Alba Share Discussion Threads

[joekoe] 18/10/2004 17:07

The JV with Beko for Grundig worries me somewhat, as Grundig's products are starting to seriously compete with Alba's. Last time I went into a Curry's superstore, I saw major space given over to cheap Grundig audio equipment. Also, Beko are increasing market share in the UK and Europe in brown goods, competing directly with Alba. I fear that the JV could become acrimonious due to the overlap between the companies.

Of course Beko and Alba could, and should, have foreseen all this and come to some kind of agreement to prevent territorial disputes occurring. Although Alba would have to tread very carefully indeed to avoid falling foul of the Competitions Act.

[m.t.glass] 12/10/2004 13:30

Down five times as badly as the market already today, on biggest volume for 4 months. Some bad news leaking out?

Not heard of any.

One marketmaker has shifted his bid below 700 and 3 othesr at 700 now

[joekoe] 30/5/2004 23:47

Alba is launching a range of budget high-specification digital cameras under the Goodmans brand this week. They are also launching a low cost portable video player that uses flash memory.

The design of the newer ranges also looks superb, particularly noteworthy are Goodmans digital radios and portable hi-fis.

For a low-cost brand they certainly seem to be coming up with good ideas. I'm looking forward to their results in just over a week. The bottom line may not appear to justify the price at first glance, but with the Grundig purchase and the innovative designs, the prospects are excellent.

[tom_sutcliffe] 16/2/2004 18:09

JV will do E1bn of sales in 3 years at better than group margins and they get half, that puts 70% on the EBIT. As soon as they start going round after the FY results in March this thing will fly.

[johnroger] 07/2/2004 16:49

Director buys 3000 at £7.80

[pippin] 02/2/2004 10:10

I sold on Friday at 821p as the rating had become a bit rich for me. I think they could drift back down some way as the media interest in the Grundig deal abates.

Still, they'll stay in my watch list and if they fall back far enough (10-15%) I'll be back in.

[johnroger] 30/1/2004 14:48

Telegraph today

Alba turning up the volume

Alba, Britain's leading supplier of budget and mid-priced consumer electronics, is now hacking into mainland Europe. In a 50-50 joint venture with its Turkish supplier Beko, Alba is grabbing Grundig's consumer electronics arm after it filed for insolvency last year.

Alba has made a habit of profiting from absorbing struggling companies. It's a "tried and tested formula", says chief executive Daniel Harris, who has already pinched Bush, Goodmans, Anthony Worrall Thompson and Roadstar to his benefit.

It's a great business model. Let someone else invest millions in building up a strong brand, then buy it when it's down. Alba doesn't actually do any manufacturing itself and takes on no technology risk and it outsources manufacturing cheaply to the Far East. Then it sells its products to the likes of Tesco, Argos and Dixons.

Germany's Grundig is the latest target and Alba's biggest acquisition to date. Analysts think Alba got the company for a snip at €80m. It is after all a European household name and had sales of €778m in 2002.

Alba hopes the acquisition will help it to crack the European market, which currently accounts for just 10pc of sales. The acquisition should initially add £100m to Alba's annual turnover of £528m. In the longer term, analysts believe Grundig could add as much as 30pc to sales.

The shares, which have doubled in the past two years, were bumped up 14pc on the news to 765p. They are now trading on 16.5 times expected earnings, yielding 1.4pc. That may look full, but with the acquisition opening so many doors, they're worth buying.

[johnroger] 30/1/2004 13:18

Hareram ..... many thanks for your post

[hareram] 30/1/2004 12:21

Alba does deal so good it 'beggars belief'
Alba has just announced that, in partnership with a Turkish company called Beko, it is buying German consumer electronics giant, Grundig, for Euro80m (£54.5m). For this sum the joint venture partners are buying the brands, stock and an international distribution network. The business they are buying had turnover in 2002 of E788m (£538m) which is very similar to last year's turnover at Alba of £525m. For comparison, prior to the announcement of the Grundig purchase, Alba was valued at £339m. It is hardly surprising that the first analyst to write about the deal has described it as so attractive that it almost 'beggars belief'.

There is a reason why the price was so low: Grundig was bust. The joint venture partners have bought the business from the administrators leaving behind the nasty bits such as high-cost manufacturing facilities in Austria and expensive liabilities under German law to the workforce. Only some 200 of a 1300-strong labour force will be staying with the company under its new owners. Alba has said that it expects the deal to be earnings-neutral in the current year. Grundig's turnover dropped dramatically in 2003 to nearer Euro 340m while in the hands of the administrators, but sales are likely to recover dramatically under the new owners. Alba chief executive, Daniel Harris, says turnover back at the much higher levels of 2002 is perfectly achievable.

One reason why the price was so low may have been the fact that the two most enthusiastic buyers, Alba and Beko, joined forces to bid. If they had been bidding against each other the price might easily have moved dramatically higher. Beko has Europe's third-largest factory making TVs and is a successful low-cost manufacturer which already supplies Alba. In broad brush terms, the deal envisages that Beko will make the products while Alba sells them, though product will also be sourced from China.


