Michelmersh Brick Share Discussion Threads

[ed 123] 30/8/2006 23:31

Also suspect that MBH is currently cheap. Holding but don't have facts to back up my hunch, so not adding.

Eric Gadsden has 56% therefore, IMHO, not likely to empire build for the sake of it. Brickworks are likely to be cheap at the moment and buying could be good medium term strategy for MBH. Alternatively, by talking of acquisitions Eric Gadsden may be trying to solicit a bid for MBH. Either way, happy to hold here and await events.

[ntv] 30/8/2006 22:06

more interest today

[shanklin] 23/8/2006 17:49

Would they lose money on every brick? I just wonder whether PSN or MBH will have the pricing power in this arrangement.

Cheers, Martin

P.S. No position currently but suspecting MBH is cheap at current levels.

[alan russell] 23/8/2006 13:35

ONly a guess, so many variables, but 2.M to 3M bricks for the whole development might not be too far out. Quite a lot if set down on your foot but say 300,000 pa for 10 years against a group capacity of 60M, a big single order but not comapny changing.

[meadow50] 23/8/2006 11:39

Assuming Persimmon is the purchser of the land,part of the option agreement is that the Telford development will only use bricks supplied by Michelmersh.I wonder how many bricks that is,if the whole 60 acre is developed.Ideas anyone?

[alan russell] 23/8/2006 11:20

I feel the results are slightly disappointing but not a shock as these issues had been well flagged up in advance. It would have been nice if the company had been able to break even (how irritating it is to see the company headlining a so-called "profit" as if payment of interest is not really an item worth having regard to).

I find the chairman's remarks about expanding the business and considering opportunities decidedly unsettling. He may feel emboldened by the re-valued assets but he should bear in mind he is running a loss making business under pricing and over-capacity pressures where conditions may well get worse before they get better. The Persimmon deal is an option (is this revealed today for the first time?) so they can just walk away if market conditions deteriorate. Often if prices slip the purchaser under an option will offer to complete at a reduced price or not at all, leaving the seller to either take the lower figure or start all over again to find a buyer. I feel he is a bit early to start empire-building.

I just want MBH to keep its head down, focus on cutting costs and keep the company solvent until the Persimmon cash starts to flow.

Look at it this way. Reading between the lines IMHO it appears that about £1M has been spent preparing the Telford site for development. If that continues at the same rate about a further £3M may be spent by the end of 2007. Debt is £16.4M so if the company was to break even (including operations and interest!) between now and the end of 2007 debt would then be £19.4M. The company would then receive £10m from Persimmon over the next year or two, so debt reduced to £9.4M. A further 53 acres will remain to be sold realising perhaps £1m pa after costs (I'm discounting any in-built uplift in price against its deferral). £53M less £10M debt = £43M which is more or less the cap of MBH. So the Telford site represents the present value of the company and debt – where is any increase in share price going to come from? It can only come from ongoing operations moving into profit or other assets being realised – no guarantees there.

I don't see MBH giving any scope for asset-stripping. As I understand it planning permission is only obtained as brown land, ie the land has to become an exhausted clay pit first, then developed. No option to close it all down and still develop the land. Running the brick-making operation for years will not appeal to the asset-strippers. On the other hand, as has been pointed out, if the price were to fall significantly it could be cheaper for Persimmon to buy MBH rather than complete the deal. Whether they would want to is another matter.

The down side is limited..... the upside, perhaps 50% max, is as yet very unclear..... and MBH may indulge in a buying spree on the back of a deal the other party can walk away from. Mmmmm ... I think I'll hold but not add yet.

[wcjan25] 22/8/2006 10:33

bought some more near the low

trading at discount to nav (excluding the TRUE value of the michelmersh land) early this am in an industry which is undergoing consolidation!

will be bought, consolidated/offshored

[ntv] 22/8/2006 08:33

if it fell much further probably cheaper for persimmon to buy the company

[ntv] 22/8/2006 07:44

bad results
valuation got to now based on land alone

[viruiltohip] 21/8/2006 21:37

doesnt get better than this:

[alan russell] 21/8/2006 20:59

Many thanks wcjan25

[wcjan25] 21/8/2006 10:58

will probably add more if results tomorrow are poor (energy costs) and the share price drops accordingly

[wcjan25] 21/8/2006 10:56

alan russell

the plant is at SO51 0NL - stick it in to multi-map or something

here's a local house for sale



i happen to know this having looked at the house.
i was amazed when i visited it to see a view of the factory. has been there for a lot of years apparently, using the local clay.

