Michelmersh Brick Share Discussion Threads

[dozey3] 18/2/2019 08:25

I like this bit - “· The Acquisition will enhance Michelmersh's UK product portfolio and increase the Group's scale while also providing access to new European markets.” Shows the board are on the ball.
Quite agree; should be a discounted rights so shareholders can participate. However it’s become quite a tradition now to stuff small shareholders.

[cwa1] 18/2/2019 07:38

Interesting little acquisition this morning:-



Earnings enhancing from the start, is a phrase that I like to hear.

Proposed placing to "friends and those and such as those" but not available to current grubby little shareholders, is one I personally don't like to hear. However I understand why they are doing it and if they get it away safely at about the current share price I suppose it will just have to be lived with.

[alanrussell] 14/1/2019 13:55

MBH look to be in decent shape going into the next recession but I can't but think there will be better buying opportunities later in the year.

[makinbuks] 14/1/2019 13:48

Debt reducing faster than forecast. Carlton acquisition throwing off cash faster than planned

[bamboo2] 02/12/2018 10:08

shauney, Certainly in the South-east, both MBH and Ibstock have factories based in similar locations producing similar stock bricks. [Check on google maps] This is due to proximity of suitable clay for brick and tile making. It's hard to see how they would avoid competing with themselves in local markets.

I would guess that any interest would come from elsewhere. Older members of management could well be looking for a sale.

The chart is not looking very good right now. Price is contained within a descending triangle. A downbreak is confirmed with eod close below 78



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[shauney2] 23/11/2018 10:05

Interesting words from IBST today after selling their US division and concentrating on the UK.

"This divestment augments our strong underlying cashflow generation, leaving us with a strong balance sheet. Our capital allocation and shareholder return priorities remain unchanged, and we continue to assess both organic and inorganic investment options in the UK as we look to deliver long term growth."

MBH a good fit?

[bamboo2] 24/9/2018 21:39

I think the potential turn noted for late last week occurred this morning.

Breakaway gap from 4/9/2018 filled today. Unexpected, I had thought it would remain unfilled for a longer time.

Successful test of 50sma and 200sma on daily chart, and spelling successful without being picked up by spell checker. :-)

[bamboo2] 20/9/2018 22:38

Potential turn 20-21/9/2018
Price testing prior Breakaway gap support zone
Trendline and 200sma support

[bamboo2] 04/9/2018 21:08

Breakaway gap up today presents a potential support zone 87-91.2

Current chart pattern tp 96.4
Historical resistance approx. 100

[bamboo2] 04/9/2018 20:48

Paul Scott missed the t/o potential. I think this becomes more likely as the original founders move on.

[dozey3] 04/9/2018 17:47

Saw no mention of turning exhausted clay excavations into lucrative landfill sites, or is that yesterday’s story? Anyway a strong hold for me from the iht relief angle, and the thought that, although seemingly primitive, bricks don’t look like going out of fashion anytime soon.

[masurenguy] 04/9/2018 13:49

Paul Scotts opinion. "These numbers look good, but the growth in revenues and gross margin seems to have come from a big acquisition. Forecast profit from 2018 to 2019 is flat, so I think it's important not to get carried away with today's strong highlights, as the growth looks to be largely one-off, due to acquiring Carlton.

The balance sheet looks OK to me.
The valuation seems about right.
Forecast dividend yield looks alright at 3.7%

Overall it looks OK, but I can't see any particular reason to rush out and buy this share - especially at a time of macro uncertainty. There could be an angle here for possible upside from surplus property, but I haven't got any information about that.

With the share price having almost doubled from early 2017, and struggling to get through 100p, I do wonder if banking some profits might not be a bad idea at this stage? I'm nervous about anything housebuilding-related, because of the possible withdrawal of the Government's ridiculous "Help to Buy" scheme - which has just pushed prices up.

[davebowler] 04/9/2018 09:55

Cenkos;
The foundations for an excellent year



Michelmersh’s interims fully recognise Carlton’s acquisition (June 2017) for this first time over H1A, contributing to an overall 74% YoY improvement in CKS adj EPS to 4.3p p/s. Positive trading across the remaining group has also supplemented the acquisitive growth. While YoY growth rates will materially moderate over H2/18E, the current order book places the company firmly on course to achieve FY18E expectations. We expect 34% annual EPS growth and a material DPS uplift (+48% YoY).

n H1A results – strong YoY growth: Group revenues of £23.1m (+43% YoY) reflected sales of c55m (H1/17A: 36m) bricks, c1m more than that manufactured, in the face of strong market demand across all segments. This lead to some de-stocking of reserves, and we expect this to continue in H2/18E to meet current demand. Modest, single-digit price inflation was also passed on to customers, largely reflecting cost inflation. Both gross margins (40.5%, +14%) and CKS adj EBITDA margins (25.5%, +34%) appreciated strongly, predominantly highlighting the accretive impact of Carlton. The company achieved CKS adj EBITDA of £5.9m (+91%), in-line with FY18E forecasts of £11.3m.

