Hayward Tyl Share Discussion Threads

[rivaldo] 27/4/2016 07:17

A very positive trading update this morning. Results are broadly in line, so probably just under expectations at about 8p EPS, with a likely 1.4p dividend.

But the order book for this year is up hugely, with both organic and acquired growth, so prospects for this year look excellent.

Both the FMC and Ebara partnerships are starting to pay off and have huge potential.

Plus net debt is below target and the expansion is going well.

Happy with that.

[jch18] 10/4/2016 17:36

Gargoyle2. The article, has not taken into account the sale and leaseback for £7.5m.This will reduce interest by £250k. The lease is £575k. Which looks like it will reduce profits by £325k, but this depends on maintenance and who deals with that side. But this does allow further investment and a potentially more liquid asset base. With the Luton factory completed in June, these are exciting times for the company.

[arthur_lame_stocks] 10/4/2016 10:31

I've been having another look at these and I'm beginning to think they're very cheap. With the acquisition they should make an operating profit >£7M and have net tangible assets of around £20-£25m. That doesn't look bad to me at a current market cap of £45m.

Think i'll do some more research on these today but may buy a few next week for my SIPP.

Arthur

[proactivest] 01/4/2016 09:08

Video interview with Lloyd-Baker



Ewan Lloyd-Baker, chief executive at specialist engineering group Hayward Tyler (LON:HAYT) discusses the sale and and leaseback agreement for its site in Peterborough with Proactive Investors.

Lloyd-Baker says the property deal will be free up some capital which will be used to repay debt and invest in the business going forward.

He sees "a huge amount of opportunity going forward" for the Peter Brotherhood business.

[rhomboid] 30/3/2016 13:45

Hi Rivaldo

Thanks for copying my post , it saves me the trouble !

As to the surplus land it is no more than an acre or two at the northern end of the site that the remodelling of the built area leaves surplus for either future growth or more likely obtaining planning consent for an alternate high value usage and then disposing of it for a few million.

As to the argument about the sale and leaseback , it really turns on what mgt plan to do with their freshly de geared balance sheet, I'm happy that they'll make the right choices for the long term benefit of shareholders and the business.

In the meantime I prefer lease obligations to debt facilities that were short term and liable to be withdrawn if ,god forbid, something unfortunate occurs in the future thus magnifying the blow.

Cheers

[rivaldo] 30/3/2016 13:35

It's a balance, and I too like the way HAYT's management operate.

If the huge investment that's been made here starts paying off - with more acquisitions possible once PB has been fully integrated given the strengthening of the Balance Sheet - then no-one will be complaining.

Some broker comment here:

http ://www.proactiveinvestors.co.uk/companies/news/124138/hayward-tyler-group-plc-de-risks-the-balance-sheet-124138.html

Extract:

"House broker finnCap noted the possibility of a sale and leaseback was flagged at the time of the acquisition, and added it significantly reduced debt levels and de-risks the balance sheet.

The transaction should be taken as a positive, the house broker said

“The lease cost, partly offset by lower interest costs, has a small impact on our forecasts for 2017. The transaction should be taken as a positive for the group, giving a much stronger financial position. We retain our existing price target, which provides for significant upside,” finnCap's David Buxton said.

Buxton has a price target of 113p for Hayward Tyler; the shares were unchanged at 85p on Tuesday Morning."

[rivaldo] 30/3/2016 11:53

An excellent post from rhomboid1 on another comments board which sums the freehold sale up nicely..I hope he won't mind me copying it here.

I hadn't realised HAYT hold an extra chunk of land which might also be sold:

"Re Hayward Tyler (LON:HAYT) the acq. of Peter Brotherwood was an opportunistic move when It became apparent that Dresser Rand were prepared to offload it at basically NAV as it had become non core and sub scale for them. HAYT had identified it as an excellent fit years ago but hadn't been in a position to do anything about it . Timing last year wasn't ideal either as they were midway through the complete rebuilding of their Luton facility but they raised over £8m in fresh equity at 90p a share and put in place bank funding of £11m , £5m of which was repaid from the placing. The debt was not cheap at 3.75 over Libor so the intent was always to do a S&L and use the proceeds to repay this debt and further invest in upgrading the Brotherwood operation.

My concern with this company was a low ball opportunistic bid from Harwood Capital who hold 20 % here and have form in such matters. This deal makes that less likely as the bank will be more comfortable as a result of this. Fwiw They also own the Luton freehold, (encumbered,) but there is a chunk of extra value there IMHO for part of the site they may not require going forward, the site is near Luton Station and towards Luton Airport so alternate uses are quite high value.

I like the company a lot as they are fast moving and entrepreneurial as well as totally fixated on creating a world class high end engineering group with state of the art nuclear certified facilities.

As you may have guessed I hold a fair few .."

[p1nkfish] 30/3/2016 08:28

Smart deal overall and that sort of thinking shows management with brains. The acquisition looks very sensible as a fit and value.

[rivaldo] 29/3/2016 11:54

Cantor Fitzgerald today retain their Buy and 120p target price.

