Devro Share Discussion Threads

[philanderer] 05/12/2011 08:45

Morning all.


Michael Ulrich is the manager of the F&C UK Mid Cap fund. His diary runs from November 14th-20th.

Tuesday:

Off to see Peter Page, the chief executive of Devro, a maker of sausage casings. I bought this stock after hearing about it from Sam Cosh who runs our successful pan-European small cap fund. Page is refreshingly honest about the challenges and opportunities facing the business. The company is benefiting from investment in R&D (research and development) as well as the long-term trend to greater meat consumption in emerging markets. We come away convinced that the business is in good hands.

[xandeebee] 04/12/2011 23:41

Thanks for the post Philanderer - Nice to see Chinese demand is starting to filter through to the books. Depending on the systemic situation over in Europe, 300p should be achieved here within the next few months.

XB

[philanderer] 04/12/2011 21:03

And from the week before...

Nov 22, 2011

Small-cap manager Harry Nimmo has positioned his £1 billion Standard Life Investments (SLI) UK Smaller Companies fund to benefit from emerging market growth in the difficult UK market.

He is focusing on companies with heavy exposure to emerging markets and is tapping into the growth story around food demand.

He pointed to the fund's holding in Genus, a firm that uses biotechnology to boost breeding among cows and pigs. 'With the urbanisation of the emerging markets, people are eating more meat,' he said. 'Peasant agriculture is turning into a more industrialised agriculture with science and technology, and breeding is not left to chance like it used to be. That's what Genus is all about.'

Devro, another fund holding, has benefited from the same trend, according to Nimmo. It produces skins for sausages and other meat products, and has a 57% share of the world market.

'It's a niche but the company is doing well because demand has started to pick up,' said Nimmo. 'The Chinese are eating a lot more sausages than they used to.'

[rabbrooks] 01/12/2011 16:08

Lots of small deals going thru, recently Is this related to employees shareholdings?. Seems out of proportion to the norm.

[gorvachof] 29/11/2011 16:05

No problem Phil.
These may also interest you from early this month, the second article in particular provides some excellent insight from Peter Page on their method in hope of "cracking china".

www8.open.ac.uk/platform/news-and-features/expanding-globally-thinking-locally

www8.open.ac.uk/platform/news-and-features/emerging-in-china

[philanderer] 11/11/2011 16:23

Thanks Gorvachof - good information there.

Updated brokers since this weeks IMS

8th nov Investec buy tp 315p
8th nov Panmure buy tp 320p
8th nov Peel Hunt buy tp 280p (upgrade from hold)

[gorvachof] 11/11/2011 15:43

Interesting analysis of Devro.

[philanderer] 10/11/2011 23:58

Questor share tip: Devro's business is sizzling

Sausage skin manufacturer Devro posted a reassuring trading update this week. It said that sales growth was "strong" and it expected to meet full-year expectations.

10 Nov 2011

Devro
259p +6.8
Questor says BUY

[phillis] 08/11/2011 13:57

and a good one too
good sales growth

[gorvachof] 28/10/2011 08:38

Just had a reply.
They plan IMS for 8th November

[wilsywoo] 24/10/2011 10:32

OK thanks Baglady I'll keep an eye on that. WW

[baglady] 21/10/2011 14:58

wilsywoo - sharescope has the DVO interim management statement down as Mon 31st Oct. but it's a 'still to be confirmed' date.

[wilsywoo] 20/10/2011 12:53

Does anyone know if the interim management statement is out tomorrow? I've checked DVO website but they don't seem to keep it very up to date.

[gorvachof] 16/10/2011 14:29

Certainly nothing personal to DVO, just European/US economic woes, in the event of financial meltdown nothing would be spared. However the chart did look due to put on the breaks imo, makes sense too, with the recent increase in capital spending the market is possibly focused on seeing how this is helping to sustain/capture growth.
Could just be a better oportunity to buy for the long term hold, with a bet on their niche market and trends continuing to grow across those developing and emerging markets.

[shuisky] 06/10/2011 08:34

None whatsoever.

They sell skins for pork sausages. The economy can do what it wants. People won't stop eating sausages.

[scrapman] 28/9/2011 15:25

anything to justify todays drop anywhere?

[shuisky] 20/9/2011 07:25

Thanks.

I've got access to Peel Hunt research but can't find that sell note or any google reference to it. Its strange. There is no reference to it here either...



Totally agree with you on the state of the markets. I guess as an investor all you can do is try and stay rational. I understand why cyclicals will get sold off in a slowing economy but Devro's fundamentals look solid. They did pretty well in 08-09. Sausages and pork are seen as a 'cheap' meat option and sales are soaring in places like China.

[shuisky] 19/9/2011 21:31

Gorvachof,

Do you have a link to the sell rec? I've taken a look and have Peel Hunt as a 'hold', 3 others with a buy and one with an add.

I noted the Smithfield results.They are a different co to Devro. They are a pork producer and processor. Feed costs are rising and pork prices falling so margins hit. They also said that China exports were strong.

However, lower pork prices should be good for Devro because volumes for their sausage casings will pick up. Raw material costs could be an issue but they seem to have managed them well and energy costs have stabilised. Strong China demand is an obvious plus.

I confess I was puzzled as to why Devro got sold off after the Smithfield results, their profit drivers are not the same

[gorvachof] 16/9/2011 15:50

Shuisky
It would seem Devro were brought down by US peer Smithfield Foods results, although fairly solid they were not well recieved.

Another possibility UK Pig producers are reporting challenging market conditions.

Peel hunt issued a sell note on the 9th, probably didnt help matters either?

[shuisky] 08/9/2011 19:47

What is going on here? Please dont tell me its this...




'Ongoing raw material inflation and competition from branded rivals meant underlying operating profits slumped 42 per cent from £50m to £29m, and Mr Bull said Devro is exiting unprofitable contracts that dragged the operating margin down from 6.2 per cent in 2010 to 3.6 per cent last year. That was despite good growth in central and eastern Europe, where sales climbed 18 per cent to £139m, thanks to higher volumes and the acquisition of personal care group, Dermacol.

Broker Investec savagely cut its current year underlying pre-tax profit estimates a few months ago from £30m to £23m and is maintaining these estimates, which would give flat adjusted EPS of 9.4p.'

Coz this is a TYPO ERROR by the investors chronicle. The company in question is mcbride not devro!!!

[shuisky] 18/8/2011 16:30

Who is selling this?

They make sausage skins and the growth drivers are secular NOT cyclical, moreover their margins expand when commodity costs fall!

[phillis] 09/8/2011 17:36

what's not to like about this stock?

Competent management
Growth market
good products
attractive p/E
nice yield

[gorvachof] 06/8/2011 00:10

Recovered well today. Agree Xand 300p easily achievable if/when this uncertainly calms.