Coral Products Share Discussion Threads

[felix99] 08/12/2002 16:45

Ok chaps here is some info for you regarding the points above

Plastic prices

Oil is a bit of a factor but the major determinent of plastics prices is supply and demand of the plastic grade itself. Their plants are either on or off they can;t switch them down to half pace they are basically on or off no in between .

At present we basically have a huge surplus of polystyrene capacity and polypropylene is more in balance with demand. If oil doubles overnight the plastics price can still be weak if supply is plentiful and demand is low as the plants have to run and producers do not want to build stocks. The only way to get prices back in their favour as they lose shed loads of dosh is to switch plants off and mothball them till demand supply balances swing back inot their favour.

If supply and demand is evenly balanced then a rising oil price will mean higher plastics prices . If oil halves overnight and supply is tight plastics prices will still rise and roducers restore their margins.

So plastic does ot necessarily follow oil


Coral is a pretty big buyer of plastic and is not a little fish in the market that just pays what they are told each month.


Even if plastics prices double overnight they are protected by contracts to an extent with customers as they have said whereby if plastics price smove up or down prices are adjusted to maintain margins. The only issue is how long it takes them to get customers to agree to do it and how big a stock pile they have at the time to cushion them in the meantime before margins are hit .

Whe coral has the whip hand - i,.e there si big demand and ltd supply then they will be able to go for price adjustment easily . Where things are iffy is when demand is slack and so custoemrs will resist for a bit

At present they seem to be saying demand is buoyant so any price issues should be dealt with without too much of a hit. ( and if prcies gently fall they may even make as customers will be too concerned about supply for the time being to try and screw the last penny out of coral.


Capex etc

They have a depreciation charge of circa £1.6m / £1.7m per annum at last accounts and so add this too profits of £1.2m from last year and you can see they have a very strong freecashflow to fund investment of £2.8m . They have just made £1m for first half so add 1.7 to that you have £2.7m plus whatever they make in second half say another £1m = £3.7m to spend on capex

They are buying back stock at 44p odd now and with low gearing if anything thet should be borrowing to increase gearing and buyback stock . They have t pay out 3.3p per annum in cash for a divi yield of 8% odd. So why not borrow cash at 6% and buy back stock which is saving you 8%?


Cd sales


Been on the rocks for ages and so poor demand in period to me is not unexpected. What sounds intriguing is that they are now aware of new sources or demand for CD boxes - so this to me reads like volumes amy be picking up lads.

Video sales

Going great guns still it seems although party will end soon as everyone starts to throw the video recorder out the window. But they will I am sure benefit from a suitable one off increase in DVD sales as CD will have done when vinyl records went to cD ( watch for all your old favourite teletubbies videos being offered on DVD for a few quid to get you to throw the video collection out and replace them with the DVD version) By my reckoning they should be safe enough on video for next year before it dies .


DVD Sales

Dunno what the split of their sales is but they seem to be doing the right thing in ramping up capacity quick ready for when video dies and you get the one off replacement pop I referred to above. The lines they are putting in must be getting them big capacity inplace and so as long as DVD demand keeps growing they are likely to rapidly increase profits as they have done in first half.



In summary buy it for 8% yield with little downside as company is buying back shares to provide a floor . Plus you get for free a substantial chanceof capital uplift too.

They have largely fixed overheads so when they are busy they print money and when they are quiet they suffer.( They are clearly busy at present so if this follows through to second half they will make £2m IMHO ) Having said all that even when the yhave been quiet they have never made much less than a million profit in the year so the downside is clearly ltd in that even if capital gain does not a rise you are sat earning a relatively safe 8% per annum .

No brainer to me - zip downside and upside is a nice steady 8% plus capital gain. 60p doesn't look unreasonable?

Hope this helps

[night watch] 06/12/2002 22:37

In the last 2 months there has been 6 Director buys & 6 Company purchases of it's own shares this company's share price is ready for a re-rating & the directors are buying "cheep as chip's" !!!!

[shuisky] 05/12/2002 10:35

Thanks Dragonhorse, The point about propylene/oil is especially pertinent as they are a small player and hence dont have much buying power. I believe they are unhedged as well.