[jch18] 29/3/2016 08:58

Therefore they have only paid an initial £2.3m for PB. They have however increased there yearly outgoings by £325k, which must be considered a cost of purchasing PB. So over the next 15 years they will pay rent at current prices of £7.6m, which may include the maintenance of the buildings. This will depend on the terms of the lease. It therefore depends on how they use the money, whether this is a good deal long term.

[caradog] 29/3/2016 08:48

The 250k saving is on "an annual basis" isn't it?
Selling the property for 7.5 million after buying the business for 9.8 million puts the acquisition in a very good light. Mind you, 8% yield for Helical Bar sounds like a good deal too!

[rivaldo] 29/3/2016 08:26

Good news this morning, with HAYT selling the PB freehold site for £7.5m, plus saving £250k per year in interest, against an annual rental of £575k.

This will free up the Balance Sheet not only for working capital but possibly also further acquisitions.

EDIT - thx for the correction! Meant to type year and got carried away!

[rivaldo] 01/3/2016 08:27

HAYT have been tipped for 2016 here too yesterday....



"HAYWARD TYLER

Specialist pumps and motors supplier Hayward Tyler (HAYT) has performed well despite being exposed to the oil and gas sector. Acquisitions and a large installed base that generates strong aftermarket revenues will help the company to grow.

Hayward Tyler has a strong brand and good relationships with major customers in the power generation and oil and gas sectors. In power generation there are organic growth opportunities.

Management expects a much stronger second half after reporting lower revenues and flat profit in the six months to September 2015, largely due to the timing of new orders and reduced demand from oil and gas customers.

Hayward Tyler supplies boiler circulating pumps (BCPs) for power stations and subsea motors for the offshore oil and gas sector. Although the company is small relative to larger rivals, such as KSB, because it has been trading for two centuries it has the largest installed base of BCPs in the world.

That provides strong aftermarket income. Hayward Tyler also supplies subsea motors that enable more oil to be extracted from offshore fields.

The product range has been widened through the acquisition of Peter Brotherhood, formerly a subsidiary of Siemens, which makes steam turbines, gas compressors and combined heat and power units, and has an installed base of 1,500 units in total. This is an earnings enhancing deal.

At the end of 2015, Hayward Tyler raised £8.4 million at 90p a share in order to reduce borrowings following the Peter Brotherhood acquisition and investment in the Luton facility.

The placing will dilute earnings but strengthen the balance sheet, with pro forma net debt expected to be £14.3 million at the end of March 2016. There is potential to sell and lease back the acquired company's 11.5 acre Peterborough site for around £6 million.

Oil and gas is around 5 per cent of total revenues so it is unlikely to go much lower when maintenance spending is taken into account.

In the full year, underlying pre-tax profit is forecast to increase from £4.4 million to £5.1 million with an additional boost from a lower tax charge. A dividend of 1.4p a share is forecast.

Next year, the acquisition of Peter Brotherhood will boost profit. There is also a new deal with Ebara Corp of Japan which will help Hayward Tyler to access the Japanese market.

A forecast 2016-17 profit of £6.8 million will put the shares on less than 10 times prospective earnings.

The business has a strong base and longer-term growth should be supplemented by recovery in oil and gas sector demand."

[rivaldo] 23/2/2016 14:12

Cheers - good to see HAYT attracting a little attention.

Forecasts remain at 8.2p EPS for the year about to end , and 8.8p EPS to 31/3/17 (with 1.4p and 1.55p dividends).

[rivaldo] 08/2/2016 08:08

Indeed - Christopher Mills' Oryx had this to say recently about HAYT as one of its top holdings (and remember that HAYT recently raised £8m at 90p to repay borrowings, refinance them at a cheaper interest rate, and get net debt:EBITDA below two times EBITDA):



Hayward Tyler Group Plc
Cost £4,492,574 (6,000,000 shares)
Market value £4,440,000 representing
4.45% of Net Asset Value

Hayward Tyler is a world leader in boiler circulation pumps and is engaged in the manufacturing, design, engineer and service of fluid filled electric motors and pumps for the energy sector.

The company has a market leading reputation and is an established player in the Original Equipment and the Aftermarket segments. The Company’s original equipment segment includes the design and manufacturing of pumps and motors serving the power, oil and nuclear industries.

It is potentially a major beneficiary of the soaring demand for power in China where 1,200 power stations are expected to be built over the next twenty
years. The company’s installed base provides a secure source of highly attractive long term revenues and profits. The other businesses, which comprise 10% of sales, is in the oil and gas services industry. This is good high margin
business. To date, the company has not been impacted by the reduction in the global oil price.

The company is currently undertaking a major refurbishment of its UK factory headquarters based in Luton at a total cost £8.5m including plant and machinery which will be completed by December 2015, and funded partly through a government grant and partly through debt. This will reduce working capital and net costs whilst increasing the capacity of the facility and the future capability to be able to compete for substantial nuclear contracts that should
become available over the next few years.

