Share Name Share Symbol Market Type Share ISIN Share Description
Macfarlane Group Plc LSE:MACF London Ordinary Share GB0005518872 ORD 25P
  Price Change % Change Share Price Shares Traded Last Trade
  -0.50 -0.42% 117.50 92,834 16:35:26
Bid Price Offer Price High Price Low Price Open Price
116.00 119.00 118.00 116.50 118.00
Industry Sector Turnover (m) Profit (m) EPS - Basic PE Ratio Market Cap (m)
Support Services 230.03 13.00 6.45 18.2 185
Last Trade Time Trade Type Trade Size Trade Price Currency
15:40:22 O 55,500 117.74 GBX

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Date Time Title Posts
07/6/202116:47Macfarlane Group - The Long Story358
31/3/201509:06Macfarlane - a company at the crossroads1,041
06/8/200719:16Serious Director Buying442
13/5/200611:39Macfarlane tipped in the FT(Lex)123

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Macfarlane Daily Update: Macfarlane Group Plc is listed in the Support Services sector of the London Stock Exchange with ticker MACF. The last closing price for Macfarlane was 118p.
Macfarlane Group Plc has a 4 week average price of 112p and a 12 week average price of 98p.
The 1 year high share price is 129p while the 1 year low share price is currently 69.20p.
There are currently 157,812,000 shares in issue and the average daily traded volume is 164,939 shares. The market capitalisation of Macfarlane Group Plc is £185,429,100.
illiswilgig: Just to add - my previous forecast was for 10p eps and 14.5x earnings 145p share price (I think I posted this). So I am using this as my baseline and the 11.9p and 15x earnings 180p is my upper bound - reality is likely to be between the two? The errors in my calculations don't easily allow me to pick a number! If you pushed me I'd go for 10.95p as the median but it doesn't mean very much! cheers
illiswilgig: Aha, thank you both. Fantastic work. I have not yet had time to take it all in as I've been working on my figures. I updated my spreadsheet yesterday and came out with revenue predictions which seemed so far away from current forecasts I was too embarrassed to post them immediately - before checking again and finding a way too tone them down. I've been seeing this in my figures since the recent results. But for years MACF has never quite managed the growth I'd hoped for and they seemed to deserve. The turnaround of the manufacturing, improvement in costs, growth in sales and continued good acquisitions may just be an inflection point. It seems I mat not be that far out of court? So here they are unadjusted. As of yesterday my prediction for revenues are H1 2021 £129.3m H2 2021 £140.6m FY 2021 £269.9m - I agree pieric that 270 would be a stretch so I am pleased my figures come out just below that :-) The revenue figures include a straight split of GWP and Carters reported revenues for Q2 and H2 with no growth built in (I added them afterwards). I built a model from FY18-20 to give me the gross and operating margins and then projected that to FY21 with a slight forecast improvement in gm to 34% Q1 and 35% H2. With hurried assumptions for change in distribution costs (remains relative to sales) and admin costs (closer to fixed). I am really sticking my neck out here I feel, I predict operating profits of H1 2021 £10.7m H2 2021 £14.5m FY 2021 £25.2m These figures used my FY18-20 model to predict organic growth and then I have added the declared operating profit figures for GWP and Carters Q2 and H2 to that. Not very sophisticated. I've made simplistic assumptions for finance costs and Tax - but also made no additions for anticipated cashflow or improvements to costs made in the last year. My sheet gives profits of H1 2021 £7.98m (5.0p eps) H2 2021 £10.88 (6.9p eps) FY2021 £18.85m (11.9p eps) I feel some of my assumptions are a little 'loose' but there are both pluses and minuses in there - but that these figures represent an upper bound forecast. I rate the management team here and fully expect them to fill any finance buckets that they can and sink costs now where appropriate. Having spent a couple of years sharing an office (as engineering director) with a finance director I respect immensely I learnt a lot! Plugging these figures as they are into my forecasts spreadsheet I find that my target (upper bound) share price for MACF 2021 is ONE-HUNDRED-AND-EIGHTY. Sorry couldn't resist that. Actually 178.5p given 11.9p eps and 15x rating. At the moment I will leave these forecasts until H1 - it gives me something to measure against - then learn from that where my assumptions have been too 'loose' and reset my spreadsheet for 2021 and 2022. As well as forecasting figures I also try to quantify my confidence in management, the company and market opportunity (yes, I am