Alba has great record of rejuvenating neglected brands
Daniel Harris explains the deal, in part, by pointing to Alba's track record of success in taking well-known but unprofitable consumer electronics brands and giving them a new lease of life. The company has a string of such brands, many coming in by acquisition over the years, and has grown strongly as a result. There was a serious blip in the early 2000s when the group invested heavily in promoting a web-linked TV business hoping to build up recurring subscription revenue. The results were disappointing and led to hefty losses. The company moved decisively to extricate itself and has been extremely successful in its core business with a steadily widening range of branded consumer products.

Part of the opportunity now is that Grundig is both a more powerful and far more widely recognised brand that any of the existing ones owned by the group. And unlike Alba's other brands, Grundig is international. This year Alba is on course for sales around £600m of which around 85 per cent will be in the UK and the balance overseas, mainly in Italy, Spain and Switzerland. Grundig does 45 per cent of its sales in Germany and has sales in places as far-flung as Australia, the Middle East and the Americas. Even better for Alba, Grundig has minimal sales in the UK, creating an obvious opportunity to exploit a wide-open new market with a product that can easily be positioned at a premium to existing Alba brands.

Harris says he expects that in three years' time Alba may make as much as half its sales overseas, implying overall group sales well over the £1bn mark. In addition, because Grundig is a premium brand, he says that margins on the additional sales may be higher than the 5-6 per cent range being achieved by the group presently. The implication is that profits could be £60m plus with earnings per share heading up fast towards the 100p mark. No wonder the shares leapt by 94p to 765p on news of the deal. They are already showing a healthy gain on my November recommendation at 647.5p but I think there is much more still to come. The shares are a strong buy.(SHARE WEEKLY)

[pippin] 30/1/2004 10:07

So, that's three of us then!

[babolat] 30/1/2004 09:39

Pippin - It seems not to have the support enjoyed by some of the more 'techie' stocks.
I first bought in November at around £6.50, on the strength of a recommendation in Chart Breakout - 'The move above 550p signals a breakout with a minimum target of 1200p, around the old peak'.
They didn't give a timescale, but at this rate it won't be long !

[pippin] 30/1/2004 08:13

More than can be said with people on this board.

Very, very odd!

[johnroger] 29/1/2004 21:24

With a rise of 94p today the market is obviously very impressed with this deal!

[pippin] 29/1/2004 17:10

Looks to be very, very shrewd. It fits beautifully, the cost savings from closing the European manufacturing will be very useful and it's a great brand name.

[johnroger] 29/1/2004 09:59

Price moves to new high on RNS? Where does Alba fit in?

[pippin] 26/1/2004 15:45

Two buys, totalling 68,000 shares have gone through at the full ask price in the last few minutes.

Yet the price stays steady.

Still oddly overlooked on this board given the potential.

[pippin] 22/1/2004 10:59

Strangely overlooked, this share.

The fundamentals have become very good indeed of late.

[johnroger] 20/1/2004 17:36

Ready to move up after trading over £6 for the past 4 months

[johnroger] 09/1/2004 15:31

Price now approaching recent highs again. Lloyds have almost 4%, is this a new holding?

[johnroger] 10/12/2003 15:25

Noticed that Asda and Co-op are now stocking Alba electrical items.

[rafieh] 09/12/2003 13:08

John,
" For now, fairly priced." I hope the price action over the next few weeks will prove them wrong.

[johnroger] 06/12/2003 16:47

Investors Chronicle report on results.Only rated as "fairly priced" but does admit to the Eastern European potential.

5 December 2003

ALBA (ABA)

It seems that UK consumers just don't want to stop spending. Alba reported a 19 per cent rise in sales at the UK electronics brands arm, and a 12 per cent increase in sales of domestic appliances and power products. DVD players remain a big seller, and are expected to be the top-selling product for the second year in a row this Christmas. But there was also strong demand for flat-screen televisions and smaller products such as MP3 players.

Chief executive Daniel Harris believes that a strong product pipeline for the next two years (including cheaper flat-screen televisions, recordable DVDs and better-quality MP3 players) leaves the future looking bright. The group plans to expand into home computers in Easter 2004.

Neither is a slowdown in consumer spending a major concern for Mr Harris, as he believes the cheaper end of the market will hold up better if customers start watching the pennies. Expansion by retailers, including Tesco and Dixons, into Eastern Europe is great news for Alba as it offers an instant market for its products. Sales in the European division jumped from £21m to £40m. KBC Peel Hunt forecasts full-year pre-tax profits (pre goodwill) of £29.8m, with EPS of 45.5p.



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Ord price: 635p Market value: £321m
Touch: 628-642p 12-month High: 650p Low: 380p
Dividend yield: 1.6% PE ratio: 14
Net asset value: 162p Net debt: 130%




--------------------------------------------------------------------------------
Half-year Turnover Pre-tax Earnings Dividend per
to 30 Sep (£m) profit (£m) per share (p) share (p)

--------------------------------------------------------------------------------

2002 210 7.8 12.7 2.05
2003 250 7.4 11.4 2.25
% change +19 -5 -10 +10

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Last IC view: 20 Jun 2003, page 53 Ex-div: 24 Mar Payment: 26 Apr


The UK continues to perform well and there are huge opportunities awaiting Alba in Eastern Europe. But the shares have risen over 60 per cent since February, suggesting the good news is factored in. For now, fairly priced.

[johnroger] 03/12/2003 14:35

Previous highs were on the back of "internet TV" and the TMT bubble.This time it will have to be based on real earnings and not just hopes!