Michelmersh Brick Share Discussion Threads

[ed 123] 18/4/2015 10:39

stuart little

Many thanks for the industry insight. Appreciate it. :-)


battlebus2

No need to come back here if it goes wrong. No personal challenge from me. It was just that I was surprised at the timing of your entry into MBH. You may yet be proved right. Good luck. :-)


envirovision

Yep, MBH was yet another to suffer the curse of the AIM dilution. I'd like to see AIM stocks limited to the same private placing maximum as fully listed stocks. We've all witnessed the pattern of the falling AIM share price, with a final dip to some silly level (and private investor holders not knowing if they've missed something hugely negative), only to be followed by the announcement of a big private placing. It's legal but is it morally any different from non-violent theft? EDIT: Having said that, the MBH placings weren't so bad, viewed with hindsight - but for me the principle remains that all shareholders should be treated equally.

Ah yes, Telford land. Planning delays, negotiating delays and clean up costs took off the gloss. :-(

[stuart little] 18/4/2015 09:31

The brick industry has eased off a little beginning of this year. Bricks are more readily available as opposed to this time last year when it was nigh on impossible to but in any volume. It remains to be seen whether this is just a start of year blip or whether new factories, increased production from existing works coupled with a slow down from construction will bring an end to stupid lead times. My opinion is that due to large price increases 1st jan many merchants, housebuilders etc stockpiled bricks in December leading to cancelation of loads early this year. Also the uncertainty of an election could be slowing the housebuilder sector which is the main factor of brick shortages. This should balance out soon and I think, I can't see a normal brick market for some years with all bricks 'ex stock'.

It is true to say that MBH bricks are not 'housebuilder' bricks but as the squeeze is put on the main guys for production to cope with volume sales it opens many doors for MBH which in the past they wouldn't get a sniff at.

stuart.

[envirovision] 17/4/2015 19:01

I was a heavy buy and hold from 2010 onwards. I began to sell out upwards of 65p last year.Whilst you all say it was a great time the share proved quite a disappointment for me including being massively diluted in their expansion plans which did not prove at all great as it later showed. Additionally all the hype over their Telford site never quite proved as lucrative as one may have originally imagined.Just my tuppence worth.

[ed 123] 17/4/2015 18:46

It's good to read the positives. I hope it goes well for you. :-)

[battlebus2] 17/4/2015 18:42

Ed thanks for your advice but i think the director would have been well aware of the order book and would have sold in February, to me it's just coincidence he sold on that day. Strangely the share price has continued to rise since then.
Eric Gadsden, Chairman at Michelmersh Brick Holdings, commented: "Michelmersh is the only UK owned brick manufacturer and places itself in the top end of the market in terms of quality of products and service to customers. With a strong financial footing, and in a market that seems set for continued prosperity, we can be confident of robust profitability and meaningful shareholder returns going forward. We have had a strong start to 2015 and, with our well-invested plants, feel well positioned for the year ahead."

I bring you back to the chairmans statement only a few weeks ago....

Chairman's Statement

I am pleased to report a very good performance for the Group in 2014 having made continued strong progress, building on the foundations laid in the previous period, and in a further improved market place. In addition, I can report to shareholders that the Group is well placed to make further advances in a very promising market.

In the financial period, turnover increased by 10% to GBP28.5 million (2013: GBP25.9 million) as average brick selling prices increased by 13.5%. These price increases translated into a profitable outcome for the year and we can anticipate continued progress with the recent completion of the investment at our largest brickworks Freshfield Lane, as the long awaited improvement in industry dynamics continues to play out favourably. I am particularly pleased that our fortunes and prospects are positive enough to be able to reinstate dividend payments.

Selling prices of bricks up 13.5% yoy and fixed assets of 42 million and NAV of 57.5p with the current m/cap 58 million..

Michelmersh Brick Holdings is the only UK owned brick manufacturer and places itself in the top end of the market in terms of quality of products and service to customers. With a strong financial footing, and in a market that seems set for continued prosperity, we can look forward to increasing profits and meaningful shareholder returns. We have had a strong start to 2015 and, with our well -invested plants, feel well positioned for the year ahead.

In short a top class undervalued UK co.

[ed 123] 17/4/2015 17:52

Ah well. Good luck with it.

Just a quick couple of mentions from me, which may help you. Michelmersh is a producer of high quality bricks. Afaiaa, the volume house builders don't buy Michelmersh bricks in a meaningful quantity. And finally, a week ago today (ie. the same day that the ONS report was released), the Commercial Director and his wife sold 200,000 Michelmersh shares.

[battlebus2] 17/4/2015 17:29

Just my opinion, ofcourse buying in 2012 was a fantastic move i wish i'd had the courage back then but it's a much more interesting company now it's in better shape. Construction output is on the rise so i discount that as a one off blip. There's a chronic housing shortage which will have to be addressed at some point. It's only my opinion so safe to say i really like this share.

[ed 123] 17/4/2015 17:14

battlebus2

Well imv there are a lot more positives to this company at the current levels ...

I can't see why MBH is a better buy now at 70p than it was in 2012 in the low 20's.

Also, the latest ONS report shows construction output fell recently.


Falling output has to be a negative.

What positives are you seeing?