The outlook for the business over the medium term looks highly favourable with profits capable of rising to £8m - £8.5m (EBITDA £9.25m - £9.75m) by March 2018 as the benefits of the new plant become apparent."

[arthur_lame_stocks] 07/2/2016 22:36

Chris Mills likes these and he's one of my favourite shrewdies. Doesn't look expensive but quite a lot of debt I think.

[cerrito] 07/2/2016 22:22

Thanks for that Rivaldo
I see this s classified as a Higher Risk Aim Stock-personally given its financial structure(especially after the November 15 equity raise), management quality and operational performance by the standards of AIM I would regard this as v low risk.
Incidentally they did well to close the Peter Brotherhood deal with its payment due in US$- before the £ fell out of bed against the US$

[rivaldo] 05/2/2016 12:35

Good plug for HAYT in this new article on the best AIM shares:



"The second stock he nominated is Hayward Tyler. He commented, ‘Engineering group Hayward Tyler is one of the world's leading suppliers of specialist electric motors and pumps, with a growing reputation for providing mission critical products and services. The company’s products are often large and take a long time to build. A further attraction is a need for after sales maintenance and repair. Management's focus is on cash generation to help fund growth, improve communications between customers and suppliers and manage long term growth allied to short term output.

The group have expansion plans which are geared to their markets being relatively buoyant and investors should note that its CEO is confident in the ability to win more contracts and most importantly, grow the business. This is a higher risk AIM listed company that is establishing a niche for itself across the globe.’

Hayward Tyler is a £42 million market cap company, It reported a profit of £4.36 million to the end of March 2015, on a turnover of £48.6 million. "

[rivaldo] 13/1/2016 11:36

Nice sudden move up today.

Thx davebowler for the full Finncap tip.

[davebowler] 11/1/2016 12:57

Finncap;
We believe the group has a much stronger investment case following
recent commercial developments and strategic action. 2015 was a year of
several enabling plans and actions; 2016 will see many of these come to
fruition, so this year is all about delivery.
HAYT has recently announced the signing of an agency agreement with Ebara
Corp of Japan to supply BCPs in Japan and globally. Until now, the company
has found it difficult to effectively gain traction in the Japanese market,
dominated by its competitor Torishima, so we see the relationship with
heavyweight Ebara as potentially pivotal in this market.
Post the period-end, the group has concluded the acquisition of Peter
Brotherhood from Dresser-Rand for $15.0m in cash (see note of 12 October
2015). The business was an orphan asset, with poor margins and a declining
sales base. Management considers that it can revitalise sales and marketing,
gain the benefits of cross selling via HAYT’s existing sales team and gain
benefits from streamlining the supply chain. Additional volume drop through,
added to good husbandry, has the scope to significantly improve margins and
profits. Our forecasts are based on fairly conservative assumptions.
The company announced an alliance with FMC Technologies in May 2015 to
manufacture permanent magnet motors for FMC to use in its 3.2MW subsea
pump system. HAYT currently has a low level of sales into the subsea
hydrocarbon market, which offers a substantial new end-market for the group.
FMC is a strong partner that should accelerate sales in this market segment.
The Luton Centre of Excellence remains on track and on budget for building
completion by the end of 2015 and to be fully operational by June 2016. This
provides a world-class facility that increases scale and capability; doubling
capacity from a 40% increase in footprint. Skills have also been upgraded
through more training and being certified Fit for Nuclear. It is also important as
a show case for customers.
Valuation
The shares have appreciated over the past year, but still appear to trade within
a fairly static trading range. We consider the group to be fundamentally
undervalued, trading at a discount to a selected peer group of UK industrials,
while the shares have also barely responded to the significant commercial
developments and corporate events of the past year.
We believe our forecasts are conservatively pitched, with potential upside to be
gained from new contracts (subsea motors are large-scale items, where each
order would be significant to our forecasts); we also consider that there is
upside potential as management delivers margin improvements at PB. As such,
we consider the shares are well placed to outperform progressively over the
next year. Contract news, especially if in the Oil & Gas sector, could provide a
catalyst for a rerating.
The shares currently trade on a 16% discount to the company’s industrial peers
on an average of 12.5x. We consider there is scope for this discount to narrow
over time as the group eliminates risks and delivers on plan.
Our 12-month price target of 113p is based on a P/E of 13.9x, dropping to
12.8x in 2017. With the expectation that the perceived risk profile diminishes as
on-plan delivery occurs, we see good upside scope on both forecasts and the
P/E rating.

[rivaldo] 06/1/2016 11:22

Finncap have today released their top picks for 2016 - HAYT is one of them, with a 113p target price (I also own CHT, which is another of their top picks):

http ://www.proactiveinvestors.co.uk/companies/news/121020

"Hayward Tyler, meanwhile, designs, manufactures and services performance-critical pumps - used in situations where failure would be catastrophic.

Shares climbed 15 percent to 93p each last year and finnCap’s David Buxton believes a further 20% gain is achievable in 2016."