Agree with you on the fundamentals, however I have a question on cashflow. In the results they stated that ' we have recently invested 1.8m in two additional case production lines.' Is this included in the Capex figures for the interims or not?

Their capex spending seems to consistently take them into negative free cash flow. I know they are restructuring to target the DVD market, but these days cash flow is critical. Calculating rolling ROCE gives Op Prof= 758 + 1104= 1862. Now CE is 10754(shareholders funds)+4417 (net debt)=15171. so ROCE=1862/15171=12.3%

12.3% looks good to me, and growth prospects look good. But it aint for the faint hearted, any drop off in demand or under utilisation in cd production will leave them exposed, and they will fall like stone.

[wirralowl] 05/12/2002 09:41

Agree results look very interesting.

Could anyone answer me some questions on their DVD business :

What proportion of their total business is DVD's ?

What customers do they have for their DVD boxes ?

What is their market share of the UK and European markets ? (Most of the DVD's I own seem to be Amaray cases, but I don't like these, and the one Coral case I have is much better quality.)

Also, have they managed to penetrate the x-box market, as previously discussed.

Thanks in advance,
WirralOwl

[dragonhorse] 04/12/2002 20:34

Shuisky ... Outlook on polypropylene price will pretty much track the outlook for the crude oil price .... and if you can determine where the oil price is trending, your on a winner!

Better than that is looking at other more interesting varibles IMO ...
eg. Cashflow, profit on operations, gearing, dividends, Director ownership of large amounts of CRU equity, share buy-backs, continuing investment in the business...etc,etc

All variables in the above list are encouraging with regards CRU IMO.

Bon chance.

[shuisky] 04/12/2002 15:34

Reading through the results, it appears that polypropylene is the raw material that determines a large part of their costs. Anyone know where I can find an outlook or at least some price charts for polypropylene? The sites i have found thus far are all subscription only. TIA

[night watch] 04/12/2002 11:02

LONDON (AFX) - Coral Products PLC, which makes packaging for DVDs, videos
and CDs, reported sharply higher profits for the first half on the back of a
rise in demand.
It said it remains confident about prospects in the months ahead.
Pretax profits for the six months to Oct 31 rose to 1.01 mln stg from
585,000 stg last year. Sales grew to 9.90 mln stg from 8.36 mln.
EPS increased to 3.44 pence from 1.96. The interim dividend was left
unchanged at 1.05 pence.
"The six months to Oct 31, 2002 resulted in a period of significantly
greater demand for our products than the comparable period last year. Volume
sales of video boxes and DVD cases increased appreciably during this period
although our CD case sales remained below expectation," said chairman Sir David
Rowe-Ham.
The company has increased its share of the market for CD cases slightly, he
added.
The chairman said the industry is forecasting that demand for DVD packaging
will continue to grow.
"Whilst total demand may reduce with the completion of Christmas orders we
have a strong order book in all our products as we enter 2003," he said.
[e-mail]
ak/
NNN






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[night watch] 04/12/2002 10:56

RNS Number:6140E
Coral Products PLC
04 December 2002



CORAL PRODUCTS PLC

2002 Interim Results



Coral Products PLC, one of Europe's leading manufacturers and suppliers of media
packaging for Digital Versatile Disc (DVD), Video and CD, announces interim
results for the six months ended 31 October 2002.



In his statement to shareholders, Chairman Sir David Rowe-Ham said:



"The six months to 31 October 2002 resulted in a period of significantly greater
demand for our products than the comparable period last year. Volume sales of
video boxes and DVD cases increased appreciably during this period although our
CD case sales remained below expectation."



Summary

Six months ended Six months ended
31 October 2002 31 October 2001



Turnover #9.9m #8.4m
Pre-tax profits #1.01m #0.59m
Earnings per share 3.43p 1.93p
Interim dividend 1.05p 1.05p

* DVD case sales continue to rise with increased demand.
* Video box turnover remains strong.
* CD case sales remain below expectation but both customer base and market share improved.
* Production capacity increased with the installation of two new DVD case lines.



Regarding the business and prospects for the current year, Sir David added:



"We have recently invested #1.8million in two additional DVD case production
lines. This has enabled volume sales to increase substantially. The industry is
forecasting that demand will continue to grow and we remain committed to
ensuring that our capacity responds accordingly."



