche electronic components is worth £20bn globally. Our view remains that Acal’s true potential value lies in taking advantage of the digital transformation of industry. With its growing expertise in power supplies, fibre optics, wireless and sensors (amongst others) and its design to delivery services, Acal is very well placed to produce significant long-term growth,” the broker said."

[sharw] 06/6/2017 12:53

SoundBuy - thanks for the link. Just before the end Nick Jefferies says that they expect to deliver a 20% increase in earnings this year. I make that 23p (in line with FinnCap) for a forward p/e of 12.4 at 285p. Hardly expensive and a PEG of 0.64.

[soundbuy] 06/6/2017 11:11

HT AV ML

Peel Hunt.

FY17 PBT came in a nudge ahead of our (and consensus)
forecast at £17.2m after a year that was characterised very
clearly by two distinct halves. After a very tough first half, H2
saw organic underlying growth of 6% and momentum has
continued into FY18e. This morning we are increasing our TP to
360p from 315p and reiterate our Buy recommendation.

FY17 adj PBT was £17.2m vs PHe (and consensus) £17.1m, on revenues +18%
(-1% underlying organic at CER) to £338.2m but this was very clearly a year of
2 halves: H2 underlying organic growth was +6%. In addition, the order book at
end of Mar was +13% organic, and we understand momentum has continued
into Q1 of FY18E. This has been driven by an increase in new project activity as
well a good level of repeat business, as well as cross-selling and a good
performance from recent acquisitions.


Upgrades. it’s early in the year, but given the small FY17 beat and the strong
start to FY18, we are nudging our forecasts up accordingly. Our FY18E PBT and
EPS increase 2% to £21.1m and 21.7p respectively.
Reiterate Buy. H2 has come through as the order book had indicated and should
prove a robust reminder of the ever-improving quality of the business and the
long-term investment case for Acal – to grow and develop a higher margin, high
quality business by organic growth supplemented by acquisitions, capitalising on
its unique position to consolidate a highly fragmented market. Taking into
account the strength of the end markets as we head into FY18, the strength of the
balance sheet and scope for further acquisitions, and the upgrades, we are raising
our TP to 360p which equates to what we think is an undemanding PER of
16.5x our revised Mar18E EPS. With 20% upside we reiterate our Buy
recommendation.



Stifel

This was very much a tale of two halves for Acal with a very strong 2H. The
group enters FY18 with confidence supported by a good order book (+22%).
Cash generation surprises to the upside with balance sheet gearing coming
down to 1.2x from 1.7x. We continue to argue that the group’s strong
fundamentals are not discounted in the rating. BUY.


FinnCap

Acal has reported FY 2017 adj. EPS up +13% (our forecast 11%) driven by H2 organic sales growth of +6% (up from a -7% decline in H1), a continued rise in margins, a strong contribution from acquisitions and favourable FX translation. Cash flow was also strong with pre-exceptional operating cash conversion of 151%. With the year-end order book up +22% CER (+13% organically) the outlook remains positive. We make no changes to our PBT/EPS forecasts and reiterate our view that Acal has the market opportunity and services to build a significantly larger business.

[rivaldo] 06/6/2017 10:44

Peel Hunt have increased their target price to 360p (from 315p).

[rivaldo] 06/6/2017 10:20

Tipped here this morning - I think more acquisitions are on the cards rather than special dividends, but hey....

Dobsey, the shares have had a good run, markets are volatile and some short-termers have taken profits. IMO the share price will soon gather steam and advance again:



"Special dividend?

Acal(LSE: ACL) is another company that has all the hallmarks of a top dividend play. Today the company announced its full-year results for the year ended 31 March 2017 showing strong growth across the board. Earnings per share rose 13% to 19.2p as underlying profit before tax rocketed higher to £17.2m, up from £14.5m in the year-ago period. Revenue grew by 18% or 6% at constant exchange rates. The best performing metric was the group's cash flow. Cash flow from operations increased 66% from £16.3m to £27.1m and the group's cash balance at the end of the period hit £22m, up from £20m at the end of the last fiscal year. This cash balance gives the company more than enough headroom to maintain its current dividend payout of 8.6p per share, which is costing around £5.2m per annum.

Unfortunately, this kind of dividend security does not come cheap. Like Amino, shares in Acal trade at a relatively high forward earnings multiple of 15 times, but City analysts have pencilled-in earnings per share growth of 14% for the year ending 31 March 2018, so the high multiple is to some extent justified by growth. The shares support a dividend yield of 3%, and the payout is expected to grow by around 5% per annum for the foreseeable future. With such a healthy balance sheet I wouldn't rule out special dividends along the way as well."

[dobsey] 06/6/2017 10:09

Great results and the shares drop 10 today,
Unbelievable

[soundbuy] 06/6/2017 06:18

Excellent reading throughout.......... :)

[rivaldo] 06/6/2017 06:14

Excellent results - 19.2p EPS is ahead of consensus expectations, as is the 8.5p dividend:



- order books are up strongly
- acquisitions performing well, with more acquisitions likely
- good cash flows
- efficiency programme to benefit this year
- D&M now up to 52% of sales
- this Q1 looking great

The outlook says it all:

""As expected, the second half of the year saw accelerating levels of organic growth in sales and orders, and excellent cash flow. This strong momentum has continued into the new financial year which we entered with an order book 22% higher at CER than the prior year, and which is driving further good growth in this first quarter as the order book converts into sales.

Our efficiency plan has been implemented, delivering £4m in sustainable annual savings and at a better than anticipated cost of implementation.

Variohm Group, acquired in January 2017, is performing very well. Cross-selling activities are underway with a number of exciting opportunities identified and our first design win has been achieved, ahead of plan.

This is the seventh consecutive year in which the dividend has increased - an increase of 67% in total, reflecting the transformation of the Group over this period. In the last four years alone, revenues have almost doubled and underlying operating profits quadrupled. We plan to continue this strong rate of progress through further organic growth and high quality acquisitions over the next five years."

[soundbuy] 05/6/2017 13:42

Positions been taken ahead of 2moro.

[rivaldo] 05/6/2017 11:08

Buying at 284.5p now.

[rivaldo] 02/6/2017 07:23

Obviously one is interlinked with the other - a likely good results and outlook next week mean that in the run up and afterwards we'll hopefully see a sustained chart breakout.

[sharw] 01/6/2017 12:24

I don't think this is about breaking resistance - more to do with people stocking up in anticipation of a good outlook on Tuesday.

[rivaldo] 01/6/2017 11:31

New highs now - hopefully through the resistance and on to 300p+.