[battlebus2] 17/4/2015 16:05

Well imv there are a lot more positives to this company at the current levels that lead me to think these are a buy. The current p/e isn't really high for the expected growth either. Just my view but dyor etc...

[ed 123] 17/4/2015 15:00

Hello battlebus.

Yes, the brick market is bouyant. The time to have bought these shares was in the trough of 2012.

Share price has plateaued around 70p, p/e for year 2014 estimated at 18, falling to about 15 for the current year. Dividend yield is about 1.5%.

Why buy now?

[battlebus2] 17/4/2015 14:37

Hi all , i've been buying a few here as i believe their market is buoyant and the shares look set to push higher. Set a target close to the £1 mark. As ever dyor etc.

[envirovision] 08/4/2015 07:11

Alan the 185 homes built on the Telford site was worth 4.6M over 4 years and of course no one really understood the costs to mbh putting thise parcels into an agreeable state for the LA over the years leading up to said contract.Im not quite sure how you arrive at the 9M figure and as has proven the case with the Telford site, prehaps its best to treat valuations with a large dose of salt intill contracts have been exchanged and payments made rather than hopeful speculation and claims of expresions of interest.

[ipoman007] 26/3/2015 09:28

CEO Video: Outlook encouraging: hxxps://www.ig.com/uk/market-insight-videos?bctid=4132928782001&bclid=3671160850001

[alanrussell] 25/3/2015 21:52

True. It would be most unlikely (and quite correct) that the dividend will be increased unless and until another land sale is in place, so next year at the earliest I guess. We will have to wait and see.

[envirovision] 24/3/2015 11:24

Still all Jam tomorrow

[alanrussell] 23/3/2015 20:46

Good results, no doubt about it, but then they were always going to be.

This year should see increased profit from the Freshfields expansion of about £250,000 so together with slightly improved margins operating profit should hit £3.1m with reduced interest charge net profit say £3m. Together with the £1.5m last payment for Telford less £0.5m exp at Blockleys equals an impressive cashflow. Div cost is just under £300,000.

Looking to subsequent years the question is the timing of Charnwood and Telford sales proceeds. What's a site for 200 houses worth in Leicestershire? £9m? Say six annual payments of £1.5m. What's the 80 acres worth? Not as much pa, say £300,000, so total £24m, Let's say sales commence in seven years and bring in £1.5m py for 16 years (you can see where this is going, just trying to arrange nice even income).

So operating profit of a bit over £3m (no interest charge) plus £1.5m sales proceeds for over 20 years. Say tax of £0.9m = £3.7m after tax. Even allowing for capex and cautious dividend cover MBH could easily pay 3p to 4p div per share. That's 4.2% to 5.3% yield at present share price. Rock solid balance sheet (present NAV 57.5p per share). Looks good.

What can go wrong? Lots. The inevitable turn of the house build cycle, energy costs, competitors increasing capacity, over ambitious acquisitions etc. Nonetheless a fairly solid proposition. I'm holding tight. If price dips into the mid 60s I'll add.

[mikey62] 23/3/2015 07:51

These are pretty strong figures.if there's no bounce I will add in the coming days.

[envirovision] 23/3/2015 07:16

I suppose the valuation is justified but can they ever unlock this value for shareholders?

I don't think is is great crowing about best since it floated, its double the size and has issued many additional shares and taken on debt.

[envirovision] 24/2/2015 23:24

Looks like Schroder Investment Management has exited

[johnwise] 23/2/2015 08:02

Michelmersh Brick Holdings PLC Completion of Freshfield Lane Expansion

The Project, which took a year to complete, was managed internally and utilised the Group's engineering team. The additional output arrives at a time of current brick shortages in the UK and increasing prices, and has been achieved with no increase to the overhead base.

[stuart little] 28/1/2015 12:13

Hi guys, not had time to post for a while as the brick industry has had a busy start to the year, be ok as long as it doesn't snow (looks to sky!!)

You may have missed it during the Christmas festivities but two of the UK’s major brick manufacturers, Hanson and Ibstock, were sold to US companies.

On Christmas Eve Hanson was sold for £900m to private equity company Lone Star while just one week before another private equity company, Bain Capital, bought Ibstock for £414m.

My understanding is both companies will be looking to invest in the brick manufacturers which should result in increased capacity and more bricks on the market. Dr Bernd Scheifele’s, CEO of HeidelbergCement, initial statement would seemingly suggest so: “We are pleased that Lone Star will acquire this business which as an experienced financial investor will support the sustainable development of the business going forward”.

Considering the ongoing brick shortage in the UK further capacity from two of the UK biggest manufacturers would be a huge benefit to the construction industry.

Goes to show there is plenty of interest in the UK brick industry which might partly explain the strength of MBH's share price.

stuart.

[alanrussell] 23/1/2015 22:23

That's 6.5% of all the shares traded today. Schroders very active.

[shanklin] 04/1/2015 07:37

Unless it can radically up the profits from the brick business, which to date has not happened, MBH still looks like a land bank with a brick business attached. An EPS of say 3p/share for 2016 is just not of much interest to me or will MBH blow the current broker forecasts out of the water?

[pas100] 04/1/2015 06:56

Michelmersh has just been tipped in Money Mail :