an engineer by training) - and relate this to the stocko QVM figures. For some time MACF has been both my largest and my highest conviction holding - which doesn't happen that often and is not the basis upon which I orginally bought shares - but the increasing shareprice has kept me (emotionally) from buying more. I rate the understated and over-delivery of this management team very highly and their track record now over some years is exceptional. Given that I don't actually expect these figures to be achieved, but will be way happy with less - I bought a few more thousand shares at the, for me, very high price of 117.58p. Gulp. thanks enormously for your sharing of thoughts and calculatons EC and Pieric, it's a pleasure, cheers
pireric: HI EC. For the sake of comparison purposes... I'm looking at total group growth with this I estimate the 2020 revenue numbers at 53.8m for Q1, 49.1m for Q2, 59.3m for Q3, 67.2m for Q4. These are external revenues The growth rates for last year were 1.6% in Q1, -5.5% in Q2, and I estimate 4.0% in Q3, 7.3% in Q4. We know total Q1 growth was 15.0%. I estimate a 1.13 million contribution from GWP, so the 61.9m, I forecast for 2021 Q1 is 60.8m excluding the M&A. That gives me organic growth for Q1 from the underlying business at ~13%. Q2 has a 7 point easier growth comp, plus I forecast M&A contribution to step up from 1.13m to ~4.2m for all of the quarters in the rest of the year. I feel these numbers I am about to say are possibly very conservative but hey ho. Q2. Organic business +14% to 56.6m + 4.2m M&A = 60.8m = 22.4% y/y growth Q3. Organic business +6% to 62.8m + 4.2m M&A = 67.0m = 13.0% y/y growth Q4. Organic business +3% to 69.2m + 4.2m M&A = 73.3m = 9.2% y/y growth Combines to 263.1m for the year, +14.4% y/y, which would be an excellent result. If I was less conservative my stretch revenue target for the year would be ~270m, +17.6% but I am happier being at 263m. And on a fully adjusted basis Macfarlane is on close to 10x earnings for 2021, which looks pretty ludicrous. Sets up nicely for the stock through the rest of the year, and to 150p + in my view. This is getting into the market cap realms of where institutional investors will look closely at this and they will do all of the adjustments to get to the adjusted valuation metrics. Once that happens I think the multiple gap can close quite quickly and this could easily do +40-50% on the multiple alone. Eric P.S. Nice and rare for someone on the boards to do the detailed numbers and share them. Thank you.
illiswilgig: Excellent update. Better than I expected, and given the caution of the management team that makes it outstanding in my view. I agree. The manufacturing figures are very impressive. They have been working hard to turn this around for years - so success is well deserved. I don't think brokers/analysts have seen the potential for this in manufacturing as well as distribution. Makes it the Judges Scientific of the packaging world? OK I am getting carried away - but I think a re-rating on top of the raised estimates is likely soon. I would have posted yesterday but was busy with Zytronic interims, and can't find my macf forecasts at the moment, thought I had a spreadsheet - looks like I have some work to do to revise my forecasts, shame I am fully invested at the moment - no ability to buy more until I decide what to sell. But Macf is my largest holding at the moment - not something I thought I would be saying until recently - and it seems likely to stay that way for a while cheers
effortless cool: A very good q1 update from MACF at their AGM today. (Oddly, they always delay publication of the AGM statement to the time of the AGM, so miss the 07:00 news flow). Packaging revenues were 10% up on q1 2020 and manufacturing revenues 45% up (the latter substantially boosted by an acquisition). The overall increase was 15% and its should be remembered that the comparative period was largely pre-COVID, This seemingly represents a substantial jump in the underlying rate of growth of the business, with the equivalent q1 2020 statement being only 2% ahead of 2019. Broker consensus for 2021 revenue (per Stockopedia) is £248m, versus £230m in 2020. That is an increase of just 8%, so broker upgrades now look inevitable. My own forecast was £257.1m, up 12%, so I also expect to improve my projections. Net debt of just £6m at q1 2021 compares favourably against my existing HY forecast of £14.6m, so it looks like cash flow over the period has been very favourable. All-in-all, I believe things are looking very positive for Macfarlane.
effortless cool: Cheers illiswilgig, pireric. I feel I'm on good company on this board and I'm very confident on the prospects for MACF.
