Coral Products Share Discussion Threads

[clocktower] 06/8/2018 12:47

Look forward to hearing the response Aleman. Thanks all very interesting discussion.

[aleman] 06/8/2018 12:22

Nobody available to answer my query today. DS to ring me back tomorrow.

[charo] 05/8/2018 22:58

1.8 pbt add depreciation 1.25 add interest 350k ebitda 3.4 circa.

[charo] 05/8/2018 22:47

Go to coral products plc website brokers note clear 1.8 pbt and 3.4 ebitda for year to April 2019

[aleman] 05/8/2018 21:35

There seems to be a mistake somewhere. I won't complain if £2.4m is wrong! £3.4m seems unlikely to me.


EBITDA forecast of £3.4m



EBITDA forecast of £2.4m



I have not noticed any other differences. It is just about conceivable that underlying EBITDA is £2.4m and £1m extra is released from working capital changes in a reversal of recent factors that held actual EBITDA back in the current year - but I doubt it. I think a phone call might be in order to get the two differing forecasts explained.

[charo] 05/8/2018 13:42

Aleman
The forecast ebitda for year to april 2019 is 3.4 million.The acquisitions made have been great earners but the failure to turn round haydock has hurt performance. Since JG took control in jan 2015 he has had to deal with the cash cost 400k of removing family directors followed by the insolvency of the groups biggest customer.JG funded the shortfall from his own resources.He spent a year stabilising and rebuilding finances then stepped back in 2016 appointing an industry high flier as ceo.
As often happens the high flier crashed.JG stepped back in replacing CEO and group FD and again stabilised the group as part time executive chairman.
Having set things back on course,he appointed another higly regarded industry executive as CEO.The expected sink provisions followed.
No panic, no histrionics just head down .Throughout the company has continued to invest in resources.No director or senior manager has sold any shares ,indeed there has been buying.
The forecast for year to april 2019 id for PBT of 1.8 million and it will be a great credit to the team if achieved.

[aleman] 05/8/2018 11:22

That's a simplistic view, topvest, but it does have some truth in it, too. I think it's how you choose to interpret and it very much depends on whether the trading update's reflections on current trading carry through into cash generation.

Since 2014, the company has increased debt by roughly the amount of acquisitions. That is the main reason debt has risen. Since, 2015 cashflow which might have paid for dividends or paid down most of that debt has been diverted into a £1.7m+ increase in inventories and capex exceeding depreciation by a similar amount. Call it £3.5m. Will that investment pay off? The DS forecast says yes. Underlying EBITDA was £1.26m in 2014 and £1.023m in 2015. This year is forecasted at £2.0m (though exceptionals and stock build knock it back to £1.2m). Next year's is predicted at £2.4m - more than double the 2014/2015 average!

The question is whether you believe DS that money spent on acqisitions, capex and stock increases lift cashflow at the operating level. Turnover has been growing and now we are told it is up again month on month. Key is margins. Exceptionals from all the investment and changes hit this year's numbers. Operating margins in 2016 and and 2017 were good, though. If 2019 margins return to similar levels,as predicted, the investment will have been well worthwhile and the debt will be mincemeat. The new recycling plant could even add a bit more. This reads like investment that is paying off to me. But we do need to see those better margins come through. Turnover and high capex on its own gets us nowhere.

The trading update says it is happening and profitability since 2015 has doubled after some major growth. Don't you believe it? I do. The share price, however, indicates you are not alone. It is lower than when underlying EBITDA was barely above £1m. If it had risen in line, it would be more like 30p. Maybe that's why there has been so much director buying. They seem to believe it, though directors get it wrong often enough. Anyway, I topped up.

[topvest] 04/8/2018 17:38

The trouble with Coral is that any new contract seems to incur more capital expenditure. Overall it’s a pretty low quality and marginal business. Possibly some upside at 10p, but not tempted back.

[aleman] 03/8/2018 18:20

The EBITDA numbers sound about right for me when you consider exceptionals and stock-build held 2018 back in a big way, and then we get higher turnover and margins in 2019, but I don't know what the debt figure refers to. Maybe they are only showing the long term debt and expect low capex for H2 so more cashflow goes to paying that down while the £4m of short term debt is carried over unmentioned?