"Video box demand has remained solid and we fulfilled the expected increases for
Christmas orders at the end of the period. The forward order book continues to
enable our capacity to be fully utilised."



"CD case sales were slightly below the previous year's levels but we are aware
of a renewed demand in the market. Our own experience is reflected within the
industry and our market share has improved slightly."



"We remain confident of our prospects in the months ahead."



Enquiries: Coral Products PLC Tel: [phone]
Warren Ferster, Managing Director email: [e-mail]
Stephen Fletcher, Finance Director email:[e-mail]


CHAIRMAN'S STATEMENT



As anticipated in my Statement at the A.G.M., the six months to 31 October 2002
resulted in a period of significantly greater demand for our products than the
comparable period last year. Volume sales of video boxes and DVD cases increased
appreciably during this period although our CD case sales remained below
expectation due to lower world-wide activity.



We experienced increases in raw material prices, which inevitably had an impact
on margins. However, material prices are now falling and, whilst we will not
get the full benefit of such decreases, our overall margins will improve.



Further capital investment has been made in DVD case production resulting in a
substantial increase in capacity. The benefits of this were only obtained in the
latter stage of the half-year and we will continue to take advantage of
increased volume requirements in the immediate future.



Whilst total demand may reduce with the completion of Christmas orders we have a
strong order book in all our products as we enter 2003.



Trading



Turnover for the six months ended 31 October 2002 was #9.9million (2001: #8.4
million) and pre-tax profits increased to #1,012,000 (2001: #585,000). Diluted
earnings per share were 3.43p (2001: 1.93p).



Interim Dividend



An interim dividend of 1.05p net per ordinary share (2001: 1.05p) has been
declared for the period. This dividend will be paid on 24 February 2003 to all
shareholders on the register on 7 February 2003.



Business and Prospects



We have recently invested #1.8m in two additional DVD case production lines.
This has enabled volume sales to increase substantially. The industry is
forecasting that demand will continue to grow and we remain committed to
ensuring that our capacity responds accordingly.



Video box demand has remained solid and we fulfilled the expected increases for
Christmas orders at the end of the period. The forward order book continues to
enable our capacity to be fully utilised.



CD case sales were slightly below the previous year's levels but we are aware of
a renewed demand in the market. Our own experience is reflected within the
industry and our market share has improved slightly.



We remain confident of our prospects in the months ahead.



Sir David Rowe-Ham 4 December 2002







Profit and Loss Account




Unaudited Unaudited Audited
Half year to Half year to Year to
31 October 31 October 30 April
2002 2001 2002
Notes #'000 #'000 #'000
----------- ----------- -----------
Continuing operations
Turnover (1) 9,899 8,356 16,371
----------- ----------- -----------
Profit on ordinary activities
before interest 1,104 702 1,460
Net interest payable 92 117 227
----------- ----------- -----------
Profit on ordinary activities
before taxation 1,012 585 1,233
Tax on profit on ordinary activities (2) 304 181 399
----------- ----------- -----------
Profit on ordinary activities
after taxation 708 404 834
Dividends 216 217 690
----------- ----------- -----------
Amount transferred to reserves 492 187 144
----------- ----------- -----------
Basic earnings per share (3) 3.44p 1.96p 6.77p
----------- ----------- -----------
Diluted earnings per share (3) 3.43p 1.93p 6.62p
----------- ----------- -----------



The Company has no recognised gains and losses other than the profits above and
therefore no separate statement of total recognised gains and losses has been
presented.



Basis of preparation

The interim results have been prepared on the basis of the accounting policies
set out in the Company's accounts for the year ended 30 April 2002, and are
neither audited nor reviewed.




