Coral Products Share Discussion Threads

[deswalker] 09/3/2011 16:22

Looks like the share price is starting to reflect developments here, and not before time. Should be double the current share price IMO.

[rohkap] 08/3/2011 21:52

Interesting non exec appointment. Hope he has better luck than when he was at Widney! I think bolt-on acquistions in the recycling or trade moulding space is a sensible way forward. Company should generate £1mm EBITDA again this year and I would rather the money, going forward, was spent on non media product related plant and machinery! If not, give it back to shareholders. Share price will only really start to move once the 'D' word comes back into play.

[clocktower] 24/2/2011 12:14

I doubt that because of more kerbside re-cycling taking place. In fact I can see a larger market for the products. The only serious issue is the rise in price of Oil imo.

[charo] 24/2/2011 11:05

company needs a push,changes in legislation and government cuts affecting local authorities will impact negatively on refuse container side.

[clocktower] 02/2/2011 16:12

Without news it has managed to hold onto earlier gains and I think it is fair to assume that is a positive in itself.

[rohkap] 05/12/2010 20:24

Got the info from the operating lease commitments note from 2010 accounts. Looks like they negotiated a low rental for the first year in exchange for extending lease to 15 years

[deswalker] 05/12/2010 13:04

Hi Rohkap,

I agree that management do seem to be doing a good job.

I also agree that the reduction in local government spending is an issue, but hopefully recycling is here to stay...

I also agree with you that the tone of the IMS was more cautious than the results and I for one wasn't expecting over £500k of EBITDA when in the IMS they only said it would be "small". So it does seem that trading was getting better through the period and does indeed bode well for H2.

Hopefully we will start to see more of the EBITDA converted to free cash now that most capex has been spent, although obviously some will need using to support the hopefully improving trading picture.

Where did you get the info re the rent decrease for this year and subsequent increase for next ?

Des

[rohkap] 05/12/2010 12:44

I think you have to give some credit to management for their success to date in selling recycling products. They identified a market in which they could move in to without spending huge amount on capex and so far it looks to be working. My concern here (and I've mentioned it before) is that local government spending is curtailed which would affect future recycling orders. I think management need to be constantly thinking about new products and hope they wont be taking a breather because of their recent success in diversifying away from media products.

I agree with Des that net current assets should provide support to the share price (getting closer to meeting Graham's bargain price definition). I'm however more bothered by how much cash the business is throwing off. Given the increase in raw material costs, I was pleased that there was over £500k EBITDA generated in the period (Enterprise value=2 times annualised earnings at the moment which is very cheap). Given the tone of the recent IMS, looks like that a large chunk of EBITDA came from the latter part of the period which potentially bodes well for the 2H. I think, however, that they have reaped an exceptional £75k benefit in 1H from negotiating a lower rental for the factory for 2010/2011 compared to last year. Next year they will be paying approx £250k a year (from £150k this year).

[arthur_lame_stocks] 03/12/2010 05:33

Hi Des

£12m was cash, the shares were on top, you can find the RNS on investegate. I originally started following RNSM years ago because they had a valuable surplus property in Hertfordshire, the cash from which funded the Optima acquisition.

[arthur_lame_stocks] 02/12/2010 18:09

Hi Des. I don't know who you mean by management. Old or new. I know that Quinn and Whitcomb got £12m in cash as well as shares for Optima when they originally sold it to Ransom so they should have a few bob if they want to take the group out.

[arthur_lame_stocks] 02/12/2010 17:14

Des

I quite like C21 but i'm not so sure about RNSM. A while ago I nearly bought in as I liked it on a psr and NAV basis and it used to be quite profitable but they seem to have survived by selling off many of the best brands and have been in turnaround mode for a good couple of years now. It's definitely one to keep an eye on though.

[deswalker] 02/12/2010 16:53

Felix,

Absolutely agree with what you say re need to factor in redundancy costs etc so that the discrepancy between NTAV and the share price needs to be treated with caution. But I suppose the same could be said of 95% of NTAV plays.

Also agree with what you say about being able to buy in size but the bid not being there to sell in size. I'm always surprised where the mm's source the stock for these IMO very cheap microcaps but wherever it is from I've been responsible for taking a decent slug of it from them in a range of microcaps this year. It will either prove a very shrewd move or folly as I am essentially locked into quite a few of them, but I've tried to identify registers that feel like a takeover is a distinct possibility and so will not have to worry about finding a bid. Fingers and toes crossed.

