Chamberlin Share Discussion Threads

[cfro] 25/5/2012 18:20

Great rise today and i think we just about have a breakout on the chart now too.

My broadband has been off all day due to maintenance on the lines. Been pulling my hair out today, so frustrating! Grrrr..

[rivaldo] 25/5/2012 09:31

:o)) Good to see you penpont, wondered what was taking you so long!

With essentially 20p EPS this year and 23p EPS next year, and with those legislative/technological drivers in place, CMH is the sort of stock which could be re-rated quite dramatically.

I could see 250p-300p in say 6-9 months if al goes well and the markets aren't too punishing.

Incidentally (for chrisis33), those £9m net assets are actually £11.2m of tangible net assets if you exclude deferred tax and the pension deficit. Not bad against a £12.3m m/cap.

[penpont] 24/5/2012 22:12

Well rivaldo it was me who bought that 5k, having turned down 10k at 146 prior to results :-(

This is one of those times when you need to be detached, look at the fundamentals and just build a stake at any reasonable price you can get. Really, they look worth 200p short term.

[chrisis33] 24/5/2012 16:07

Thanks Rivaldo ...

"Net assets at 31st March year end were
£9.0m which compares with the current
market cap of just over £11m."

[cfro] 24/5/2012 15:43

Stock has never been all that easy to attain here. Ever since i've been dealing in CMH shares i've always personally had to 'pay up' a bit for them. Always been worth it tho in my experience. ;-)

[rivaldo] 24/5/2012 15:34

Good to see 5k just bought at 157.83p, well above the 157p published offer price.

Chrisis33, you are absolutely correct about the excellent NAV backing for CMH. Have a read of my post 147 above for further confirmation.

[chrisis33] 24/5/2012 13:41

Can't say i know the company well, but fixed assets to the value of 2/3rds of the market cap is what convinced me to buy.

[interceptor2] 24/5/2012 13:18

chrisis33, Just checked and I believe you correct with property, plant & equipment valued at £8.1m, and market cap at £12m. Must admit it's not a ratio I normally look at though, so I take it that this ratio would be a good positive?

ic2...

[chrisis33] 24/5/2012 12:45

OK - I bought a few on results on the basis that the value of the company's fixed assets (property, plant & equipment) are a significant proportion of the market cap. Have I got this right?

[rivaldo] 24/5/2012 12:34

Excellent performance today.

Ic2, thx for the new broker forecasts. An 153p share price looks ridiculously low compared to 19,7p EPS and 22,6p EPS going forward, and especially given the legislative/technological drivers which will only encourage demand for CMH's products.

[cfro] 24/5/2012 08:39

Those 2013 forecasts look a little on the light side to me. I reckon they will be smashed putting CMH on an even cheaper forward pe.

[interceptor2] 24/5/2012 08:07

New broker forecasts are now released. See below.

Charles Stanley
2013, PBT = £2.20m and EPS = 19.70p
2014, PBT = £2.50m and EPS = 22.59p

Finncap
2013, PBT = £2.20m and EPS = 19.90p
2014, PBT = £2.50m and EPS = 22.60p

This means CMH @ 150p are on the following valuations.

PER = 7.55 and 6.62
PEG = 0.17 and 0.47
Rolling PEG = 0.22

I might have to mention these on the Zulu thread.

ic2...

[interceptor2] 23/5/2012 19:03

Good grief cfro, you are sounding more like geswan every day, I thought I was reading one of his post on the zulu thread :-)

ic2...

[cfro] 23/5/2012 17:55

Thanks IC2. Like we say cashflow of c.£2.4M is strong especially when compared to capex where its not far off double the figure. Thats brilliant as it proves that despite the added inward investment the co has generated cashflow over and above and we have the free cashflow to pay down the debt.

[interceptor2] 23/5/2012 17:09

Here is the statement I was looking for about modernisation. See below.

ic2...

After the modernisation programme we began in 2007 our foundries have now passed a milestone where they all operate with improved equipment, upgraded processes and strengthened systems. However, we believe that there are significant improvements still attainable and that these are best achieved by benchmarking our operations, quality and logistics performance against the best in the wider engineering industry. We have therefore been recruiting from that skill base to deliver the next phase of improvement.

[interceptor2] 23/5/2012 17:06

See below under the cashflow statement, I believe they have been modernising their plants since 2007, and it is still ongoing.

ic2...

Net cash inflow from operating
activities 2,430 1,791


Investing activities
Purchase of property, plant and
equipment (1,185) (1,026)
Purchase of software (243) (191)
Development costs (32) -
Disposal of plant and equipment 83 94
-------- --------
Net cash outflow from investing
activities (1,377) (1,123)

[cfro] 23/5/2012 14:34

:0)))

Where did you see that number £1,377M of investment back into the business IC2 ?......i couldnt see it anywhere. Perhaps im not looking in the right place.

