Carclo Share Discussion Threads

[1gw] 09/10/2017 08:55

The latest Barnett Waddingham paper shows a further small improvement in 15-year corporate bond yields by end-September vs end-June. Together with neutral to positive trends (from a pension scheme deficit point of view) on mortality and risk asset valuations, offset by a relatively small increase in inflation expectations, I think that should be good news for the Carclo pension scheme deficit.

ML Sterling Corporates AA over 15 years
2.58% end-September vs 2.52% end-June (vs 2.47% end-March)

BoE 15-year market implied inflation
3.47% end-September vs 3.46% end-June (vs 3.44% end-March)

[mrangry2] 08/10/2017 16:29

ansc - LOL! :-)

[ansc] 06/10/2017 11:24

CAR issued their trading update on the 14th last year and the 15th the year before that. By simple deduction, therefore, it should be on Friday next week ... the 13th! Aaaahhhh .....

[rivaldo] 04/10/2017 11:34

New note from Edison just out. They've now increased their price target range slightly to 182p-193p, based on 12.5p EPS this year rising to 15p PS next year.

The positive tone of the report reflects my own confidence in the company. The H1 blip in CTP was just that - a blip, with H1 revenues slipping to H2 and balanced by outperformace in LEDs - and given the bullish outlook should give a good outcome for the year.

Meanwhile the short and long-term prospects for both core divisions look excellent:



"Carclo is focusing investment on its two larger established businesses – Technical Plastics (CTP) and LED Technologies (LED). Here a differentiated offer and long-term relationships with customers provide good earnings visibility and higher probability of a sustainable return. This strategy delivered strong revenue and profits growth during FY17. Despite a temporary setback at CTP during H118, which was balanced by outperformance at LED, growth appears set to continue, underpinned by contracts with blue-chip customers."

"Valuation: CTP recovery to drive share price upside

We use a P/E-based, sum-of-the-parts methodology with three sets of sample peers drawn from the medical device manufacturing (P/E of 16.1x), automotive (mean P/E of 16.4x) and aerospace (mean P/E 20.9x) sectors to reflect the diversity of Carclo’s operations. This gives an indicative valuation range of 182-193p (previously 181-191p), which is equivalent to an implied EV/EBITDA range of 8.2x-8.6x (vs peer group blended year one EV/EBITDA of 8.7x). The share price has dropped by around 13% since the AGM statement advised of short-term setbacks in the Technical Plastics division. Positive newsflow confirming the recovery in CTP should be supportive of the stock, helping to close the valuation gap."

[waspfactory] 29/9/2017 16:02

It's very disappointing and although I don't do charts, really haven't got a clue - this one looks horrendous. Hope I'm wrong!

[ansc] 29/9/2017 16:00

With the share price having fallen 14% since the AGM, the market is clearly expecting that the trading update (due shortly) is going to be woeful. It makes you wonder, therefore, why the company's CEO of all people bought £20k of shares (at 141.4p) on the day after the AGM. Has he lost his marbles or is he being paid so much that he can afford to waste the odd grand or two?

Time will tell.

[rivaldo] 15/9/2017 09:45

Tipped on T.M.F:



"Luxury car market

Carclo (LSE: CAR) is another specialist small-cap firm that’s no stranger to the luxury car market. I last looked at the technical plastic products supplier back in April when I rated the shares a buy. But after a mixed trading update, am I still bullish on the West Yorkshire business?

In its most recent update, Carclo revealed that overall trading for the current financial year to March 2018 remains in line with expectations, with strong trading at its LED Technologies division which provides lighting for top of the range luxury cars such as Aston Martin, Lamborghini and McLaren.

Technology-led

But the Technical Plastics division had a challenging start to the financial year with new programmes being delayed and some operational challenges, which have now been largely resolved. Performance is now much improved and should be considerably better in the second half.

Carclo’s share price has pulled back sharply since peaking in June, and I believe this presents investors with another opportunity to stake a claim in this exciting technology-led business. Trading on a forward P/E rating of less than 11, I think the shares are simply too cheap for bargain hunters to ignore."

[pugugly] 13/9/2017 12:46

rivaldo: Thanks re your 522 .

[rivaldo] 13/9/2017 09:32

FYI here's all the latest forecasts. Consensus is 12.76p EPS this year and 15.31p EPS next year.

That's a P/E of only 10.9 falling to 9.1. And the PEG is just 0.54, making CAR extremely good value.

2018 2019
Date Rec Pre-tax (£) EPS (p) DPS (p) Pre-tax (£) EPS (p) DPS (p)

N+1 Singer 12-09-17 BUY 12.30 12.50 15.00 15.04
Peel Hunt 12-09-17 BUY 12.68 12.99 15.39 15.56 2.00
FinnCap 12-09-17 HOLD 12.30 12.60 14.80 15.20
Edison 07-09-17 None 12.50 12.90 14.98 15.20 3.90
Equity Development 07-09-17 None 12.36 12.80 15.02 15.50 1.50

[queeny2] 12/9/2017 08:40

Hi illis.You'll have seen my posts above, but two negatives (obviously!) on your comment.The milder negative is that CTP isn't supposed to slip, never has iirc, and they boast about its product programmes timing certainty in presentations. So I watch that, as it's new. Derivative of that, they've expanded capacity a decent amount recently so not great timing to have slippage?The stronger one is that they don't say they've solved the operational issues, I forget the wording but partially or largely solved? (And what are they?)Anyway we shall see in mid October what they say on H1 and whether they can still hold full year as expected. By no means probable imho.(On the back burner I'm still suspicious of their last acquisition.)