Balance Sheet


Unaudited Unaudited Audited
As at As at As at
31 October 31 October 30 April
2002 2001 2002
#'000 #'000 #'000
----------- ----------- -----------
Tangible fixed assets 14,035 13,009 12,533

Current assets
Stocks 1,834 1,166 2,048
Debtors 6,251 5,989 4,781
Cash at bank and in hand - - 84
----------- ----------- -----------
8,085 7,155 6,913
Creditors: amounts falling due within one year (9,038) (6,499) (6,465)
----------- ----------- -----------
Net current (liabilities)/assets (953) 656 448
----------- ----------- -----------
Total assets less current liabilities 13,082 13,665 12,981

Creditors: amounts falling due after
more than one year (946) (2,069) (1,345)
Provisions for liabilities and charges
Deferred taxation (1,382) (1,273) (1,382)
----------- ----------- -----------
Total net assets 10,754 10,323 10,254
----------- ----------- -----------
Capital and reserves
Share capital 206 206 205
Share premium 4,530 4,497 4,497
Capital redemption reserve 2 - 1
Profit and loss account 6,016 5,620 5,551
----------- ----------- -----------
Equity shareholders' funds 10,754 10,323 10,254
----------- ----------- -----------



Movements in Shareholders' Funds


Unaudited Unaudited Audited
As at As at As at
31 October 31 October 30 April
2002 2001 2002
#'000 #'000 #'000
----------- ----------- -----------
Profit for the period 708 404 834
Dividends 216 217 690
----------- ----------- -----------
Net additions to equity shareholders' funds 492 187 144
Proceeds of share issued 35 - -
Purchase of own shares (27) - (26)
----------- ----------- -----------
500 187 118
----------- ----------- -----------
Equity shareholders' funds at the beginning of the
period 10,254 10,136 10,136
----------- ----------- -----------
Equity shareholders' funds at the end of the period 10,754 10,323 10,254
----------- ----------- -----------




Cash Flow Statement


Unaudited Unaudited Audited
Half year to Half year to Year to
31 October 31 October 30 April
2002 2001 2002
#'000 #'000 #'000
----------- ----------- -----------
Net cash inflow from operating activities 1,748 864 2,915
----------- ----------- -----------
Returns on investments and
servicing of finance
Net interest paid (92) (117) (231)
----------- ----------- -----------
Taxation received/(paid) 127 (157) (349)
----------- ----------- -----------
Capital expenditure and financial investment
Purchase of tangible fixed assets (2,451) (1,411) (1,918)
Sale of tangible fixed assets - 3 52
----------- ----------- -----------
(2,451) (1,408) (1,866)
----------- ----------- -----------
Equity dividends paid (473) (475) (692)
----------- ----------- -----------
Net cash outflow before financing (1,141) (1,293) (223)
----------- ----------- -----------
Financing
Issue of share capital 35 - -
Repurchase of share capital (27) - (26)
Inception of new loans - 286 286
Repayment of loans (75) (175) (248)
Repayment of principal under finance leases (751) (890) (1,758)
Proceeds of sale and leaseback 863 1,164 1,539
----------- ----------- -----------
Net cash inflow from financing 45 385 (207)
----------- ----------- -----------
Decrease in cash in the period (1,096) (908) (430)
----------- ----------- -----------






Reconciliation of Net Cashflow to
Movement in Net Debt


Unaudited Unaudited Audited
Half year to Half year to Year to
31 October 31 October 30 April
2002 2001 2002
#'000 #'000 #'000
----------- ----------- -----------
Decrease in cash in the period (1,096) (908) (430)
Net cash outflow from debt and lease financing (37) (385) 181
----------- ----------- -----------
Change in net debt resulting from cashflows in the
period (1,133) (1,293) (249)
Net debt at beginning of period (3,284) (3,035) (3,035)
----------- ----------- -----------
Net debt at end of period (4,417) (4,328) (3,284)
----------- ----------- -----------




Reconcilitation of Operating Profit to Net Cash Inflow
from Operating Activities


Unaudited Unaudited Audited
Half year to Half year to Year to
31 October 31 October 30 April
2002 2001 2002
#'000 #'000 #'000
----------- ----------- -----------
Operating profit 1.104 702 1,460
Depreciation charges 949 876 1,793
Profit on sale of fixed assets - (3) 14
Release of grant income - (1) (1)
Decrease/(increase) in stocks 214 727 (155)
(Increase)/decrease in debtors (1,470) (572) 636
Increase/(decrease) in creditors 951 (865) (832)
----------- ----------- -----------
Net cash inflow from operating activities 1,748 864 2,915
----------- ----------- -----------






