Coral Products Share Discussion Threads

[maximillion] 24/2/2001 22:08

Good post Chelsea Blue.
The point on flexiblity had occurred to me, although it begs the question as to why capacity has not been switched to DVD case production.
Checked Corals figures today.
1) The rise in gearing reported last results concerned me. I've not scanned archives to get the exact debt figure, but there seems to be at least 6x interest cover. Comforting.
2) CRU was not exactly on a growth rating even prior to the warning, and so is now pretty cheap. Unfortunately, lots of other stocks are getting cheaper right now.
Personally, I am already a bit overweight in CRU. The market also has a habit of getting the price approximately right, and I've been too burned on topping up on 'bargains' of late.
Max the Pauper

[maximillion] 24/2/2001 22:05

Good post Chelsea Blue.
The point on flexiblity had occurred to me, although it begs the question as to why capacity has not been switched to DVD case production.
Checked Corals figures today.
1) The rise in gearing reported last results concerned me. I've not scanned archives to get the exact debt figure, but there seems to be at least 6x interest cover. Comforting.
2) CRU was not exactly on a growth rating even prior to the warning, and so is now pretty cheap. Unfortunately, lots of other stocks are getting cheaper right now.
Personally, I am already a bit overweight in CRU. The market also has a habit of getting the price approximately right, and I've been too burned on topping up on 'bargains' of late.
Max the Pauper

[chelsea blue] 24/2/2001 16:50

The profit warning was a bit of a body blow and because the price was adjusted down by the mm's there was no way to get out on the way down.

So we know the CD case side of the business has been hit by a European wide slow down in demand for disc based products. This has mainly occurred this year after the Xmas rush. Coral believe it to be a temporary blip, I hope they are right but I wouldn’t expect them to say anything else. However, Coral do go a little further and say they do not see a sustained fall in CD case general demand, CD’s are not dead and buried just quiet. Since the CD cases form a significant part of their business then any slowdown in sales will have a bad effect on profits, hence the announcement.

The extent of industry wide slowdown and it’s impact on Coral will not be seen until the full year results are published, until then everything is pure conjecture. As far as our Investment in Coral is concerned, all we know so far is that the share price has fallen by about 30% in the last couple of days since the profit warning. The market almost always overreacts to bad news and prices usually recover. The big question is, how far?

Staying on the subject of CD’s, if Coral have been hit hard by the general fall in demand then for sure the same also applies to their competitors. As a result of investments, the infrastructure and power availability on the Coral production site allows Coral to run a slick and flexible production facility; they always install the fastest kit. Production lines are run 24/7, it is optimised high volume manufacture. They do not believe their competitors can produce the required quality products as fast as them. So when the going gets tough only the best survive, the cake (CD case market) might not in the future be as big but if you can increase your % share of the cake then you may not suffer declining sales. Coral seems to me to be better placed than most others to achieve this.

I think we all tend to believe DVD’s are a growth area and of course Coral produce cases. They already have a fairly significant capacity in DVD which can be increased by just adding another line in production (the investments made in the production infrastructure make it easier to do this). A new production line takes about 6 months to establish if you want the best, this is due to the lead times in getting the mould and the robot. The production infrastructure is such that they could increase total production by about 50% without too much difficulty should demand exist. In summary, they are very well positioned to react to the DVD market.

So here we have a company with a strong balance sheet and very good cashflow, NAV currently 48p, a 9% divi return at current price level, an excellent and responsive production facility and quality products. Unfortunately it is not immune to market forces, the goalposts have moved and if the Management can quickly adapt and play a bigger game on a smaller pitch then all will be well. The light on the horizon for Coral has to be the DVD market and responsive reaction to market demand
Oh, and meanwhile video cases (I thought video’s were dead) continue to be manufactured – it’s all good bread and butter profitable business.


None of the above is intended as a ramp although reading it again I guess it is fairly pro-Coral. I thought I would just pass on the results of my research and opinions and hopefully exchange some views.
We must all make our own Investment decisions.
Me? I already own a significant number of shares in Coral and I intend to hold on. I predicted on another bb to expect a slight drop yesterday but was heartened by 34% buys on the day after a profit warning. I would be surprised if there were any more significant falls at current levels; Monday might see it off a point or two. Gradually I would expect recovery to up or near the NAV before the annual results announcement and then who knows? Am I looking through rose coloured spectacles because I own shares – maybe!!