n Successful site restructure: The group’s Michelmersh site was restructured in February, moving production of handmade bricks to Charnwood, achieving cost efficiencies. This has successfully returned the site to profitable trading.

n Temporary working capital outflow: Interim net debt came in £18.1m after payment of £1.9 million in dividends and seasonal cash outflows. We expect the latter to reverse in H2/18E, with FY18E net debt expected to fall to £13.2m.

n Use of material FCFs: Given the strong FCF generation expected over the course of the year (FY18E FCF of £7.7m, 10.2% yield), the company has repaid early the outstanding £1.8m of deferred consideration for Carlton. Funds of c£1.5m have also been earmarked for expansionary capex projects at Carlton this year. The company plans to invest in new equipment at the site, which will yield cost efficiencies, de-risk operational processes and give potential for near-term capacity improvements. This capex is included within our FY18E forecasts. Beyond this, we expect the company to use remaining FCFs to pay down debt. The board have stated their expectation that net debt will fall to under 1x EBITDA in FY19E, in-line with our forecasts.

n Order book underpins H2/18E delivery and beyond: The group’s order book currently stands at c67m bricks (+11% YoY) and is said to be well-balanced across sectors and price points, diversifying risk. Given our expectation that Michelmersh will sell at least all their annual capacity of c100-105m bricks, this provides good visibility over H2/18E and into Q1/19.

n Forecasts largely unchanged: We consider today’s results reflective of in-line trading. We expected this slightly stronger H1 delivery, given the occurrence of annual planned maintenance over H2. As such, we leave our forecasts largely unchanged, but have updated for the early payment of deferred consideration, a slightly higher FY18E and FY19 DPS (+0.1p in each year) and a marginally higher share count. The company is on course to post growth in CKS adj EPS of 34% this year.

n Valuation – anomaly verses peers: Michelmersh is a more premium, niche player with higher gross margins compared to its larger, listed peers (Ibstock and Forterra). It offers materially stronger earnings growth this year versus these names. Despite this, the company is currently valued at a discount, or in-line, to these mass market players

[masurenguy] 04/9/2018 08:42

Yes - looking good !

[cwa1] 04/9/2018 08:31

Decent set of results on first quick glance IMHO:-



Commenting on the results, Martin Warner, Chairman of Michelmersh Brick Holdings Plc, said:

"The strong growth achieved during the period reflects not only the successful acquisition and integration of Carlton but also improved sales and operational progress across our other divisions. With a robust order book for the rest of this year and into next year, and the market demand for bricks remaining strong, the outlook is positive and we are confident in meeting our full year targets."

[bamboo2] 28/8/2018 11:46

Hi rich, hope so, will know by eod close

[villarich] 28/8/2018 11:19

Confirmed??

[bamboo2] 22/8/2018 22:29

Price closed above 50sma.
Needs close above 87.5 to confirm the Inverse Head and Shoulders pattern.
Tp approx. 94.6

Potential turn 3-4/9/2018. [4 Sept date of half yr figs] Watch prior trend for likely direction. gla

[bamboo2] 14/8/2018 22:04

A potential turn shows on the chart 14-15/8/2018

[bamboo2] 09/8/2018 14:01

This consolidation/retrace forms the second shoulder of the INVH&S bottom pattern. Should see an increase in volume around this price level.

[shauney2] 09/8/2018 12:49

From IBST results,
"Demand from the Group's UK brick customers was strong over the first half,

Review of UK brick manufacturing assets identified requirement for increased maintenance and refurbishment activity over 2H 2018 and 1H 2019 to sustain manufacturing capability"

They should think about taking out MBH,at a large premium of course.

[bamboo2] 05/8/2018 09:23

Price into resistance zone now.
Expect consolidation for a few days.
Good volume.
New target price 96.4

[bamboo2] 31/7/2018 08:27

mrf, I only have direct personal experience of FLB arm of MBH. A large percentage of production is used locally, which means weather related probs and energy costs are well contained. Builders merchants collect using their own transport, leaving the co's lorries for site and direct deliveries.

I would guess that a similar story applies to MBH's other smaller factories.

Are you not holding anymore, or are you short?

[marvelman] 31/7/2018 06:47

Re Ibstock "Demand from the Group's UK brick customers continues to be strong, particularly from the new housing sector, and market fundamentals remain favourable".

Net debt of £117 million on a market cap of circa £900 million and strong cash flow looks very serviceable while still able to produce a healthy and non stretching dividend.