Notes to the Accounts


1. Turnover

All production is based in the United Kingdom. The geographical analysis of turnover is shown
below:
Unaudited Unaudited Audited
Half year to Half year to Year to
31 October 31 October 30 April
2002 2001 2002
#'000 #'000 #'000
----------- ----------- -----------
United Kingdom 9,171 7,771 14,753
Rest of Europe 728 579 1,607
North America - 6 11
----------- ----------- -----------
9,899 8,356 16,371
By Business Activity ----------- ----------- -----------
Media packaging 9,870 8,144 16,031
Housewares 29 212 340
----------- ----------- -----------
9,899 8,356 16,371
----------- ----------- -----------


The classes of business activity do not differ substantially and therefore no separate analysis
of operating profits and net assets is disclosed.

2 The charge for taxation on the profit for the period is based upon the estimated effective rate
for the full year.

3 The calculation of basic earnings per share is based on the profit on ordinary activities after
taxation for the half year namely #708,000 (2001: #404,000) and on 20,571,451 (2001: 20,637,781)
ordinary shares being the weighted average number of ordinary shares in issue and ranking for
dividend during the period. Calculation of fully diluted earnings per share is based upon a fully
diluted weighted average number of ordinary shares of 20,614,574 (2001: 20,918,073).

4 The results for the year ended 30 April 2002 are in abbreviated form and have been extracted from
the published accounts as filed with the Registrar of Companies. These were audited and reported
upon without qualification by PricewaterhouseCoopers and did not contain a statement under
Section 237(2) or (3) of the Companies Act 1985.

5 The interim report will be posted to all shareholders on 4 December 2002 and copies of this and
the last published Annual Report and Accounts are available from the Secretary. Coral Products
PLC, North Florida Road, Haydock Industrial Estate, Haydock, Merseyside WA11 9TP (Tel: 01942
272882). These reports may also be viewed on our web site at coralproducts.com.






This information is provided by RNS
The company news service from the London Stock Exchange
END

IR FSMFIDSESEDE


Coral Products(CRU)

Three Year Chart Intraday Chart

[midherts] 01/11/2002 19:43

Its worth reading the Chairman's statement at the AGM since this suggests that the year is going well and the share price seems to have responded a bit. We'll know more when the interims appear.

[dragonhorse] 01/11/2002 17:44

Thought I'd point out that since the last post, the FTSE100 and most other other indices have gone 'pear-shaped' whereas over the same period CRU has gained approx. 15% in value whilst dishing out a 9% dividend ... Wonderful!

This is the only share in my portfolio that I intend to keep buying on the dips!

But of course as holders you already know that!

Bon Chance the Pool.

[timbo003] 22/9/2002 19:28

I have posted before on Coral on previous threads, but I will risk boring everyone by repeating myself. I have a small interest in these (5K) purchased about a year ago, I would dearly like to buy more, but I doubt if I will. Coral seem well managed and the divi is very attractive, but the liquidity is a problem, they are ifrequently traded, the NMS is small (MMs will deal in 2.5K lots) and there's an horrific spread most of the time (there are only two MMs). I'm just happy to hold and collect the divis and hopefully see a gradual capital appreciation, it's an ideal ISA filler, but I would not want a large position.

The AGM statement on Friday sounded quite good.

[humdinger] 21/9/2002 00:04

Haven't posted for some time as so little interest on the PBB on many good shares like this one and it seems pointless to do all the research and end up talking to myself so at least I can finish off my last ever post on the PBB with a smile :-)

(edit - got too busy/manic on the FBB - quieter here but at least I can hear myself think so maybe not my last post)

John B

[r.dryden] 20/9/2002 15:23

30% increase since last September doesn't seem too bad.
Keep talking!

[timbo003] 05/7/2002 18:14

I have a very modest holding in these (5000) which I have held since the beginning of the year in my ISA, I would buy more, but they are sooooo illiquid.

Having said that, the divi is fantastic and the recent results were most reassuring

[dragonhorse] 05/7/2002 17:12

At a 9% dividend yield on my capital in CRU, my risk profile on this is well satisfied.