[charo] 03/8/2018 10:19

Pbt nil plus depreciation and interest 1.2 million circa so ebitda about right for 2018,maybe a bit conservative on eps for 2019 but not overstated.Take 1.2 for 2018 add 1.8 plus Inc deprec and interest so 3.2 circa again about right.

[valuschmalu] 02/8/2018 22:41

is it me or does the DS note have several material errors? EBITDA for 2018 should be around £2.2m not £1.2mn? PBT next year must be lower than £1.8m is EPS is 1.5p and net debt is £7m?

[clocktower] 02/8/2018 16:28

Yes I spotted that as well Aleman. A positive sign, and although they said break-even, I would not be surprised to see the final figures are just a fraction better than break-even bearing in mind that the last months of the year have been profitable.

[aleman] 02/8/2018 15:46

Notice that Daniel Stewart indicate full year results will be in August this year.

[aleman] 02/8/2018 12:24

A return of dividend at 0.7p is pretty impressive.

[clocktower] 02/8/2018 12:23

Thanks for pointing it out charo - great figures forecast. once the market recovers from its current trend,and the seller that has been dumping 100k lots is out of the way, we should see this back up nicely.

[fozzie] 02/8/2018 12:20

Thanks for that Charo

[charo] 02/8/2018 12:18

BROKERS NOTE NOW ON COMPANY WEB SITE.
FORECAST APRIL 2018 APRIL 2019

SALES 24 MILL 28 MILL

PBT B/E 1.8 MILL

EPS NIL 1.5P

DIV NIL 0.7P

EBITDA 1.2 MILL 3.4 MILL

From history capital repayments and interest circa 1.4 million so forecast dividend covered around 2.5 times by free cash.The investment in recycling will be very cash generative through calendar year 2019.
encouraging note.

[charo] 02/8/2018 08:50

Brokers note out yesterday contacted company for copy will post when receive.

[clocktower] 01/8/2018 22:18

There is more than enough plastic waste
to keep any machine running at full capacity 24/7 all year round, so I guess the cost will be insignificant by comparison but I expect it will be just another piece of financed equipment, like many machine in a large number of factories.
Unlike most machines you will not have to sell anything to be able to run it at full capacity,as I doubt that it will keep pace with the production and sales, so other raw materials will still need to be purchased.

[valuschmalu] 01/8/2018 20:06

how much does your average plastic recycling unit set you back these days?

[clocktower] 01/8/2018 17:36

Having reviewed past figures and outlook statements that were made in Jan 2018 - We must assume that the group will not do much better than break-even in the current year to 30 April 2018 due to non-recurring costs of £425k and increased depreciation of £302k Total £702k - so in view that the group made operating profits in each of the four months to 30 April, it seems to me that there may be a few more odds and ends tied up in the full year accounts, that will leave Coral with a very clean sheet in H1 2018/2019 as sales and margins are ahead of the same period last year.

The full year to 30 April 2017 produced turnover of £21,432,000 so on that basis we can look forward to being in line or ahead of that figure for 2018 and moving forward to 2018/2019 we should see a return to profit of no less than the £938,000 that was posted in 2016 on a turnover of £18,714,000 - so maybe we will exceed that as margins and turnover have improved in the first quarter May - end July 2018 , with the board having stated they have a strong order book and expect further improvement in the coming months.

The new Plastic Recycling Unit that is due to be operational Jan 2019 will also produce further revenues in the last for months of the current year.

This increasing Plastic recycling plant will I suspect increase profits further, as costs of material with fall bearing in mind the way in which the oil price has increased over the past 12 months.

So a lot to look forward to, and maybe see dividends resumed in 2019

[this_is_me] 01/8/2018 13:08

Nothing much is going up today.

[clocktower] 01/8/2018 10:00

Want breakfast at Haydock?

[clocktower] 01/8/2018 09:23

The good news seems to have gone down like a damp squib, I am guessing but I would not be surprised to see those two early trades being sold back before the day is out, as they might have been very speculative and traded on the basis of a quick buck. Not so with CRU.

The long time frame to returning to any form of dividend and real asset growth is what will hold this stock back imo.

We might not even see the 12p level being breached for some time. on consideration of all the facts.

Still, I will be adding on any weakness over the coming months.

[charo] 01/8/2018 08:54

Think you will find regulatory restrictions limit what company can say.But very positive.