Cml Microsystems Share Discussion Threads

[roddiemac2] 18/2/2021 22:04

A lean BOD now---TWO--- Chris Gurry and Nigel Clark.

I noticed yesterday that ADVFN showed two sells of 20,000 each: wrong info. --One was a sell the other a buy ( Bed and ISA deal ). similarly the two trades now showing of 12,500 each marked as ? were a bed and ISA . they relate to yesterday afternoon.

[bones] 18/2/2021 15:34

Is there a vacancy now? This is the question. There are many realignments happening here as the business focuses on the Communications division and presumably there is M&A in the air with the monster cash pile.

[netcurtains] 18/2/2021 15:25

Be interesting to see who the new person will be.

[bones] 18/2/2021 15:13

Is this a consequence of the Storage division disposal, I wonder?


“.... 18 February 2021

CML Microsystems Plc

(the "Group")

Directorate Change

CML Microsystems Plc, announces that, after almost seven years with the Group, Hugh Rudden, Group Sales & Marketing Director, has today advised the Board of his decision to retire. He will step down from the Board on 31 May 2021.

Chris Gurry, Group Managing Director said :

"On behalf of the Board, I wish to thank Hugh, he has made a very valuable contribution to the business throughout his tenure for which the Board expresses its heartfelt thanks and good wishes for a long and happy retirement"....̶1;

[netcurtains] 16/2/2021 10:15

Thanks - anything over 10% is fine by me.
If you think about it if I can get 10% on all my stocks within 6 months then over 10 years with 20% compound growth I'll be absolutely loaded!

[bones] 16/2/2021 10:11

Net, I don’t really do targets, I can just see the potential for considerable growth in their marketplace and the cash pile is ripe for a strategic acquisition. Conversely, there is always scope for a bid for them from left field.

My only target is up! The six month price is too dependent on external events such as market sentiment and whether CML indicate an upswing in their next statement. If they do happen to reference an uptick in business and link this to the semiconductor shortages, I would want to see above £5 a share as it is a very illiquid share. It took me several days of buying to get my holding so I am hopeful. But you just never know!

[netcurtains] 16/2/2021 09:50

Do you have a 6 month target price for this bones? (just very roughly)

[bones] 13/2/2021 18:06

Is this semiconductor shortage playing into CML’s hands and might we get a positive trading update at some point? Note the reference to ASIC’s etc.



For example:

“ SupplyFrame, a market intelligence firm, reports a lot of movement in recent weeks.

“We are currently seeing the highest buyer intent activity in over 12 months,” said Crouch. “As an example, [early February] was the highest demand we've seen in over 12 months. While there are product specific areas that are 'hot spots' such as microcontrollers, microprocessors, ASICs and audio ICs, we are seeing activity increasing every week overall.” “

[roddiemac2] 11/2/2021 17:28

wiloughby 2

I will find out what the current situation is re. property.

[roddiemac2] 09/2/2021 14:18

sue1alan,

I am told CML have withdrawn the last planning application they submitted. I will have to check everything I say here at a later date ( I am very busy with other things )
I feel any development of the site is something of a side show now. Countryside Homes of Brentwood have been handling the various applications, and I think at their own cost, so no loss to CML . When central government told the MDC that they should build around 3,000 new homes in the area ( from memory ) the MDC seem to have decided that this development would take place mostly or entirely to the North and South of the town. CML stands to the WNW .For what it is worth, there are no decent roads in and out of Maldon. CML stand on one of the worst of these roads,although only a few miles from the A12 and a rail connection at both Hatfield Peveral and Witham. Countryside appear to have been greedy when they first applied for planning for over 100 houses ( close to a village that probably counts its population in dozens.) I don`t know if Countryside intend to apply again for yet another reduced number of houses. CML do have permission for industrial use , but have not built any units. I think CML should concentrate on what it does best, and if anything comes of any future planning application it will simply be some icing on the cake: perhaps not much icing!

I will endeavour to get more up to date with what CML are doing and report here in about a week.

[bones] 06/2/2021 18:38

As mentioned in the last post, the sale of Hyperstone to Swissbit has now completed for $49M (£36M) cash. Probably another £7M-£9M in bank already? Freehold land valued years ago at £15M, probably worth way more now? Yet the market cap of CML is £63M, therefore probably below current tangible net asset value.

Here is what the company said two months ago upon announcing the sale of Hyperstone:

"The Disposal [of Hyperstone] reflects a strategic decision made by the Board to refocus the Group exclusively on the global Communications market. The Board believes the communications sector represents a large and high growth market opportunity for CML, which has been significantly enhanced through the acquisition of PRFI Limited in March 2020. The Disposal further enables CML to direct its efforts, including research and development spend, on capturing the exciting growth opportunities within the wireless communication markets, leveraging its standing as a key supplier to many of the world's Tier 1 equipment manufacturers...............The proceeds from the Disposal will provide the Group with the financial flexibility to maximise its future growth potential."

How can Mr Market effectively attribute no value to this established and, according to CML's directors, potentially high growth business? The market is giving stratospheric values to loss making start-ups yet nothing to this business that continues to generate profits, cash and dividends, and is backed by tangible assets. Once the recent bumps in the road caused to CML by Covid and the US/China trade spat are behind them, CML's share price must surely re-rate significantly? I am betting on it and have bought a good pile of them over the last two months.