[illiswilgig] 11/9/2017 18:40

Hmmm,

missed all the excitement!

Still back now and plenty of time to mull it over. First impression is: Typical Carclo. Very good news from LED, better than I'd expected and even the old soldier Aerospace looking perky as well. But ooops. CTP managed to search out a banana skin. Who'd a believed it?

Really not enough information in this statement to make a judgement on the seriousness of the issues.

Delayed start to programs is one thing, but I've never liked the 'oh we had some operational issues but its all fixed now' kind of thing. All too often it's not that simple. I'd like to believe that won't happen here but without more information its very hard to know whats going on.

Sitting on hands time. If it drifts lower I might have a little bite of a few more,

cheers

Illis

[rivaldo] 11/9/2017 11:21

Peel Hunt have reiterated their Buy and 200p target for CAR:

[rivaldo] 08/9/2017 14:24

Edmonda's post is from yesterday's Equity Development report, which is here:

[queeny2] 08/9/2017 13:49

edmonda - thanks

[pugugly] 08/9/2017 12:27

edmonda: Can you advise which broker's note ?

[andrewbaker] 08/9/2017 12:11

CAR deserves a bounce, particularly after director buying indicates support from that direction. However, I think we're going to go through a tough patch as a result of undisciplined ineffective and chaotic Brexit talks and plans from our current incompetent government; and with no hope of a better one coming along. So ... I'll hold, and wait for what should be future growth: but I won't be allocating much more, if any, to UK companies than I already have. The grass is far greener ...

[rivaldo] 08/9/2017 11:58

Good to see the CEO buying £20,000 of CAR shares at 141.4p - I suspect this is his ISA contribution for the year....

[edmonda] 08/9/2017 10:00

On track for FY18 with strong H2 expected

Carclo is a leading global designer and contract manufacturer (FY17 sales 70% non-UK) of fine tolerance and often mission/safety critical components for the medical (46%), optics (5%), aerospace (5%) and luxury/supercar (27%) markets.

One of Carclo’s many attractions is its broad spread of activities, spanning multiple geographies, technologies and vertical markets. When one division stumbles another picks up the baton. And so it has proved today, with the group saying this morning that it is “on track” to hit FY18 numbers, despite experiencing some H1 “challenges221; in Technical Plastics (re: program delays and operational difficulties) on top of temporary weakness in Aerospace demand.

Better still, the vast majority of revenues are tied to long-cycle products, high client retention and OEM platforms with typical life-spans of between 5-20 years. Hence providing excellent forward visibility, with underlying H1 vs H2 PBT likely to be split circa 1/3rd : 2/3rds this year. Consequently, there is no change to our adjusted EBIT forecast for this year (£14.3m) and next (£16.9m).

In terms of valuation, we believe the stock (at 155p) remains cheap, trading on CY PER and EV/EBIT multiples of 12.1x and 9.9x respectively vs peer averages of around 20x and 16x (see below). This also compares favourably with our 200p/share sum-of-the-parts: calculated using FY21 EV/EBIT multiples of 14x for Technical Plastics (64% FY17 sales), 12.2x LED Tech (31%) and 10x Aerospace (5%), discounted back at 12%, and adjusted for central overheads, the pension deficit and net debt.

[yump] 08/9/2017 00:10

Oh how stressful it is to choose to live by half-year results deadlines.

[pugugly] 07/9/2017 17:50

Closed above 140 so support seems to be holding - Will have to wait to see trade action tomorow -

Brokers still positive

Date Broker Recommendation Price Old target price New target price Notes
07 Sep 17 Peel Hunt Buy 142.50 200.00 200.00 Reiterates
07 Sep 17 finnCap Hold 142.50 165.00 165.00 Downgrades

Peel Hunt house broker - So rose tinted glasses (imo) David Buxton finnCap usually fairly reliable but sometimes trends to best case scenario.

[queeny2] 07/9/2017 16:58

June: "Current strategy builds high future demand visibility due to the complexity of our manufacturing processes and the product validations - once customers are committed to the early phases, projects rarely shift"That's a profit warning today, for H1. Profit warnings generally come in threes, so goes the old saying anyway.Intrigued by the operational issues, has anyone seen any research updates that point to what these might be?Trading update mid October, H1 results mid November.

[rivaldo] 07/9/2017 16:19

Today's trading showed lots of buying on AT and OK trades, and lots of smaller selling via O trades. I thought this was very telling. It indicates that institutional investors have been topping up, whilst PIs have been panicked out.

The company has guided towards meeting expectations. One division outperforming and one underperforming strikes me as perfectly fine overall given that the latter is now improving.

The market looks forward, not backwards. I suspect a bounce may be quick if the outlook in the interims confirms the bullish scenario for H2.

[queeny2] 07/9/2017 14:03

Owenski re leaky, certainly looks it.

[owenski] 07/9/2017 13:58

Covering analysts are guided by the same company that didn't guide on the recent mixed message at the last results.

This share price has had a ceiling on it in the 170 area for the last three years. Todays share price reaction and the moves prior to today show the market aint impressed.

Value's relative, if it aint being bought then it's dead money or a loss, until market viewpoint changes.

Meantime, no guarantee they wont disappoint again.

[rivaldo] 07/9/2017 12:49

The news was mixed. One division is thriving, the other has had some delays. So H2 will be more important this year.

But the company have guided they will meet expectations. And all covering analysts have maintained their forecasts.

IMO this reflects the high level of confidence in the market in the management.

In the meantime the company is even better value on a P/E of 11 and a forward P/E of 9.