Please DYOR. All IMHO.

[monty burns] 13/2/2001 00:41

I think it is basically the overall control by one family that is holding it back.

I have held for around 8 months, in at 49p, since had a final and an interim dividend, can't remember, around 3.5p total.

I thought it would take off when the Co-Op sold their stake, but it hasn't really happened. Not bad though, 20% plus the dividend. Nasty spread around 5p normally, was down to 3p on Friday last week (when it went ex div) now back to 58:62. Interesting MM trade for 25,000 share at 60p this morning.

Most of the fundamentals are already on the thread (PE ratios etc, also Net Asset value is approx equal to Market Cap, so you get the profit flow and divis thrown in for free!), basically a rock solid operation with low risk and a very good upside potential, just difficult to say when that will happen.

[monty burns] 12/2/2001 14:58

Just Group:

Every time I open the board, there is always that bloody Just Group thread, along with the EUA thread.........

I have no interest in either, both are the beneficiary and the victim (at different times) of wishful thinking/ramping.

Thanks for the tip, but no thanks.

[night watch] 12/2/2001 13:05

Monty,
This year is really starting to show good prospects.
Firstly with Just Group & now Coral it makes a pleasant change from last year.
I hope you've bought Just !!

[night watch] 12/2/2001 11:33

Thanks for the great postings guy's !
I just had to get a shed full of these shares.
In the next 4 years, the demand for DVD's is to increase x 13.

Its nearest competitor, Amaray, was recently bought,word has it, for 30-40 million. I wonder why. "IF" Coral was taken over, the share price would be around "150-200p"
At 62p these share's are grossly underated !

Williams de Broe forecasts turnover will reach 19m this year up from 15m last year & EPS 9.6 up from 8.8 giving a unbelievably low PE of 5.1 paying a DIV of 3.3p. This is a well run, growth company just begging to get snapped up !

I have been studying the graph on Investtech which shows it's in a continous rising trend. BUY.

[humdinger] 11/1/2001 14:15

4D and others - don't know if you are still around but basic story still very much intact - XD on Feb 5 so not time to sell and is equivalent to almost 2% before tax and that is just the interim payment!! Careful on XD dates in future as T3 kicks in next month so record dates will be changing.

Oh.... Billies Box a K.O. (Argonaut's game at Vegas show looked awesome) - connection is CRU already do MS boxes for PC in UK - must be a good chance CRU get the X Box business for UK + Europe (PAL A/B, Secom conversion needed??)

Add to that the buyback in place but not needed I am sticking with CRU - in for over a year and a lot more to come IMO.

John B

[maximillion] 07/12/2000 23:41

Interims pasted below (from RNS); format massacred, I'm afraid.
Turnover is up 34%, but this may be attributable in part to a rise in oil prices, since CRU hedged by passing costs on (contractually) to its main customers. Profits are up 5%, which is pretty flat, ceterus paribus. Market share outside UK lost, which worries me somewhat, and some heavy investment, which is fine.
Generally, I found the results were a bit disappointing compared with previous performance, and they lopped quite a chunk off the share price (bad luck RHPS; you called on the wrong set of results...). However, the company seems pretty well run, is tooled up for churning out media packaging in great quantities at a competitive price, and its rating is dismal. Shame about the lack of growth in the last results, but I'll just have to wait a few months more and see what's next.
Max the Pauper


2001 INTERIM RESULTS
Record pre-tax profits; Major Capital Investment continues; Increased Dividend
Coral Products PLC, one of Europe's leading manufacturers and suppliers ofmedia packaging for Digital Versatile Disc (DVD), Video and CD, announces itsinterim results for the half year ended 31 October 2000.Commenting, Chairman Sir David Rowe-Ham said:'I am pleased to report an encouraging demand for our media packaging productsin challenging market conditions. We believe that UK and European markets willfollow the United States in terms of DVD sales growth and that we are wellpositioned to take advantage of this market trend.'Summary Half year Half year % change ended ended 31 October 2000 31 October 1999* Turnover #9.90m #7.4m +34%* Pre-tax profits #1.48m #1.41m +5%* Fully diluted earnings per 4.87p 4.65p +4.7% share* Interim dividend 1.05p 1.0p +5%* Continuing investment in media packaging production facilities* Further expansion of DVD case manufacture* Investment in Haydock site, now comprising 27 up to date production linesOn prospects for the second half, Sir David said:'Demand, at the present time, continues to be good in our core media packagingbusiness. Providing industry demand is maintained in the New Year we look tocontinue to improve our trading performance in the second half.'