[bones] 05/2/2021 07:36

Good to see the completion of the disposal of Hyperstone to Swissbit. The $49M of cash should prove very useful in furthering and growing CML’s business and hopefully accelerating the trajectory and perhaps even gaining it a more dynamic reputation amongst investors.

Assuming cash in the company is about 70% of the market capitalisation now, that gives a very skinny enterprise value to the business that even this normally reserved board of directors describes as:

“....the global communications market which represents a large and high growth market....”

[sue1alan] 02/2/2021 15:07

Bones,

CML has put in a number of planning applications over the years to develop the site. All have been rejected. I became aware of the latest application from the “Maldon Standard” dated 20th May 2020. This application is still pending. I can find no recent comments from CML on this or any other applications by them. The problem appears to be Maldon Council’s perception of over development of the site. CML’s latest application has therefore been scaled back. Also there is a significant local response to the latest application. I have read a few of the letters, none were supportive.

[sue1alan] 02/2/2021 15:07

Bones,

CML has put in a number of planning applications over the years to develop the site. All have been rejected. I became aware of the latest application from the “Maldon Standard” dated 20th May 2020. This application is still pending. I can find no recent comments from CML on this or any other applications by them. The problem appears to be Maldon Council’s perception of over development of the site. CML’s latest application has therefore been scaled back. Also there is a significant local response to the latest application. I have read a few of the letters, none were supportive.

[bones] 02/2/2021 11:22

Willoughby2, and that is before even contemplating the renewed laser focus by the management on the communications business (with the “distraction” of Storage out of the way) and before the management hopefully are successful in identifying successful new M&A targets to complement the business. All of that seems to be thrown in here for peanuts.

As for the land, the assumption must be it is worth a LOT MORE than it was previously valued at. Are we aware of any thoughts of selling some of it off or might it be used for expansion of the business? I think this might have been discussed years ago here but times change and circumstances certainly have!

[wiloughby2] 02/2/2021 09:47

Does anyone know when the last proper property valuation at CML was carried out ? I seem to remember reading some years ago that the property assets were in the region of 15 mill. Roddiemac could probably enlighten us he has been involved for a long time.Market cap today circa 63 millCash at bank in Nov 7.35 milCash due from sale of hyperstone 35.5 millProperty once valued at 15 milMakes the market cap look woefully low

[roddiemac2] 29/1/2021 11:06

I agree with your thinking.

[bones] 28/1/2021 12:23

Chris Gurry transferred 30,000 shares to his wife. Maybe just estate planning but maybe in advance of completion of the Swissbit deal, perhaps in expectation of gains?

[roddiemac2] 12/1/2021 11:46

bones

Yes they might attract a bid.

[bones] 11/1/2021 11:08

Thanks, Roddiemac2, for the comments and information. You raise two areas where I did not emphasise advantage and that is (1) the income attraction, strong cash flow and dividends, and (2) asset backing.

At current valuation, CML appears to be a sitting duck for any keen aggressor thinking of an outsized bid.

[roddiemac2] 11/1/2021 10:22

bones

You have summed the situation up very well.

"The board’s average age is well in the 60’s, so some must be thinking of retirement at some stage!"--- Several years ago, at the AGM, I did ask Chris Gurry If they were aiming to sell the business at some point. He said "not yet".

"I have to assume that CML now has a war chest to expand M&A, as there has been no talk of returning the cash to shareholders."--- CML have returned cash to shareholders, by way of a special dividend,on several occasions in the past, but they do look to be getting all their ducks in a row for expansion now.

As well as the considerable cash pile, they own their own premises and surrounding land ( Oval Park ). On occasion, when I have called in there , it has been evident that they have ample spare space if staffing levels were to be increased.

They are in a strong position to exploit opportunities as they arise.

[bones] 08/1/2021 22:31

I feel certain that this will be a good investment at these levels. Market cap at £62M with an expected £36M (US$49M) cash due to come in from the sale of the Storage Division to Swissbit. At 30th September, there was £9M cash on the balance sheet. Let’s assume that balance is similar now and that’s potentially £45M of cash on board.

So, ex-cash market cap is £17M on those assumptions. This is for a business that is now exclusively focussed on the Communications market, an area where CML sees considerable potential increasing its influence in the 5G and Internet-of-Things spaces.

Communications had a relatively rough half year to 30/9/20 thanks to delayed demand resulting from Covid19 impacts on its customer markets plus they have not been helped in general by the fractures caused by the US/China trade spats.

If, as we all hope, things slowly improve for the world economy from Covid19 vaccinations and possible improvements in trade relations once the new administration takes the reins in the US, things could look upwards for CML’s business.

I have to assume that CML now has a war chest to expand M&A, as there has been no talk of returning the cash to shareholders. They acquired PRFI in March 2020 which adds more R&D and IP to the group. I guess it was a small purchase as the sum paid was not disclosed. So, perhaps the next acquisition will be a lot more juicy and earnings enhancing?

Overall, I am excited by the outlook and for the market to attribute just £17M (excluding cash) to the Communications/5G/IoT activities, seems out of line!

The board at CML is long serving and experienced, always conservative. That’s something I like. Question remains for me is how “racey” or “daring” will they be with the new streamlined arrangement and a pot of cash to hand? The board’s average age is well in the 60’s, so some must be thinking of retirement at some stage! Perhaps new blood will arrive with a future, major acquisition?