Chamberlin Share Discussion Threads

[rivaldo] 29/2/2024 07:23

Intriguing stuff - Free Association Books Ltd (FAB) have turned up with a 3.68% holding in CMH, or 6.6m shares:



This was bought as part of the 2p placing on 9th January judging by the date of purchase.

Most interestingly:



FAB appear to be an investment vehicle for the Brown family. Trevor Brown used to be a director but isn't any more - whilst Edward and 3 other Brwons are still directors.

So in essence Trevor and his family have now bought into CMH to an even greater extent.

He's evidently pretty convinced that there's rather good value to be had here.

[jellypbean] 22/2/2024 13:34

Rivaldo,

I suspect it may be lease liabilities, that account for the difference. As of May '23 CMH had 2.7M lease liabities, of which the Petrel facility would likely have been a fair chunk. The RNS says CMH will now be subletting to Petrel, so presumably this allows them to remove this liability from the books?

The RNS explicitly states where the 3M is going, I think it's wishful thinking to assume there there has been more cash paid than is stated.

[this_is_me] 22/2/2024 13:15

I was confused by the mkt. cap too since ADVFN haven't updated the information on the financials page.

[red army] 22/2/2024 12:51

"From a £2.75m m/cap there's a lot of room for upside from a company which has been around for over a hundred years."

You could say the same about Marconi or Woolworths etc

[rivaldo] 22/2/2024 12:47

The RNS specifically states that of the £3m, £1.1m is being used for working capital and CMH's growth strategy. Simple maths would therefore suggest that it's impossible to reduce liabilities out of the remainder by £2.6m. The implication is therefore that the acquirors have taken on £2.6m of Petrel-related liabilities. Happy to be corrected though.

Your m/cap is correct, cheers - I'd used the prior pre-placing shares in issue.

[jellypbean] 22/2/2024 11:22

Oh, and market cap is 3.6, not 2.8.

[jellypbean] 22/2/2024 10:49

Rivaldo. By my reading. It has not been sold for 3M plus 2.6M liabilities.

It has been sold for 3M, and this money has been used to pay down the liabities.

AFAICS The buyers have gotten 4.5M book value assets for 3M.

CMH has got well-needed cash.

I would be very happy to be corrected in this (with a clear evidence).

[rivaldo] 22/2/2024 10:43

Absolutely Tim, fair comment.

My perspective is that Petrel's been sold for a good sum, i.e £3m plus £2.6m of liabilites. In doing so CMH have effectively resolved the pension deficit, reduced expensive borrowings and provided working capital for the core business which is on the rise.

With competitors going out of business, onshoring gaining momentum, petrol/diesel engines looking like they're going to be around for a long time to come etc, CMH fulfil a need for local supply which is only growing and in a shrinking market of suppliers who are soundly funded.

From a £2.75m m/cap there's a lot of room for upside from a company which has been around for over a hundred years.

[this_is_me] 22/2/2024 09:25

While it is difficult to argue about selling a bit of the company for more than the mkt. cap., it is the part of the company that has been making money and the bit they are keeping has been loosing money.

Petrel Ltd

2323 revenue: £ 3.829 million operating profit £606,000

Petrel's operating performance has improved markedly in the last two financial years and the Board expects this to continue in the 2024 financial year. Having delivered two consecutive years of record operating profit, Petrel is on track to improve again this year. Having changed the management team in 2022, the Board has supported the addition to the sales force of a European Business Development Manager and an Eastern European Agent to drive the strategy of increasing export sales from around 20-25% to 35-40% of total sales by 2026. Petrel continues to improve its offering through enhancing existing product ranges and providing lighting design services that give customers tailor-made lighting solutions that exactly meet their requirements and needs in an energy efficient and cost-effective way.

During 2023, Petrel has invested in two new machines that will enhance productive capacity and deliver cost-saving efficiencies. In the first half of the current financial year, Petrel has introduced upgrades to its product range, including a self-test emergency option for the popular 7 series. With expectations of double-digit revenue growth again in 2024 at operating margins that have consistently been around 16% for the last 2 years, the Board believes that Petrel is well placed to contribute a materially enhanced operating profit in 2024.

[rivaldo] 22/2/2024 08:38

Encouraging to see the sale of Petrel completed quickly as per today's RNS. This is a transformational deal.

£2.75m is now coming into CMH's coffers, with a further £0.25m deferred consideration.

The pension deficit is reduced to a paltry £0.4m.

On top of the £3m sale proceeds, CMH's liabilities will also be reduced by a further £2.6m, and the results to 31st May will look good with a £2m exceptional profit.