Thats really good actually imo as CMH are clearly investing in the future of the business and that is a serious amount of money to commit. The important number tho is as you say the free cashflow figure which is extremely healthy. Importantly its good to see cashflow above the capex even after this additional investment.

[interceptor2] 23/5/2012 09:53

Must admit it did go over my head cfro, far too subtle for my sledgehammer wit.

:0)

ic2...

[interceptor2] 23/5/2012 08:35

An area that really stood out for me was how strong their cashflow was. To reduce net debt by £1.3m to £1.6m, for a net gearing of only 17% is very impressive. Free cashflow was £1,053 compared to £0.668m last year, at this rate we should be looking at a net cash position during 2013/4.

I did check to see if the £500,000 raised last year by a placing had flattered the figures, but no this figure is accounted for in a seperate area.

CMH still invested £1,377m into the business, so they aren't skimping on investment imv.

ic2...

[rivaldo] 22/5/2012 23:20

Cheers chaps (and agreed about TCN).

Here's Investor's Champion's view of CMH:



Conclusion:

"- Valuation undemanding

With net debt down to £1.6m (2011:£2.9m), gearing is modest at 17% and the
Group currently has the support of a £5.0m overdraft facility, which is renewable annually and is not subject to financial covenants.

For the year ending 31st March 2013 the house broker estimates sales of £49m, pretax profit of £2.2.m and normalized earnings per share of 19.7p. At the current share price of 152p this leaves the shares trading at a seemingly undemanding 7.7x forward estimates."

[interceptor2] 22/5/2012 18:46

cfro, Brought on a positive RNS, I thought you would have waited for a dip first :0)

ic2

Edit. I read the post in the wrong context............

[cfro] 22/5/2012 18:03

"I did manage a modest top-up before leaving this morning."

SEE....i damn well knew those pubs in France opened early!! :0))

Nice article btw Rivaldo. 30% discount to castings and trading on a pe of only eight against 2013 earnings which will now be substantially upgraded.

[interceptor2] 22/5/2012 16:31

Just back in from the pub/golf, a double whammy for me by winning my golf match and seeing CMH results have been well received. I did manage a modest top up before leaving this morning.

Good to see you here rivaldo, and as cfro says both CMH and TCN "are a cracker of a pair to hold'" I would also add PLA to list imv.

ic2...

[rivaldo] 22/5/2012 15:30

Cheers eb. Looks like CMH will get plenty of support over the coming days:



"Brokers queue up to praise Chamberlin
Tue 22 May 2012

LONDON (SHARECAST) - Engineering firm Chamberlin said revenue and earnings are now at higher levels than they were before the recession bit in the last decade.

Exports drove revenue growth, with turnover up 14% to £45.5m in the year to March 31st from £39.8m the year before. That was a shade below the £46m expected by the market, but underlying profit before tax, at £1.7m, was ahead of expectations of £1.6m, and more than double the £0.8m achieved the year before.

As profits doubled, net debt almost halved to £1.6m at the end of March from £2.9m the year before.

The group saw growth across all of its foundries, and that trend is expected to continue. Around 70% of sales are now for overseas markets and the group's tighter focus on the more technically complex end of the market is clearly boosting Britain's reputation for engineering excellence.

"This approach has delivered a strong foundation on which to build and our strategy for the future will focus on growing both top and bottom line by offering top class technology which is valued by our customers," said Chairman Keith Butler-Wheelhouse.

"We anticipate that growth will be achieved both organically and by acquisition and we will continue to explore opportunities which would be a logical extension to the group," he added.

Broker Northland Capital Partners described the results as "strong" and notes that the shares trade on eight times projected fiscal 2013 earnings (prior to any adjustments in the light of the release of the fiscal 2012 results).

House broker Charles Stanley says the shares are still too cheap, with the company well placed for growth.

"Chamberlin's Walsall foundry produces small castings with complex geometries and a key market for the business is bearing housings for turbochargers. This market is expected to grow very strongly as manufacturers increasingly use pressure charging in downsized engines to meet CO2 targets. Furthermore, business continues to grow with recently won IHI as the full product family is brought on stream. New turbocharger products are being worked on and management are targeting other established OEMs [original equipment manufacturers] and new entrants to gain further market share," said Charles Stanley analyst Richard Hickinbotham.

finnCap also rates the shares a "buy", after figures came in ahead of its forecasts.

"Both divisions performed well with the Foundries division increasing EBIT [earnings before interest and tax] by 55% and the Engineering division by 50% with both delivering material margin enhancement," notes finnCap analyst Mark Paddon.

A re-rating is overdue, in Paddon's view, with the group sitting on a 30% discount to its closest quoted peer, Castings, on both a price/earnngs ratio basis and also an enterprise value/EBITDa (EBIT plus depreciation and amortisation) basis.

The final dividend has been doubled to 2p, taking the full year dividend up to 3p from 1p the year before, and well ahead of the 2.5p expected by the market.

The shares rose 13p to 153p in afternoon trading,"