Eurocell Share Discussion Threads

[danieldanj] 30/7/2018 20:40

Eurocell (ECEL) Earnings-Reaction to Keep an Eye

[asturius101] 08/3/2018 16:06

interesting buying action

[johnpaul1] 13/2/2018 18:25

and again i think.

[johnpaul1] 20/11/2017 09:17

Woodford has topped up it seems. Price has dropped back recently.

[alan_a_walker] 18/7/2017 11:25

Looks like it may be getting hammered by safe style (SFE) trading update today in the same business?

[texaspete2] 02/5/2017 11:54

Ex dividend and share price hasn't dropped at all, quite happy in continuing to hold

[firtashia] 30/3/2017 12:30

Nice to see the momentum here. Even at this price still decent value and dividend yield.

[barnesian] 20/3/2017 17:11

Vote of confidence from Neil Woodford.
Woodford fund has taken 7% stake.
EQMC has taken a 5.5% stake.
Still 7.5% remaining to be announced from the 20% sale by H2.

[hpcg] 17/3/2017 09:39

Delighted by the price response but not surprised given the shares were placed at the apex of the range. Not only that but a couple of moderate director buys at 210. I'm now a bit disappointed I have such a small allocation withing my own portfolio.

[barnesian] 17/3/2017 09:34

All sold in quick order at 205p. And the CEO and CFO have each just bought £28K of the shares at 210p.

Well that underpins the price at 205p so lots of upside.

[barnesian] 16/3/2017 22:33

Yes - it gets rid of the overhang in a managed way. It will be interesting to see where in the price range the shares are placed and the range of new owners. Hopefully some will be left wanting more. One can hope.

[hpcg] 16/3/2017 19:55

Maybe - well probably, but it also gets rid of the overhang and puts the shares into institutional hands. H2 Equity should now have no more insight into the business than anyone else, quite different from buying from PE off the rack. Price response may hinge on where in the range the shares are placed. It looks like the current buying has a wallet behind it so it looks like a mutual good timing. In that sense it will likely halt upward momentum.

[barnesian] 16/3/2017 16:52

Placing is of 20% of the stock at a price between 195p and 205p. I suspect this will place a damper on the share price.

[jg88721] 13/3/2017 00:58

thanks Barnesian and apologies. I started my reply to Melody (#15) and took a break (more analysis) before posting, and did not see your reply until I had posted.

Good explanation. Thanks!

[jg88721] 13/3/2017 00:25

thanks Melody

To be more specific, I was mostly looking at the trend of operating profits margins over the past five years. Gross margins grow strongly over 5 years - excellent. 43.9%, 45.8%, 48.3%, 51.7%, 52%.

but administrative expenses have grown faster than sales. Ie, revenues are up on average 9.9% p.a. from 2012-2016. But administrative expenses have grown by 14.7% p.a. on average.

I just don't get that. EXEL is doing a great job growing gross margins, but profits would be much higher if distribution expenses were being managed as well as other costs.

EDITED: Admin expenses not distribution expenses

[barnesian] 12/3/2017 22:49

jg - you are right to highlight the large increase in overheads.

Excluding exceptional costs, I estimate that overheads increased by 24% from £67.9m to £84.2m, an increase of £16.3m from 2015 to 2016.

The Chairman states "Overheads were a little (!) higher than expected, reflecting accelerated investment in the branch network and business development teams, as well as increased logistics costs."

They opened 18 new branches in 2016 and plan to open another 30 this year. New branches operate at breakeven for the first two years as their revenue builds. This impacts overheads but not GM. The logistics problem with DHL seems to have cost of the order of £1.3m and has been addressed.

I think the answer to your question is your 2) namely investment in new branches with the payoff in 2+ years time.

The 18 new branches are on top of 141 existing branches and so should drive an extra 13% growth in revenue and profit in due course. The 30 new branches this year should drive an even bigger increase in revenue but will come with their own overheads to start with.

They are also extending their product range (500 new third party products) plus recent acquisitions of door panels and security hardware companies.

It seems to me that this is a well managed growth company and I'm tempted to top up, given the attractive dividend yield.

[melody9999] 12/3/2017 22:09

Hi jg - I too was having an initial nose around this one. Here is the section from the final results which I think answers your question.

CASH FLOW

Net cash generated from operating activities was strong at £28.4 million, compared to £19.4 million in 2015.

This includes a net inflow from working capital for 2016 of £0.8 million, comprised of a decrease in stock (£1.6 million), an increase in trade and other receivables (£0.6 million) and a decrease in trade and other payables (£0.2 million). This compares to a net outflow from working capital of £0.8 million in 2015. It also includes tax paid of £3.5 million (2015: £5.7 million).

Other payments include acquisitions of £6.3 million (2015: £1.7 million), capital investment of £7.2 million (2015: £6.4 million) and financing costs of £0.6 million (2015: £4.0 million).

Dividends paid represent the final dividend for 2015 of 5.2 pence per share (or £5.2 million) and the interim dividend for 2016 of 2.8 pence per share (or £2.8 million).

Taking all of these factors into account, net debt reduced by £5.6 million during the year to £20.3 million at 31 December 2016 (31 December 2015: £25.9 million).

[jg88721] 12/3/2017 21:41

I've only just started looking at this company. Looks interesting enough, but I don't get why revenues and gross margins are growing so strongly, but net profits are not (if you exclude the exceptional costs, esp. IPO costs etc, as mgmt. highlight. (Including these exceptional costs make the profit growth look stronger). Do they:
1. have a cost mgmt. issue (which would be a real problem if revenue growth slow/stopped/went backwards) OTOH, gross margins are improving suggesting they manage costs well enough. OR
2. is there some investing for the future which may mean faster profit growth in future. If so, what is the investment?

will do more work, but interesting in any others' thoughts.

GLAH

[hpcg] 08/3/2017 13:02

I only have a very small holding here, less than 1%, sits in my value / dividend bucket. Slow and steady is all I'm looking for.

[barnesian] 08/3/2017 11:44

Yes - I agree. And an 8% increase in dividend shows cautious optimism about the future. Very steady.

[hpcg] 08/3/2017 11:33

Pretty good results I thought. Some mixed language on future prospects, cautious because cautious, not cautious because an actual slow down is being experienced.

[firtashia] 23/2/2017 15:53

Nice to see this breaking out but can't see a catalyst for it. Anyone have any suggestions?

[firtashia] 24/8/2016 19:37

Given today's announcement I wonder if they deliberately took it down yesterday so that the NED could buy in.

[firtashia] 23/8/2016 08:55

Laughable share price response to the results so far today. P/E, PEG and dividend yield all suggest undervalued. Taken a position here, good luck all holders.

[boldtrader] 22/8/2016 08:48

Thanks BBD for opening this ecel thread. I believe these are going back to pre brexit. as a company they appear to be doing well and the drop was overdone. I have a small stake and look forward to alittle profit!! Cheers.