Any thoughts on the results?
No real surprises I thought. One thing that did catch my eye was this paragraph:
"The appointment of Steve Adams as CEO, as announced on 10 August 2022, creates an opportunity for a division portfolio review, to ensure we deliver on our short and long term goals as we enter a new phase of growth. As an existing Executive Director of the Company and Managing Director of the James Cropper Paper Division, Steve joined the Company in 2017 and is perfectly positioned to oversee this work, which is already underway."
I wonder if they might actually be thinking about disposing of the paper manufacturing? It's the largest division by turnover but has always been an unreliable profit source. It will, however, probably have a lot of assets so should be worth a bit in a sale.
I think if they did get rid of this and focused on TFP and Colourform we would see a step change in profitability and the attractiveness of these shares to investors. |
Should have gone for Mondi - far, far more forward thinking company |
Ho Hum,it looks like I was a bit premature buying back in after today's profit warning. It's a really tough environment for manufacturers at the moment so maybe I shouldn't be surprised. I still wish they'd ditch paper manufacturing and concentrate on the two growth businesses. |
The only question I have Arthur is the extent to which the TFP profitability is 'clean' versus benefiting from intra-company agreements on sourcing costs. In other words, if you took TFP out, does it need to move to arms-length contracts on any cost lines that make the P&L today distortedly high (and which in turn could materially impact how to think about the valuation multiple for the business).
That's a genuine question as I don't know the answer, but it's something I'm mindful of when doing divisional analysis. So if anyone knows, I'd love to know!
Eric |
I also bought back in. I think TFP is worth the market cap on its own with the paper manufacturing and Colourform thrown in for free. If paper can remain profitable throughout this year then I expect a really quite good set of results in 2023. |
Well about time they wrote something positive, hold and added a little on weakness.
Illiquid. |
Impressive update all round so finally taken a position. |
Quality company that it is, it is hard to see a floor for this one given the uncertainty and elevated rating. Like you Arthur I want to buy in at some point but just don't see what price represents good value. £6? |
The investors' Chronicle have called this a sell.
I actually disagree somewhat and would like to buy but hopefully they will get cheaper before things get better. |
Massive tax rate (51%) has decimated bottom line earnings despite a 33% uplift in revenue and only a reduction in exceptionals (primarily the restructuring costs) ramped up pbt.
Energy costs more than doubled.
On a current PE of 72x…….I must be missing something!. |
Ok results, interesting company. I noted the large increase in raw material costs which they have navigated reasonably well. Also the new undrawn borrowing facility. Need to get profits up to drive eps imo. |
I agree it doesn't look cheap as a whole, but the divisional breakdown when it comes should give a clearer picture of the value in these. I expect TFP to make hefty profits but to be dragged down by losses in the growing Colourform and paper manufacturing. |
Thinking like you Arthur but just feel it is a fairly weighty valuation with a p/e of 30 plus in such uncertain times. |
I'm giving some thought to buying back in. TFP has to be worth £100m on its own surely?
I wish they would sell the paper manufacturing and concentrate on the growth areas though, I guess the family must be emotionally attached to it. |
Callum,
On one level that is a reasonable observation, but misleading. "Directors and wives" (plural) did not sell in January. One director and wife sold. Two other directors purchased. The balance of sales outweighed buys - although the remuneration committee also purchased.
There was buying and selling (both) in November and in September too.
Just for balance.
Best wishes,
G. |
"I am worried that the spiralling energy cost which is a big cost for them will push them into a profit warning soon" Very prescient comments Arthur. Now we can see why the directors and wives were selling in January. |
Positive growth continuing but eye watering energy increases hitting paper margins:
"The average wholesale gas price has moved from 50p/therm to over 250p/therm, peaking at 800p/therm in Q4"
Longer term prospects continue to look great, IMO.
G. |
I think its a reasonable concern Arthur - it has certainly proven to be a problem at certain times over the years.
G. |
I sold these a little while ago as I am worried that the spiraling energy cost which is a big cost for them will push them into a profit warning soon.
I will keep an eye on them though as I like their prospects overall. |
James Cropper Plc posted an impressive set of HY results a few weeks ago as the company rebounds from COVID. Revenues were up 46% to £49.8m, profit before tax was up to £1.9m from no profit, and EPS was up to 16.2p from loss of 0.2p. Obviously business has rebounded from shutdowns to pre-Pandemic levels. But so too has the share price which is back at early-2020 levels. Valuation isn’t particularly helpful, forward PE ratio at around 34 looks a little rich. Balance sheet is reasonably healthy, but share price lacks momentum. Not a bad company, but a share to monitor for the time being....from WealthOracleAM |
Agreed Arthur. Multiple is high. But TFP's existing buisness prospects have been enhanced following the purchase of PV3. That is now TFP Hydrogen.
Current market cap £129K
What price TFP in a few years' time?
By way of example, this from August:
At TFP Hydrogen Products we are proud to announce our involvement in the Ocean Renewable Energy Fuel (Ocean-REFuel) programme, has an electrolyser system manufacturer.
The innovative £10M research project will investigate the potential of harnessing offshore wind and marine renewable energy to produce zero carbon hydrogen and ammonia fuels.
G. |
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