[yngwie] 06/12/2000 19:06

red hot penny shares

[accumulator] 06/12/2000 14:14

WHAT IS RHPS?

[tony14] 04/12/2000 14:34

Tipped in RHPS.

[maximillion] 04/12/2000 14:29

Anyone know why Coral have suddenly risen from the dead? I'm trying to check the paper tips to find out, but its slow loading...
Max the Pauper

[maximillion] 17/9/2000 12:25

I'm a fan and holder of Coral, though the share price sometimes puzzles me. The large holding by the family probably has a negative influence on the price, as it largely rules out hostile corporate action; you see the same underrating in other family-controlled firms. Coral rates on yield, PE and value, and its growth, investment, the area it works in are all good. It is underpriced; one day it must get a rerating, though I don't know when that will be. Results came out not long ago, so I don't think more are imminent; I'll check.
The rising oil price, and possibly the recent UK disruption to througput seemed to have caused a lurch in the price. However, after its margins suffering from this effect earlier in the year, Coral has (apparently) put some hedging clauses in its contract to supply (i.e. the unit price goes up if the oil price hrises). Other countries will also suffer from the rise in raw material costs (unless Saudi Arabia has started making DVD boxes...), and Coral has low wastage rates for the industry.
If I was forced to put all my money into one share for a long-ish period, Coral would probably be at the top of the list; it's not in a field where it will do anything spectacular, but it seems a very safe bet.
Max the Pauper.

[4d] 15/9/2000 12:57

Coral Products is Europe's leading supplier of media packaging for DVDs, CDs and video boxes.

Take a look at profit and EPS figures from last 4 years:
1997: Pre tax profit = 0.97M, EPS = 3.98
1998: Pre tax profit = 1.26M, EPS = 4.37
1999: Pre tax profit = 2.3M, EPS = 7.63
2000: Pre tax profit = 2.61, EPS = 8.80

So curently at 51.5p CRU are trading on a P/E ratio of around 5.8.

Coral have shown impressive growth in recent years and this looks set to continue.

Forecasts are as follows:

2001: Profit = £2.9M, EPS = 9.6
2002: Profit = £3.45M, EPS = 11.4

So the P/E ratio is set to fall to 5.3 in 2001 and 4.5 in 2002.
To find a growth stock like Coral on such a low P/E, which is set to get even lower, is indeed a treat.
A 7% dividend yield, also expected to grow, is also very attractive.

In the results announced in July the company stated:
“CD production facilities are being expanded further, together with our CD product range. The ALPHApak DVD box has been successfully introduced and substantial investment has been made in new DVD lines that should see production rise sharply, by December 2000. We believe that the media industry will continue to offer excellent prospects, particularly in the CD and DVD markets.”

Also stated was:
“The beginning of the new financial year has started well. Market conditions remain testing despite the recent easing of sterling and slow down in raw material price increases. It is our intention to use our strong balance sheet and cashflow to invest in the business organically, which we believe will add to shareholder value, whilst at the same time maintaining a worthwhile stream of dividend income.”

I bought this share a few months back. The price today is the same as what I paid. The share has been held back by the Co-operation Retirement Benefit Fund, who have been slowly selling off their 25% stake. Good news is they have now sold their entire stake.

The price initially rose to 56p when investors realised the Co-op was out the way, but lack of activity has seen it drift back to 51.5p on the back of very light sales.
However, this is all set to change. The AGM will be held on the 22nd of this month At the AGM, as well as hopefully an upbeat trading statement, shareholders will approve the proposal that the company buy back 15% of its own share capital. This is what we need to get the price heading north and attract some interest.

Coral is a favourite of Citywire, Who recently stated:
“Citywire's own view is that Coral is an ideal candidate for a management buy-out or quasi-shell into which something bigger, if still media related, could be rolled. Coral generates strong cash flow and has valuable and specialist skills in the world of media packaging. More could be made of them.”

