Molins Share Discussion Threads

[castleford tiger] 16/8/2017 17:20

Total rubbish in my opinion.

Market cap is 31.7m as you say and cash will be slightly over 30 but hey you want to talk about the pension.
An agreed figure is being paid into the pot each year. Its not stopped dividends being paid before or again.
An agreed amount was paid to the pension from the sale.

As soon as interest rates move north the pension issue can resolve itself.

I think you are being too harsh and clearly the market does not agree.

tiger

[stemis] 16/8/2017 16:27

I don't think it's true that the market isn't 'valuing' the company. You are assuming the market places a valuation on the pension fund which is the same as it's balance sheet value.

The market cap of Molins is £31.7m (at 157p). Proforma cash is £29.8m. So it looks like the market is only valuing the company at £1.9m.

However that's all trivial compared to a pension fund which, approximately fully funded, has assets and liabilities each of around £420m. Apply a 5-10% discount to the asset values (like most investment trusts) and suddenly the market looks like it's valuing the Molins business at £23-44m.

No one will ever acquire Molins and it's long term ability to pay dividends will always be restrained by the performance of it's pension fund.

[castleford tiger] 16/8/2017 15:02

its moving north because.
market cap will be fully covered by net cash once the property sale goes through.

There is no value in the company.
Shares should be over 200p and then lets see what the company can make.

tiger

[richjp] 16/8/2017 14:26

I don't think that pension fund surpluses can be treated as assets, but I think the relevance is that when there is a surplus it means that the company does not have to put money aside from current profits to beef up the pension fund.

A nice movement today but there does not seem to be any news.

[dan_the_epic] 08/8/2017 21:26

Pension surpluses should not be treated as assets AFAIK

[stemis] 08/8/2017 09:34

Wow, this is an investment fund masquerading as a packaging company...

[castleford tiger] 08/8/2017 08:24

Yes there is that but as and when interest rates turn it could become an asset.

Either way a 50 m t/o company that should make 2 million a year valued at nothing?

Crazy

tiger

[dan_the_epic] 07/8/2017 21:54

Pension deficit?

[castleford tiger] 07/8/2017 21:06

still looks far too cheap as market cap is now less than cash
tiger

[richjp] 05/7/2017 15:33

I hope you are right. I would like to see the full details of ST's analysis assuming that is in this week's IC.

[castleford tiger] 05/7/2017 15:09

disagree.
the sop valuation is very cautious as there are many unknowns.
The original packaging business is still for free.
With interest rates going to move up soon the pension may also help the balance sheet.

My short term target is 250p.

Tiger

[richjp] 05/7/2017 13:42

I got so lucky with this one. I am a long term holder and was carrying a big loss and I was on the verge of hitting the sell button a few weeks ago when the 8th June announcement came through. I had been mulling the thought over for a couple of days and probably one more day would have done it.

I am still nursing a much smaller loss but the question for me is when to sell. Simon Thompson's recommendation is probably worth listening to but there may not be much more to go for at the moment.

[teela brown] 03/7/2017 19:38

Recommended in today's Investors Chronicle (online) by Simon Thompson.


Basically he agrees with the 180p sum of the parts valuation produced by Equity Development week.

Teela

[jay083] 29/6/2017 08:04

The appeal is not against a refusal it is against a non-decision, but is now been 'called in' by the secretary of state as it is a major development in green belt land.

Whether they are successful or not is anyones guess, but there are already buildings on the site (it was/is a sports and social club) and even if this application is not successful there may still be development potential in the land for and alternative (and probably smaller) scheme - just my opinion...

[teela brown] 29/6/2017 06:50

There's two further bird of interest in the ED research:

1/ assuming Molins can deliver its ‘through cycle’ targets of 10% pa LFL growth and 10% EBIT margins, then we see no reason why the stock could not trade on 1.0-2.0x turnover multiple (see below), equivalent to a mid-point of 400p/share.

2/ they have land in Buckinghamshire that the local authority won't let them seek for development. They are appealing against this decision. If successful the land would be valued at £15m or 75p per share. Even if they're not successful now, who knows of any land that's fine down in value?


Teela

[rhomboid] 28/6/2017 14:32

Key new info in the note was 10 acre surplus land worth maybe £15m if they get the applied for housing consent, that makes this an utterly compelling buy case IMHO , I've topped up more today as a result as a profitable business (as per Equity Development note ) with a potential £15m windfall is valued at 10% below its own y/E cash position ..even cheaper than Volvere 😀

[edmonda] 28/6/2017 08:19

Thx FishbourneTrader

ED note is indeed out reviewing all these material changes for the Group and available:

[fishbournetrader] 28/6/2017 06:14

There is a new research note from Equity Development. The full report is available on their website equitydevelopment.co.uk if you register which is free.
The highlights are:


There are typically only a few key events in a company’s life that can truly be described as ‘transformational’ but we think that Molins’ £30m disposal of its Instrumentation and Tobacco Machinery (I&TM) arm to GD Spa (part of packaging giant Coesia Spa) falls into that camp.

