Macfarlane Share Discussion Threads

[aleman] 19/8/2009 15:28

SG - possibly. The forecast yield for 2010 that cs44 quotes suggests a possible doubling of the share price. Earnings only suggest a small rise but they are often misleading. Cashflow will be key and I think it will probably hold up but there you would need access to a broker forecast to get that. As most businesses have recently been reporting a slight strengthening of UK manufacturing/industrial markets, you would think a supplier to all of them would show a slight improvement in recent trade as well. With the shares so low, surely it would take a deterioration to take the shares down more. One can never say never, though. I think forecasts are slightly pessimistic judging by recent optimism about the UK recession ending in Q2.

Pension fund deficits in the UK shrank last month. They are cyclical and fears about them are overblown in every recession by companies using temporarily exaggerated deficits as an excuse to cut costs by closing them. The reality has always been less troublesome than the scaremongering although working out each individual case is notoriously complicated. Can you think of many companies actually taken down by the pension fund in this or previous cycles? It doesn't happen much.

[cs44] 19/8/2009 11:45

I don't think there is much expected from MACF with the interim results. The agm statement gave an implicit nod towards a dividend cut - indeed all the brokers' forecasts suggest 1.5p total for 2009 and 1.7p for 2100 - and the inevitable restructuring costs will eat into the profits.
Recently someone has selling stock so that any demand from the results' gamblers is being supplied; hence the moribund share price.
I would dearly love MACF to surprise on the upside but......!
I suppose anyone buying now could see a decent return over the next 2 years, but I have too many of these at a much higher cost and like many holders my patience is wearing thin.

[simon gordon] 19/8/2009 11:42

Aleman,

Do you see much share price upside in MACF?

I note the fairly large pension deficit.

[aleman] 19/8/2009 11:18

Results a week tomorrow. Very quiet here.

[jhigylen] 24/7/2009 19:23

Aleman, I have been keeping an eye on MACF for years now, in fact ever since the ill fated t/o attempt for BPI way way back. As with BPI, directors have been buying big scale in recent times and the IMS of 5th May was almost upbeat, while exuding necessary politically correct gloom. As you say MACF should be tracking the rest of the market (BPI in particular) and are not. MACF have been serial dividend payers and if current earnings are not far away from expectations and the pension deficit not to deep (and perhaps now benefiting from rising indices) the prospective yield at current prices could be v. attractive indeed. Anyway, I opened a small long position today and would hope to see some rise in the share price up to the interims on 27th Aug.

[aleman] 24/7/2009 13:23

If these were keeping up with the rest of the UK market, they'd be over 20p now.

[aleman] 15/7/2009 15:00

This is the only share in my portfolio that isn't blue today. Don't MACF investors follow economic news?

Claimant count increase:

Oct 50k
Nov 85k
Dec 84k
Jan 78k
Feb 147k
Mar 165k
Apr 50k
May 31k
Jun 24k

The recession is probably over and corporate news, both in the UK and internationally, has been very good this week. As UK companies are MACF's customers, you would think this would perk up MACF shares as well.

[aleman] 01/7/2009 11:21

I think you are barking up the wrong tree. First, most companies who have significant pensions deficits have been trading through the problem without too much difficulty and the regulators have been taking a flexible line on extending the period of making up shortfalls. Secondly, MACF's cashflow performance has been pretty good of late. Debt has run up a little but would have been much better if not for the acquisition, which should itself increase cashflow further. MACF could increase debt to bring the deficit down to a level that isn't worrisome but that might then cause some to worry about the debt which would, of course, draw interest. Better to avoid the interest, keep the balance sheet strong and retain flexibility on paying a little extra from probably strong cashflow into the pensions fund as top up payments for a few years. I don't think you should consider pensions deficits without looking at debt. Many companies have high debt and a significant deficit so MACF is much better off than them. If they can keep the cashflow above £4m with the help of the recent acquisition (and hopefully further expansion of online sales) , a £12m deficit is nothing to worry about with a strong balance sheet to back it. The recent update was cautious on the dividend but had to be in case the economy weakened. Corporate news suggests that the UK economy is showing some signs of improvement but it is not yet widespread. Hopefully, enough of this improvement will be seen with the interims that cashflow is maintained and the outlook is seen as improving. I am not taking anything for granted , though. I have seen too many companies cutting dividends to play safe when I don't think it has been necessary. I will have my fingers crossed. (It is worth commenting that some of those companies have seen their shares rise when they cut the dividend but that is not what I want to see. The attutude of major shareholders could come in to play.)