pireric: Agree. Historic underlying EPS CAGR here has been over 12% on my calcs, and with modest forward organic growth and margin assumptions, plus the M&A theyve done, Im expecting baseline ~9.5% and 7.5% eps growth this year and next. Id imagine the end result is double digit eps growth in both years. At yesterday's close I have this on slightly over 10x underlying fy22 earnings. Given the track record at MACF, no reason in my view this shouldn't be on 1.5x PEG today. So fair value today in my view is close to 150p. And frankly, given the bull market we've been in for a while, when I look at the earnings multiples some stocks are getting... You couldn't rule out a 16-18x P/E multiple making sense on a longer term view. Eric
greggphilips88: A lengthy write up on MACF by Algy Hall in Investor's Chronicle dated 08 March 2021 in relation to the Cornerstone Growth screen. Of the 9 shares covered, only MACF passed all the tests, so Algy concentrated on it in his write up. Overall, I took it as a positive assessment of MACF acknowledging the business may be better than he assessed 12 months ago, with less cyclical risk and more resilience and upside potential. He highlights some risks and opportunities, but summarises that the 12-mth forward looking PE of 12 should "prove a bargain if the progress continues".
effortless cool: Header updated with latest projections and copied below. MACF released their FY 2020 results on 25 February and then announced the acquisition of GWP Group on 1 March. These projections reflect both of those announcements. The results were, in my view, superb, beating my forecasts and also beating broker forecasts by a greater margin. After dropping against the prior period in H1, second half revenues proved resilient in the face of COVID, being 6% higher than 2019 H2. Gross margin in packaging improved from 31.1% to 32.5% and in manufacturing from 32.2% to 32.7%. The adjusted admin expense ratio, by contrast, increased from 22.2% to 23.4%. However, this was hit in 2020 by three (hopefully) one-off factors: COVID safety preparations, provisions for bad debt provisions and end of lease provisions. MACF is a cash-generating machine, and FY profits of £13.0m translated to a remarkable £23.3m of net cash from operating activities. This facilitated the repayment of £10.2m of debt, shrinking the net debt position down to just £0.5m. Further, unlike many companies with pension deficits, MACF's clever use of liability-driven investment funds meant their deficit actually shrunk materially in 2020 to just £1.5m. The icing on the cake here is that they have agreed with the trustees that deficit repayments will now reduce from £3.1m per annum to £1.3m, which will improve future cash flows for shareholders materially. The acquisition is also very good news. Unusually, it is of a manufacturing business, rather than a packaging distribution one. What makes it particularly interesting is its scale - £13.2m revenue in the year to September 2020 - and its excellent performance - 43.8% gross margin and 13.1% operating margin - both far better than MACF's current manufacturing businesses. The efficiencies from potential horizontal and vertical integration, plus the additional scale, should bring significant operational gearing benefits. My revised forecasts are (no broker forecasts available to me yet): # Revenue: .............. 2021 £253.8m (£xxx.xm), 2022 £263.0m (£xxx.xm) # Reported net profit: .. 2021 £14.0m (£xx.xm) .. 2022 £16.4m (£xx.xm) # Adjusted net profit: .. 2021 £16.3m (£xx.xm) .. 2022 £18.4m (£xx.xm) # Reported EPS: ......... 2021 8.89p ............ 2022 10.39p # Adjusted EPS: ......... 2021 10.35p (xx.xxp) .. 2022 11.66p (xx.xxp) # DPS: .................. 2021 2.75p (x.xxp) .... 2022 2.95p (x.xxp) # Net cash/(debt): ...... 2021 -£5.2m (£-x.xm) .. 2022 £1.1m (£x.xm) # Pension surplus: ...... 2021 £14.7m (£x.xm) ... 2022 £23.2m (£x.xm) (Adjusted figures add back amortised intangibles) My target adjusted PE ratio increases to 13.5x (85% of the market median) and my valuation increases to 147.7p (was 112.3p), which includes adjustment for the pension deficit, net debt and outstanding options. Even after the recent rise, this target price represents a 43% premium to the latest closing price of 103.0p. On that basis, MACF becomes a STRONG BUY for me. This may seem aggressive, but the model is consistent with previous iterations and it does seem to me that finally the stars are aligned for MACF to deliver big time. I have put my money where my mouth is and increased my holding to 400,000 shares at an average of 67.06p. Dividends to date: £23.2k.
illiswilgig: Yes Excellent results. And under the circumstances even better than that. At H1 sales were down 2% over previous year. H2 sales look to have been up around 6% in comparison with previous year. If I've read it correctly - according to the Nov trading statement they were up 4% in the first 4 months of H2 - so it looks like they have continued to build into last 2 months, despite the november lockdown. Which seems a good sign to me for current trading being continuing to grow. With increased cash flowing into the coffers they should be able to make an acquisition or two - if they find one at the right price - without increasing debt by much. A good position to be in for continued outperformance in this FY. Share price, even with 10% uplift this morning, remains very modest on 11x current year forecasts. Should be an upgrade to profits forecasts which may bring this onto more radar screens? Accordingly I've bought a few more on top of my core holding, cheers
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