I'm long 60k at 6.84p average after costs. That's about 4 grand invested. I have no intention of buying any more but will hold these for many years and hope for some form of corporate action.

Arthur,

I'm not sure the business is dead with all sorts of stuff coming out that people won't be bothered to download (Blue Ray or whatever it's called etc etc), and the move into other products is a step in the right direction. That said it's hardly a fantastic business but everything has its price and IMO the current one is too cheap by a factor of two.

I'm into LDSG to the tune of 16 grand at current prices so my weighting is more there than here. I'm not tempted to buy more because of PG and JC holding so many. The register is clearly better here IMO.

I'm virtually a mini PG these days. A good proportion of my shares are where he has his usual 29.9%. Unfortunately DSN isn't one of them but recetn purchases have been C21 and RNSM where he holds recently acquired stakes.

Rgds,

Des

[felix99] 02/12/2010 15:37

Properties sold and part leased back a while back arthur. Suspect thats what Gilly was after when he bought in.

The plant does last over 10 years machinerywise but any money spent on the moulds will be capitalised and thats not worth anything really if business closed tomorrow as it were.

I think when you start buying for NAV you need to factor in redundancy and closure costs, stock and debtor write downs if someone were to attempt to realise the value you see of 29p versus 7p.

Don;t think your discount will look so big then imho

All the best Des but I think you will find you can buy large amounts at touch offer. You try and sell 100k say and see what price MMs offer you . It will be well below bid . You are locked in for life if you are buying here so be sure you are comfortable with your exit strategy here - what is going to happen to allow you to sell at a decent profit.

The spread is bad enough taking touch but in reality its even worse if you want to buy/sell in a decent size say 100k which is still only £6k worth.

[arthur_lame_stocks] 02/12/2010 15:17

Well i'd sort of agree with you Des, that was why I started following them in the first place, in fact you might find a post from me somewhere on this thread to that effect.

I just don't like the business, although it remains to be seen whether their branching away from their traditional cd/dvd cases market works for them.

I'd stick more money into Leeds Group myself, at least that's profitable as well as having cash and a huge discount to TNAV and NWC.

[deswalker] 02/12/2010 15:07

Arthur,

True the NTAV is falling rapidly. It was 37.33p per share in Oct 08 and is down to 29.29p per share in Oct 10. But we need to remember that the share price is 7p !

What is growing however is Current Assets minus All Liabilities. In Oct 08 this was 5.14p per share but is now up to 7.65p per share in Oct 10.

So effectively they are converting plant & equipment into working capital with a large depreciation charge and a much smaller (and now flagged as being smallish going forward) capex bill. They claim in an AR somewhere that the residual life of the p & e is greater than that used in the depreciation schedule (hence the smaller capex).

Ofcourse this logic is not substainable forever as the machines will need replacing in due course but by then the CA minus AL should be much higher and that is quite some safety margin.

I note also that they are optimistic about trading but that the high oil price will not help. I don't know about freeholds as their ability to turn the large p & e assets into working capital is more important to me than that.

Corporate action in due course with PG and the two directors owning 50% between them ?

Why don't you like it ?

Des

[arthur_lame_stocks] 02/12/2010 14:17

I've never been tempted Des, it's been on a downward spiral for years, take a look at the NAV from a couple of years ago.

Do they have any freeholds by the way, I can't get the AR to open on my PC.

[deswalker] 02/12/2010 08:12

I completely missed yesterday's Interims (which were put out at 11.29am) until about an hour ago. Having run the numbers I've added some more and caused the tick up. This company is too cheap IMO.

[stewacg] 12/10/2010 22:27

Isn't the visible driver the tangible asset value of ~£6m, ie c 30p per share?

[clocktower] 12/10/2010 15:39

On the up again without a visable driver.

[clocktower] 20/9/2010 15:22

Estimated current asset value anyone?

[jab118] 20/9/2010 14:59

I watching

Someone wants these, we were up graded Friday, on no sells and 100k buy today, looking bullish I say....;-)

[charo] 30/7/2010 17:08

pg new target.watch this space.