Per the interims, with RDC improving its operating profit by 43% year on year and CHC looking better for this H2 onwards, the core business is in good and improving shape.

A £2.8m m/cap gives a very decent risk/reward imo given the turnaround being achieved.

[rivaldo] 21/2/2024 12:14

Well well.....Petrel has been sold for £3m - more than the entire m/cap first thing today.

H1 results look to show continued solid progress too, with optimism about prospects for growth in this H2 (which should be grounded in fact as we're already almost halfway through H2).

I'm off to read through the two RNS's properly over lunch....

[hastings] 01/2/2024 11:15

I see, you're looking at PAT.

[hastings] 01/2/2024 11:14

From what I can see, Cavendish has £0.5m in for adj PBT for full year 2024, where does the higher figure come from? Is there another broker note?

[z1co] 01/2/2024 10:24

Looking forward to the interim results towards the end of this month:

The Board is anticipating a further increase in revenue of between 15% and 20% and profit after tax of between GBP0.8 million and GBP1.0 million in FY24. The Group has the installed capacity to grow organically to an estimated GBP45-50 million in revenue

[jellypbean] 27/1/2024 22:23

Rivaldo. Petrel specifically made LED luminaires for use in harsh and hazardous conditions. I believe that these fall under the category 'special purpose lamps', which do not yet fall under the fluorescent lighting ban (will be 3-5 years).

So no forced replacement of old lighting yet AFAICS.

[rivaldo] 26/1/2024 10:27

Commentary from LPA in their results yesterday:

"The legislation across the EU banning the sale of fluorescent tubes from September 2023 is a strong positive for us, driving much interest in our LED alternative"

This of course is directly relevant to Petrel:

[rivaldo] 17/1/2024 12:42

Miton UK Microcap Trust have been buying - they now own 8.15% with 14.6m shares.

Looks like they've been buying in the open market as they crossed the 8% threshold on Monday:

[rivaldo] 12/1/2024 12:37

Cheers - I assume they took the 7.5m shares in the placing. Hopefully they're new long-term shareholders:

[z1co] 11/1/2024 22:39

Raglan Securities Ltd Dublin , Ireland have a holding of 7,500,000 shares or 4.18%.

[rivaldo] 10/1/2024 22:37

After taking their further shares in the placing First Equity were due to be at 29m shares per the placing RNS, so they've actually bought a further 1m shares on top to get to their current 30m shareholding.

[z1co] 10/1/2024 18:12

Bit of good news at last

William Black of First Equity Limited as Investment Manager of Armstrong Investments Limited has increased stake in company to 16.727% from 13.057%.

[z1co] 10/1/2024 09:27

Thanks for posting the note

[rivaldo] 10/1/2024 09:17

Cavendish have an updated note out today, reiterating their forecasts of £24m revenues, £1.4m EBITDA and 0.5p EPS this year to 31st May.

Extracts:

"Update.

The statement confirms the Board’s confidence in continued growth across its divisions over the medium term. For the current year, the statement reiterates previous guidance of full-year revenue growth of between 15% and 20%, and profit after tax of between £0.8m and £1.0m.

- Strategy. In the short term, strategy will focus on growth and achieving operational improvements across its businesses as the group’s turnaround continues.

- Petrel. At Petrel, the focus is to increase marketing to drive an increase in export sales to maintain the 18% growth achieved in the last financial year.

- Foundry division. In the Foundry division, both businesses are looking to enter new sub-sectors to drive revenue. CHC is investing in Spheroidal Graphite iron, a market estimated to represent approximately 70% of the total cast iron market representing a significant market opportunity. RDC is investing in the development of steel production, which is a more specialist and higher-margin sector of the castings market.

- Limited need for additional capital investment. Overall, the group has installed capacity to facilitate growth to revenue of c.£45m-50m with limited need for additional capital investment."

[z1co] 09/1/2024 11:50

Excellent order book for 2024 and the following years:

Since the year-end, the Group has continued to perform well. CHC has won a number of new long-term contracts, including, as announced on 22 June 2023, one with a leading European automotive industry components supplier. These contracts in aggregate are estimated to be worth a total of EUR14 million of revenue over their lifetime with production starting in Summer 2024. Furthermore, the Company had a record order intake in November 2023, with RDC winning new blue chip customer contracts with J.C. Bamford Excavators (JCB), Nissan, Volvo, Tekmar and Steel Dynamics.

[red army] 09/1/2024 11:42

Well at least this an opportunity for investors to buy in at a similar price to directors/institutions.