Croda Share Discussion Threads

[plentymorefish] 09/12/2008 18:26

garethcoulson - thanks for posting that. Nice to be reminded the value in this one, I'm in at 508 so still someway to go before breakeven but I consider this a solid long term hold.

[garethcoulson] 09/12/2008 09:28

Croda has the right elements to enable it to flourish

By Garry White
Last Updated: 8:47PM GMT 08 Dec 2008

Croda International

389¾p +10

Questor says BUY

Good companies as well as bad companies have seen their share price hammered over the last year. Today I want to highlight one of the good ones.

Croda International is a world leader in the manufacture of speciality chemicals. It is likely to see some hit from the parlous state of the global economy, but Questor still regards it as a defensive business. The shares have fallen 46pc from their peak on May 5 2008 and Questor believes that this has created an opportunity to get in ahead of a strong set of full-year numbers.

The group manufactures chemicals for the healthcare businesses, the cosmetic industry and crop care products that are used in herbicides and insecticides. Its other products include lubricants for the oil and gas industry, solutions to help in textile processing and polymers for plastics and packaging, plus many, many more.

It also supplies ingredients for the high-end cosmetics sold by luxury brands such as Chanel and Estée Lauder. "We appeal to two things that will never go away – vanity and ageing," Croda chief executive Mike Humphrey said after its last results statement.

Around 75pc of group earnings come from its consumer care operations, mostly low-ticket defensive items. Its industrial products cover a wide range of sectors, which should provide some earnings protection next year – although total volumes are likely to fall.

The latest full earnings statement covers the six-month period to June 30 2008. Despite the cost inflation in this period, the company managed to post an increase in pre-tax profits of 64.1pc. When the performance of discontinued businesses is stripped out, pre-tax profits actually jumped a stunning 90.3pc. There was a one-off spike in glycerine prices, which flattered the results in the period. The spike provided an additional £4.9m to earnings, constituting just over 9pc of total profits in the period.

The disposal of non-core businesses has also reduced net debt, which stood at £364.7m at the end of September. Disposals in the first half included the sale of Baxenden Chemicals in February 2008 to Chemtura for £13m and its Chicago Oleochemical business was sold to HIG Capital in May 2008 for £45.1m.

The company managed to fully recover the cost of increased raw materials prices in the first half. However, input costs are now likely to move lower, which should help to boost margins. Of course, customers will be demanding that these cost savings are passed on, but Questor expects that the company will not transfer 100pc of the reduction, which should provide a cushion from falling volumes.

The currency markets are also moving in the company's favour – so this should help boost full-year numbers, which are expected to be released in February 2009. So far this year, sales and earnings have been boosted by around 10pc by currency movements.

Collins Stewart has calculated that if exchange rates stayed at their current rate, earning in 2009 could see a 15pc boost. However, Questor expects that the pound may slide further in the next six months – providing an even greater currency-related gain.

The UK contributes less than 10pc to total sales, with around 50pc coming from Europe and 25pc from the Americas.

The company's latest trading update was issued at the start of November – and management oozed confidence. It said global demand for its core products remained robust, with the personal care and crop care sectors showing strong growth.

For the three months ended September 30 2008, sales excluding disposals were £246.7m, up 25.2pc from the corresponding period last year. Pre-tax profit on the same basis was 73.2pc higher at £24.6m due to sales increase, synergies realised from the acquisition of Uniqema, favourable currency translation and a reduced interest charge.

Croda bought Uniqema from ICI in September 2006 and it is still generating synergies from the complimentary businesses.

The company also said that, on a constant currency basis, Croda's average selling price per tonne increased 20.5pc year on year. This reflects not only price increases but also favourable mix from shedding low-quality businesses and the higher sales value of the turnover formerly carried out by third-party distributors.

In the year to December 30 2008, pre-tax profits are expected to jump 61pc to £98.13m and earnings per share are forecast to rise 23pc to 48p. This leaves the shares trading on a current-year forward multiple of just 8 times. This looks far too low.

This is exactly the type of company that Questor is looking for. The board has proved its effectiveness at cost management and the group is well diversified in different markets – from personal care to oil and gas products to crop management. The group generates more than 90pc of its sales abroad, so it will see benefits from a weak pound.