[night watch] 04/7/2002 11:23

Prospects

The new financial year has started in line with our expectations with
encouraging DVD and Video sales outweighing a continuation of weak demand for CD
sales. I expect that the commencement of the Kodak contract, together with the
growth we are experiencing in the DVD market, will help reduce our reliance on
CD sales, and should impact favourably on trading within the second half of the
present financial year.

Our cash flow generation and balance sheet remain strong, and we continue to
invest in our core media business whilst maintaining a worthwhile dividend
income stream for our shareholders.


Sir David Rowe-Ham
Chairman


4 July 2002

[night watch] 04/7/2002 10:52

CORAL PRODUCTS PLC

2002 Preliminary Results


Coral Products PLC, one of Europe's leading manufacturers and suppliers of media
packaging for Digital Versatile Disc (DVD), Video and CD, announces its final
results for year ended 30 April 2002.


Commenting upon the Company's trading Sir David Rowe-Ham Chairman of Coral said:

"Reduced selling prices as a result of lower raw material prices earlier in the
year together with poor demand for CD cases resulted in lower annual turnover
and a reduction in profits. Continuing growth in DVD sales, together with strong
Video sales have, however, helped to reduce the effects of a weak CD market."


Summary Results
Year ended Year % change
30 April ended
2002 30 April
2001

Turnover £16.4m £18.4m -11 %
Pre-tax profits £1.2m £2.0m -40 %
Fully diluted earnings per share 4.03p 6.74p -40 %
Total dividend 3.35p 3.35p same

• Continued growth in DVD sales and strong Video sales helped reduce the
effects of a weak CD market in the year.
• Additional DVD lines to be installed and running in the next 3 months
which will more than double DVD capacity.
• New contract commenced with Kodak after the year end for a range of
photographic packaging.
• Cash flow generation and balance sheet remain strong enabling continuing
investment in capacity whilst maintaining a worthwhile dividend to
shareholders.

Regarding prospects for the current year, Sir David added:

"The new financial year has started in line with our expectations with
encouraging DVD and Video sales outweighing a continuation of weak demand for CD
sales. I expect that the commencement of the Kodak contract, together with the
growth we are experiencing in the DVD market, will help reduce our reliance on
CD sales, and should impact favourably on trading within the second half of the
present financial year."


Enquiries:
Coral Products PLC Tel: [phone]
Warren Ferster, Managing Director Mobile: [phone]
David Shalom, Finance Director Mobile: [phone]

Williams de Broe PLC Tel: [phone]
David Lawman Tel: [phone]

[humdinger] 04/7/2002 10:07

Well I may be on my own but why should I care :-))

Great maintained div. which with the interim gives me 'bout 10% before the tax credit/today's rise. I absolutely love this Company - great idea for using the CD packaging line with Kodak and if the DVD doubles again (should do with new lines etc) then this one is going to go really well. Even at 40p the p/e is just 10 on this last year's earnings. Now if they can make over a million in a bad year when the CD music sales fell ............

Chart is perking up too. Meanwhile I'm off to find another silly inflated techie share to short.

John B

[night watch] 03/7/2002 11:26

The NAV.ps is currently 49.29p and only trading at 40p !!!
Also paying a dividend of 8.82%!!!
This is too cheap and due for a re-rating on results tomorrow!!!

[night watch] 03/7/2002 11:08

With DVD lines running at full capacity along with maintaining it's share of the CD market and increasing their share VIDEO market as other company's cut thier production, tomorrows results 4th July should be what we are all hoping for. This is an over-looked company paying consistently good dividen's & yet still under valued, a great investment in these market conditions. Get on board before the word gets around!!!!

[humdinger] 31/5/2002 11:32

A7009090 - whether CD or DVD shouldn't really matter as Coral make the boxes. Just remember that even the game machines (PS2,X Box and Game Cube) use CD's BUT now need the DVD type boxes rather than the old music CD type. Most new pc's come with CDRW so one industry I wouldn't want to be in is those making the three and quarter inch disks!!!

With regard to Capex I agree but they have the demand to keep the lines fully utilised so not really a problem. I think the production is pre-sold - remember about the MS link and I think they need the lines to manufacture the X Box s/w boxes which is all new business.