[cs44] 01/7/2009 08:40

Topvest

There are obvious weaknesses in the MACF business, but to dismiss it summarily without considering why a similar company, Kite Packaging, has spent c. £3m on an 11-12% stake is somewhat dismissive. Kite must see value somewhere!!

[topvest] 30/6/2009 21:25

Yes, it all depends on the strength of the underlying business. DB pension plans can be supported by strong businesses. It's a bit more marginal when you have a large deficit and an "average" to "ok" sort of business like you have here.

[l376233] 30/6/2009 19:57

IT'S not the only company with pension problem,AZ have a half billion deficit

[topvest] 30/6/2009 18:31

The one thing that really puts me off this company is the pension scheme deficit. Sooner or later that will be a problem. Not a bad company otherwise, although seem to have paid a lot for recent acquisitions. Ooops, that's two things I don't like!

[aleman] 30/6/2009 15:29

RNS Number : 7946U
Macfarlane Group PLC
30 June 2009





Macfarlane Group PLC

Notice of Interim results

Following the issue of the Interim Management Statement on 5 May 2009, Macfarlane Group PLC confirms that it will announce its interim results for the six months ended 30 June 2009 on Thursday 27 August 2009.

[l376233] 12/6/2009 16:42

why the 7% share rise

[cwa1] 21/5/2009 13:13

Thanks for that, wee bit dated, but interesting nonetheless.

[aleman] 19/5/2009 15:02

But long bond rates and shares have been rising which reduces pensions deficits. They're still high but going the right way. Not many other companies have had that much trouble with pensions deficits since they relaxed the 10-year rule on making up shortfalls a couple of months ago. The June dividend is in the bag so there is 6 months for things to get better anyway. Most UK companies reporting in the last 2 to 4 weeks have been reporting better than expected sales, orders and outlook news which is why shares have been rising. The weak £ and improving confidence should mean manufacturers and MACF actually slightly outperform the market generally as the economy recovers.

[cs44] 19/5/2009 14:46

The brokers on the Barclays' website are forecasting a dividend cut this year to 1.5p and then 1.7p for 2010.
If I didn't have so many shares I think I would have divested this particular investment - it has been an expensive mistake to date and the prospects for growth are now still further into the future.
I don't even think that Kite Packaging would be interested in an hostile bid at the moment, simply because the pension deficit is so large.
I will not be reinvesting my dividend!!

[l376233] 16/5/2009 10:35

Dividend Reinvestment, is this a good time to reinvest our cash dividend back into the company?, any views PLEASE

[aleman] 12/5/2009 13:08

With unexpectedly strong retail sales in April, it looks like UK manufacturing bottomed in March after a 0.1% fall on February.

UK manufacturing still weak but stabilising and slightly better than forecast in March with a 0.1% fall on February and a 12.9% annual fall. The balance of trade in goods improved a touch thanks to the weak £.

[l376233] 07/5/2009 11:02

Did I read about a re-rating, or is it just me hoping or dreaming

[cs44] 07/5/2009 10:44

Lo siento l37--, but I hold from further back!! Perhaps we should start a ramping campaign!

[l376233] 07/5/2009 10:37

cs44, Please don't depress me any more, I've been holding macf since 2004 and only dividends to show for it, I had high hopes with this management turning things round and getting the share price back to a reasonable level. And need to say with them until the shares reach 40p to break even

[cs44] 07/5/2009 08:39

I'm beginning to wonder if anyone can make a success of the business at MACF!! Over the past 10 years we have had a plethora of deals, some to expand, some to streamline the business, but all to no avail. The latest IMS is essentially a profit warning and a hint to shareholders of more pain to come with the prospect of a dividend cut. I'm thoroughly depressed.
Management had a chance to make the company debt free about 18 months ago but it took the decision to expand the distribution division. Imagine what a strong position we would be in now with a healthy balance sheet and the ability to pick up business cheaply. I warned them about gearing up the balance sheet but it is difficult to stop a charging bull!!

[cwa1] 30/4/2009 12:01

Interesting to see three MMs on the bid and only OREL left on the offer at 20p.

Online trading very tight, at least 50,000 can be sold at 19.35. Can't even buy 5000 shares at full ask online at the moment.

Hoping those are good signs for a possible move up some time soon.....