The group is also very cash generative, with free cash flow in the first half of 2008 jumping to £63.9m – 132pc ahead of the first half of 2007.

Questor also likes dividends – and Croda's pay-out looks pretty secure. In 2007, its dividend cover on continuing operations was more than two times. The full-year pay-out for 2008 expected to rise to 18.9p from 15.75p last year, which implies a healthy dividend yield of 4.8pc. Even if there was no increase in the dividend, the shares are still yielding 4pc.

With the company ticking all the right investment boxes, Croda shares are a definite buy.

[gorilla36] 09/12/2008 09:19

From Todays Questor column in the Telegraph

[plentymorefish] 07/12/2008 19:17

Well my initial purchase early Nov quite a bit underwater - so much for MIDAS tips. Still, twas only a small dabble so will just forget about them for now & next time I look I may be pleasantly surprised, or maybe I should buy some more but averaging down doesn't often work for me!

[hazardaguess] 05/12/2008 19:36

garethcoulson - ssshh, lets keep quiet as the longer we can keep accumulating at these prices the more we'll make when the recovery starts! good luck!

[garethcoulson] 05/12/2008 15:10

Unbeleavable and totally over done drop.

[garethcoulson] 02/12/2008 15:57

Lower volumes today but more buys than sells as per yesterday, people spotting a bargain when they see one.

[pugugly] 01/12/2008 18:43

Headline needs changing - Back to £2:00?

After todays fall I had another look at basics.

High level of debt - net debt some £365 million

Pension deficit at end of H1 some £80 Million - given the fall in markets since then probably now higher.

Pressure on all market secors in which Croda operates.


Not much support from the dividend (on a historic basis only 3.93%)

[hazardaguess] 30/11/2008 10:50

Hopefully at or near the bottom now. IMO buying down at these levels will reap rewards over the coming months/years.

[garethcoulson] 27/11/2008 11:16

Wierd how the chemical indes was up over 6% yesterday and Croda wend down.

Today is the total opposite.

[ashotinthedark] 27/11/2008 11:02

C'mon CRDA - you shouldn't be down here, get yourself back upto 500+ pronto please!

[garethcoulson] 25/11/2008 17:32

No idea why it isnt, still a screeming buy as its widely tipped to top £7 in 09.

[ashotinthedark] 25/11/2008 16:15

Could do with this one joining in the market rally - it was quick enough to fall when the market was having a bad hair day!

[garethcoulson] 19/11/2008 13:52

An absolute screeming buy at this price.

[yangou] 19/11/2008 13:50

More buyers than sellers. But somoene seems to have control over the cellar door. Nothing at all makes sense in these markets thats about all i can say. Even good performing companies are down with the bug

[garethcoulson] 19/11/2008 13:09

What the hell is going on here ???

[ashotinthedark] 18/11/2008 12:41

Still falling. Question is where is the floor???

[plentymorefish] 06/11/2008 09:29

These were tipped by Daily Mail's MIDAS online column yesterday, 05/11/08 - basically said business doing well, should do better than most during the downturn and most analysts believing shares should be 'at least 700p' - have taken a small position this morning @ 508 - lets see how we go!

[brer rabbit] 05/11/2008 16:06

yangou - about time others else got wise to Croda! In this forthcoming economic climate CRDA should be more bouyant than most ... back to £7 in 2009 is not unreasonable. I've been playing this one in & out for a couple of years - look at the chart and how it oscillates ... it's good for 5%-10% cap gain per quarter or trimester.

[yangou] 05/11/2008 15:53

Just bought a few for my wife.Do anyone have any targets or other for this share? Read the report and it seems very good

[garethcoulson] 06/3/2008 18:10

No idea but if it goes to anything sub £6 im back in.

Good company.

[daveinchy] 27/2/2008 10:53

Monty - impressive move up - any reason?
I am getting short term 'short' signals at these levels 646p with a possible retracement to 13 DEMA (586p) at the moment.

[monty dons hair] 04/2/2008 12:04

Yet another good day for Croda.

Any one else in here ?

MDH

[monty dons hair] 03/2/2008 17:56

Croda had dropped to £4.5 but appears to be gaining ground back to the £7 mark.

Since buying Uniqema they maybe took their finget off the button slighty but are they now back on track ?

Any ideas ?

MDH.

[bugs22] 05/2/2007 14:35

Nice breakout