We will all know in about a month when they announce the results. Just hope they don't let us down.

[a7009090] 29/5/2002 16:24

Good post, the sort of company I am interested in with a good yield. Two points:

Is CD packaging a growth industry? If not, why should the shares get a higher rating?

Look at all the capex. Exceeding cashflow (using refs measure) in the past two years. When will this level of capex stop?

[hpotter] 18/5/2002 22:07

I have a reasonable holding in these because of the good dividend and because its so different to the rest of my portfolio. I think the main threat is the internet. But the UK public seem to still buy Videos, DVDs, etc rather than downloading.
The continued capital expenditure is for automation and additional product lines.

[dragonhorse] 17/5/2002 17:58

Good post Humdinger.
I have some ...bought @ 35p & intend to hold as a medium/long term investment.
Excellent dividend means one can sit back & enjoy whilst waiting for a positive re-rating. Still think it's attractive at these levels and good set of finals should drive the price in the right direction.

[humdinger] 16/5/2002 14:40

I posted the lot below on the PBB but no reaction (some clever people on there but soooooo quiet). Nothing much on the FBB about Coral so here we go. Chart isn't a pretty sight when I first wrote this but it is getting better (see below) but here are a few thoughts:-

-Core business is that they make the plastic boxes that you put your discs/videos in (films/music and games) with some good customers including MS in the UK. Ole Billy's box launch should see some good volumes soon, I reckon. Do a lot with many PSX software Companies too – check out the boxes and look for a "C" logo – that is Coral. They used to make plastic buckets and stuff but that is now less than 5% of turnover.
-Company suffered in past by having the Co-op pension fund owning 20% - They decided to sell the lot so it took a while to clear all the shares.
-This is in effect a family run business and they don't sell their shares which I like very much – the shares are tightly held but I have more than just a few as the dividend is excellent (almost 10% and not likely to drop much). I tend to find that well run family owned businesses are rare but they usually look after the shareholders for obvious reasons.
-They were caught by the oil rise price hike though their contracts allow them to pass on any rises – smartass FD.
-Slow-down in game sales while waiting for new consoles + slow sales of CD's (40% of t/o but declining) affected their business in past year. Their reported slowdown in music CD box sales are what gave me the idea to short EMI a while back – useful that was ;-)
-They make a profit, pay a good dividend, have low p/e and have net assets circa 50% above the market value (and they are real fixed assets not goodwill and other nebulous valuations). CRU are the last remaining independent producer in this field and are a major player in a niche market so with directors owning more than 50% they won't sell the company cheap to a predator. Oh BTW they also have a buyback agreement in place (little used) – I reckon just in case they get a problem with any other Institution in the future.
-They have invested profits in up to date DVD manufacturing equipment (with more coming in Summer 2002 so they believe in investing for the future) and at the interim stage said they were running the older video box lines at full capacity with signs of improved sales generally albeit lower than same time last year.
-Finally they are in a growth business, unless everyone stops listening to music, playing games, using computers or watching films.

And lastly for all you traders, there are no major institutional stock holders so any buying or selling goes straight through to the price so provided you don't sell 'em you'll be ok but ......... if you do short 'em down below 30p then I and the Directors will be buying a few (I did recently after Sep 11 fall). The spread is wide but closes when the share becomes more regularly traded. If CRU do get bulk of box business for Billy's box then the profit should grow very quickly. Oh I also like the Directors and the FD 'cos they reply to letters and questions wot I asked in the past. Can't knock that can you?


Why buy now? Well they are due to announce their results shortly (beginning of July) and I have been waiting for a buy signal before posting. Last year in Feb. they posted a warning. This year, just before the close period and very early in this tax year the Sales Director sold £14k's worth (RNS 18th April) of shares and then bought them back straight away and stuck them in his and his wife's ISA and that is the max allowed per year – must think Coral are a good investment.

After all that hype I bet this one goes belly up next week – then again...........good luck everyone and dyor, shares go down, I talk a load of tosh, etc., etc. Here comes the chart which when I first post is at best cr*p but by the time you read it............ might be looking much better ;-)

John B.