The deal in our view is a ‘home-run̵7; for both parties: enabling long overdue industry consolidation to occur at a time of overcapacity, increasing price competition, lacklustre growth and ongoing cost pressures from ‘Big Tobacco’, who are themselves merging.

Molins will have effectively swapped its high quality, yet ‘sub-scaleR17; I&TM unit for a sizeable chunk of cash. Thus providing vital capital to redeploy within its rapidly expanding and profitable Packaging Machinery (PM) division, where the fundamentals remain strong.

Out of the proceeds there are £2.7m of taxes (eg capital gains) and deal fees to settle, with a further £1.5m being held in escrow for up to 2 years (nb £0.75m accessible after 12 months), and another £2.7m will be injected into the UK Pension scheme – leaving net proceeds of £23.1m (or 114p/share). This will be used to fast-track PM’s expansion - particularly in primary (ie touching product) and secondary (outer-layer) packaging solutions for the Pharma, Healthcare, FMCG and Beverage sectors, that together are motoring along at a 5% pa clip (vs global GDP 3%-4%).

This morning Molins announced that it had also sold a property in Ontario, Canada to BuildCorp Limited for net proceeds (post fees/taxes) of CA$10.2m, or £5.9m. This, together with the I&TM disposal, means the Group now has ample financial muscle to selectively acquire complementary 3rd party assets that could benefit from PM’s geographical footprint, 1st class reputation & support infrastructure, in-depth industry knowledge and large embedded customer base. In turn generating significant synergies, and returns materially above the group’s cost of capital.

Our 2017 turnover and EBIT estimates have been upgraded to £49.8m (+20% vs £41.4m LY) and £1.3m (vs -£1.2m LY), reflecting the buoyant order book and YTD trading, with net cash predicted to close Dec’17 at £27m (or 134p/share). For 2018 we anticipate revenues and EBIT margins to climb to £54.8m and 4.6% respectively, thus driving our SOTP valuation up from 110p to 180p/share.

[castleford tiger] 27/6/2017 18:52

When rates start to move it may become an asset.

tiger

[spooky] 27/6/2017 10:35

Thanks rhomboid, a great summary. I'm fully aware of the pension situation, i am just trying to see if anyone is focusing on anything else apart from that.

[rhomboid] 27/6/2017 10:05

Pensions, the scheme dwarfs the company at c£400m of assets & liabilities, on some measures it's well funded on others it's underfunded but the Pension trustees are in a powerful position to influence how the company goes forward, in the meantime they appear supportive of growing the business. From the disposal RNS;
"9. Arrangement with the Fund



The Company has formalised an agreement with the Fund's trustees, following the completion of the funding valuation as at 30 June 2015 and in consideration of the Sale. The principal terms of the agreement are as follows:

· Molins will continue to pay a sum of £1.8 million per annum to the Fund (increasing at 2.1 per cent. per annum) in deficit recovery payments;

· if underlying operating profit (operating profit before non-underlying items) in any year is in excess of £5.5 million, the Company will pay to the Fund an amount of 33 per cent. of the difference between the annual underlying operating profit and £5.5 million, subject to a cap on underlying operating profit of £10 million for the purpose of calculating this payment; this part of the agreement will fall away in 2021 if the funding deficit is above certain levels;

· the Company will pay a one-off amount to the Fund of 10 per cent. of the net proceeds (after costs and taxation) of the Sale on Completion, which is expected to be approximately £2.7 million; and

· payment of dividends by Molins will not exceed the value of payments being made to the Fund in any one year.



The next funding valuation will be carried out as at 30 June 2018 and every three years thereafter, and the agreement between the Company and the Fund will be reassessed at each of those valuations."

So they rank ahead of us shareholders in many respects.
HTH

[spooky] 27/6/2017 09:30

What is the bear case here?

[jay083] 27/6/2017 08:05

add another circ £5m to the expected cash in about a months time....i make that £1.48 / share cash approx.

that plus the remaining business where 'order intake in the Continuing Group (i.e. excluding I&TM) at the end of May 2017 was considerably ahead of order intake for the same period last year'...

[rhomboid] 15/6/2017 13:16

Packaging machinery is anything but commoditised, it's highly specialised and commonly gives great margins, a private competitor I'm aware of made profits of 2.5m on turnover of c£13m so a PE rating of 10 would be ultra conservative.

[castleford tiger] 15/6/2017 12:32

It will make 3 million a year be backed with 30 million of assets that's why I think it will be worth that much.

There is the change of growth in for free.

Wait till you see new note

tiger