They are also frequently tipped by Peter Shearlock, who writes Small Cap Thursday for UK-Invest. He recently stated:
“Coral could justify a 50% rise from current levels without even beginning to look fully valued.”

There seems to be some good support for the share price at its’ current level.

There was a lot of director dealing at around the 56p mark - above todays price, highlighting their confidence in the company.

Background into Coral Products (CRU)
WHAT THEY DO:-
Here is some background on what CRU do:
"Coral Products PLC manufactures a wide variety of plastic products for the media packaging industry and general houseware markets. We are dedicated to satisfying our customers needs by supplying top quality products at highly competitive prices with delivery to the customer on a just in time basis. From our state of the art production facilities in Merseyside we ship our products throughout the UK and Continental Europe. In the industry we supply a blue chip customer base and are the largest UK manufacturer of CD Jewel Cases as well as being a leading player in the video box supply market.
Our strategy is one of strong organic growth supported by major investment in additional plant and new products. Through this investment we continue to expand rapidly and further improve our efficiency enabling us to remain competitive and increase market share year on year in our European markets
All Coral video boxes are 100% recyclable and are manufactured from polypropylene to a rigid quality specification. All video boxes are resistant to cracking and breakage and designed both for manual and automatic packing lines. Overlay film is available in embossed ( orange peel ) or gloss finishes. Standard colours are Clear, Black and White - other colours available on request.
All Coral CD jewel cases are 100% recyclable and are manufactured from polystyrene to a precise quality specification. The CD cases are designed specifically for high speed automated packing lines but can be used for manual packing.
Coral ALPHApak DVD boxes are 100% recyclable and are manufactured from polypropylene to a rigid quality specification. All DVD boxes are resistant to cracking and breakage and designed both for manual and automatic packing lines. All boxes feature the unique EZHub Release for the safe and easy removal of the DVD disc. Overlay film is available in embossed ( orange peel ) or gloss finishes. Standard colours are Clear, Black and White - other colours available on request."
Coral also manufacture a wide range of houseware products.

Here is some info. on their directors:

Geoffrey Piper DL,MA, FCA:
Appointed March 1995.Geoffrey, aged 56, is Chief Executive of the Northwest Business Leadership Team and is a member of the North West Regional Assembly. He is a consultant to a Northwest firm of Chartered Accountants and is President of the Liverpool Society of Chartered Accountants.

Warren Ferster --- Managing Director:
Warren, aged 49, has been involved in the plastics industry for over twenty five years. He is involved in all aspects of the business but has particular responsibility for raw material purchasing and strategic planning. He has been a director since September 1990.

Stuart Ferster --- Production Director:
Stuart, aged 43, is involved in the day to day supervision of production and maintenance operations. He is responsible for the purchasing and introduction of new plant and equipment into the company's operations. He has been a director since September 1990.

Jonathan Ferster - Corporate Development Director:
Jonathan, aged 41, is involved in all aspects of sales, marketing and product development with particular responsibility for CD, DVD and overseas customers in the media market place. He has been a director since October 1991

Derek King --- Sales Director:
Derek, aged 50, is responsible for day to day sales with particular emphasis on UK customers. He has been involved in sales and marketing activities for the past twenty five years. He has been a director since November 1989.

David Shalom --- Financial Director:
David, aged 32, is responsible for all aspects of the finance function, together with the company's IT systems and has certain purchasing responsibilities. He joined the company in 1995 as financial controller at the time of flotation and was appointed Finance Director in September 1997.

Jonathan Lever LL.B, FCA --- Company Secretary:
Jonathan, aged 63 was the former senior partner of a Northwest firm of accountants which he founded in 1965. He was appointed Finance director on flotation in February 1995 and remains Company Secretary following his retirement as Finance Director in 1997.

THIS IS NOT MEANT AS INVESTMENT ADVICE. I HOLD THESE SHARES AND AM SIMPLY SHARING MY REASONS FOR HOLDING WITH YOU. ALL IMHO, DYOR etc.

4D

[justin_thyme] 15/9/2000 06:20

The market may be nervous because of the impact of the oil price on their costs and the strength of the pound against the Euro (Though their contracts do take this into account to some extent). The family also hold a very large chunk of the shares making an unwelcome bid impossible and though the Co-op have just finished selling around 29% of the shares, which should be positive, I suspect the MMs still have lots from them on their books.
That said they could be attractive, aren't results due soon?