BUT with the cost of gas in the uk and the huge acreage that the plant has in this prime development site (loads of planning restrictions, but a redevelopment of a brown-field site in a old quaryy nearby has recently got the go-ahead)... you just wonder

i can see this co being gobbled up and asset stripped. i have bought shares for this eventuality over the last couple of years and have quite a few with average under 1 pound

[ntv] 17/8/2006 20:46

surprised at the little volume here

[ntv] 17/8/2006 20:43

picked up afew more today
land holdings plus a solid business
a bargin to a bigger company

[ed 123] 17/8/2006 12:47

Good to see the interest in Baggeridge. A higher bid could come but MBH might be a preferred target. MBH up another 3p and bad trading climate certain to be mentioned on Tuesday. Bid at around 150p would be nice .............. but who knows? It may never happen. I wonder what Eric's thinking.

[alan russell] 17/8/2006 08:27

Baggeridge Brick taken over, see RNS today.



Highlights the attractions of the sector despite present difficult trading conditions. Should give MBH's share price a boost, albeit temporary.

[alan russell] 14/8/2006 07:10

Results will be out 22/8.

Hanson's interims last week showed a 19% fall in UK brick volumes. It is hard to see how MBH can remain unaffected in such a market.

[ed 123] 09/8/2006 16:40

IMHO, there has to be some cautionary comment regarding energy costs. Everyone can see this coming and yet the share price is on the up. I have looked at topping up also but also haven't done it. My guess is that the insiders believe some good news will be released soon.

[alan russell] 09/8/2006 15:32

Can you supply any info re Hants plant referred to, wcj? I can't find a location map on site, local maps don't show location. Anywhere near development limit?

Interims last year were 23/8; no announcement yet re. this year's date. Another tick up today. If I were braver I'd top up, but I'm not - too much scope for cautionary comments re. energy prices!

[wcjan25] 26/6/2006 10:45

forget telford - what is the value of mbh's land under their plant in hampshire?

prime residential village in the test valley

[alan russell] 19/6/2006 13:44

Another tick up. No big volume but for the last week or so there have been buys in 10,000 share blocks. Could be unconnected or the same person. If MBH can get through the next couple of years there is potential for a serious re-rating.

[alan russell] 26/4/2006 08:34

Gosh first post for over three months! MBH is either a hidden gem or timebomb!

>>>>>>>>>>>>>>>>>>>>>>>>

Michelmersh Brick Holdings PLC
26 April 2006
AGM Statement


Michelmersh Brick Holdings plc ("Michelmersh" or "the Group") (AIM: MBH) the UK's largest producer of handmade specification bricks and clay paviors, announces that at its Annual General Meeting held today, Wednesday 26 April 2006, Eric Gadsden, Chairman of Michelmersh, will make the following statement:

"I am pleased to report that Michelmersh Group sales for the period to date are ahead of last year, and this despite a decline in sales across the industry as a whole.

"Energy costs have continued to be volatile during the spring while industry product prices have not increased to fully recover these costs. We continue to experience strong demand and sales at our smaller specialist works and we are managing production levels against demand, cost levels and price recovery at Blockleys.

"As reported at the time of our results, our major capital expenditure programme is now complete and we continue to take steps to strengthen our sales effort and develop complimentary products to utilise the flexibility attained in our production processes as a result of this investment.

"The masterplan for the development of the 60 acres of land at Telford for residential land is now being worked on and a planning application for the initial phase of this land is being prepared. The value of this land was reflected in our balance sheet for the first time at the end of the last financial year and will stand us in good stead until the market place returns to more normal levels.

"Following approval at the AGM, the Company's maintained dividend of 1.1 pence per share will be paid to shareholders on 7 July 2006, reflecting our continued confidence in the Group's performance going forward."

>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>

One of those cunning agm statements that enables the management to look back in six months time and say "we told you so" irrespective of whether business turns up or down!

"industry product prices have not increased to fully recover these costs" Does this mean that decreased margins are offset by increased turnover so profits should be level or slightly up? Or does it mean severe margin erosion leading to falling prfits? The only thing we can take for certain is that sales are up which is better than down. All in all the statement could have been a lot worse - when I saw the RNS release I was filled with apprehension. The closer the company gets to that first tranche of money from Persimmon while keeping in the black, the more potential for a strong rise in share price however still a long way to go with energy/house market risks.

[wcjan25] 20/1/2006 11:48

cold spell starting next week?

if so- time to short?

[alan russell] 02/1/2006 15:37

wcjan25 - you could well be right, I suspect we will see the price marked down omorrow on the Russia/Ukraine news. For long term holders like myself there is some comfort to be derived from Hanson and Baggeridge announcing extended shutdowns with no similar announcement from MBH. It may be that the efficiency of the modern plant is giving MBH an edge. Of course it may be that MBH are also closing plant but just haven't said so and in this climate margins are bound to suffer so it looks like being a tough year.