Nichols Share Discussion Threads

[justiceforthemany] 03/11/2021 22:21

Defensives are definitely out of favour at the moment - Telecoms and Consumer Staples in particular. Gold also. The insane unjustified rally in Tech/Crypto/Tesla continues.

Let's all pretend that interest rates will not rise, Covid has gone away and markets go up in a straight line...

[disneydonald] 03/11/2021 16:47

Yeah, I was just checking how the trades were executed. Looks like a selling algo (splitting blocks of shares up into random fragment sizes) is at work here. Sort of suggests that someone is offloading a reasonable amount. Lets see how long the algo trades continue for.

The good news is that the market is soaking these sales up without too many dramas, so other traders, market makers, brokers are happy to take on stock at these prices.

[justiceforthemany] 03/11/2021 16:34

Algo bot trades working overtime here.

[essentialinvestor] 03/11/2021 12:33

Congrats!! - nicer problems to have.


Hopefully a move back over £12 quickly.

[disneydonald] 03/11/2021 08:33

Justice. Well, I'm in for a large CGT bill if I sell. Plus I tend to hold certain shares for the long run. NICL have always paid good dividends (just look them up). Also, I always keep long term holds under review, but for the time being I think the market has got this wrong, so I added a few more a couple of weeks ago. I'm confident they will go well in the short to medium term.

As for your comment re selling at 1900, trading by hindsight is impossible. If you have worked out how to do this, please tell :-)

[essentialinvestor] 03/11/2021 08:27

Perking up.

[justiceforthemany] 02/11/2021 16:51

disney what stopped you from selling when shares hit as high as 1900p+ as recently as a couple of years ago?

[philanderer] 02/11/2021 13:58

Good post dD , thanks.

[disneydonald] 02/11/2021 12:16

FWIW, I have been invested in NICL for more than twenty five years, in at around £1.13p. Along the way they moved from FTSE100 to AIM, which I assumed was to take advantage of business relief (family IHT planning). Also along the way they did engage in talks about selling the business, and that was rumoured to be to A G Barr (IRN BRU), but Barr didn't want the overseas business. So nothing came of that. With family owning ~35% it's unlikely that anyone could launch a contested bid, it would need the family approval.

What is interesting is that the company has now reviewed its dividend policy, at 1.5 times, were previously it was closer to 1.0. Being a family controlled business most of the profits were paid out as dividends, and NO DEBT has always been one of the main considerations. The new(ish) CEO has alluded to returning to growth and using some of the cash to make acquisitions. Put these two together, resetting of dividend at a lower level and potential acquisitions has possibly unsettled the market.

Also, at the Investor Meet session (first time in living memory that NICL have communicated anything other than basic results) , the CEO did make a few remarks about supply chain and container shortages. I fear that whilst he was just expressing the common view of current environment the market might have taken a fright. If no containers then no exports.

Whenever I look in my local stores, VIMTO is always well placed and over the years has taken market share over its competitors. So all looks good and no shortages in UK.

In conclusion, I suspect that the market has over reacted a little to the new dividend policy and uncertainty of potential M & A activity. Add the fact that getting in, and out of NICL is difficult because of the general illiquidity and often very wide margins, therefore any selling can depress the shares for months. However, given they decided that they wanted a family board representative, I guess they want to keep an eye on things a will be motivated to get the share price moving back to where it has previously been.

In all the years I have held NICL, the Chairman's (John Nichols, now non exec Chairman) has always been very straight with his remarks, and when he has guided to meeting consensus earnings he has never missed. If, on occasion (like when the Saudi sugar tax was announced) he was always quick to issue an update, which tended to be taken as a profit warning even though they are often turn out to be insignificant. Either way, these will turn up in December, so if no updates issued in December you can take it that they will meet / beat consensus earnings. Maybe now is the time to top up, whilst share price depressed and the spread is currently at all time lows.

[essentialinvestor] 02/11/2021 00:07

Phil, yes, similar to Henry Boot PLC. So many will be under the reporting threshold.

[philanderer] 02/11/2021 00:04

EI, many thanks for that.

Those holdings must be spread far and wide. I took the numbers I posted from the company website.

Like you I can't see any corporate action here without all those family members nodding it through.

[essentialinvestor] 01/11/2021 23:48

Phil, from page 63 of the 2020 annual report -

".RELATIONSHIP AGREEMENT
On 22 July 2020, the Company entered into a
Relationship Agreement with the Nichols Family. The
Nichols Family consists of certain members of the
immediate and extended family of the Company’s
founder John Noel Nichols. Members of the Nichols
Family hold in aggregate an interest of approximately
34.7% in the Company’s issued share capital.
The purpose of the Relationship Agreement is to
formalise Board representation for the Nichols Family
whilst also ensuring that the Company is capable of
carrying on, at all times, its business independently.."

[philanderer] 01/11/2021 23:44

Nearly added today ;-)

[justiceforthemany] 01/11/2021 22:33

Hmmm you mean like the Morrison family who 'did not want out'....MRW was hovering near all time lows when the bids came in.

[essentialinvestor] 01/11/2021 22:04

Just under 35% of NICL is held by members of the Nichols family,
so unless they want out can't see any corporate action here.
And they will not be interested near an earnings nadir in any case.

[justiceforthemany] 01/11/2021 21:43

There's a lot of history behind this brand and it is very well known worldwide. Especially Asia.

Must be a lot of interested buyers.

hxxps://www.nicholsplc.co.uk/about-nichols/our-history/

[essentialinvestor] 01/11/2021 17:38

Net cash is about 10% of the market cap,

so net that off and 18 X at £10 a share approx on your number.

[justiceforthemany] 01/11/2021 17:12

Pre pandemic EPS was as high as 73p
2020 EPS only 25p
2021 H1 EPS 20p

If they hit EPS of 50p for 2021 then 20x earnings = 1000p so one could argue current valuation is about right.

[justiceforthemany] 01/11/2021 17:03

New CEO has been buying small amounts.
Would have been nice if other directors had been adding.
Africa grew in 2020 but all other areas hit due to Covid.
Saudi tax not helping.
July-September quarter would be strong though you would expect with the reopening/summer?
Update expected around 20th November.

Could easily hit 1020-1030p but equally could rebound to 1600p
Must be in play for M&A given such a strong balance sheet

[essentialinvestor] 01/11/2021 16:56

Added today, it's majority owned from memory? - would need to check the annual report
on that.

[justiceforthemany] 01/11/2021 16:51

Very volatile stock and the UT is often out of kilter with large spread.
Surprising to see this sell off in such a strong market.
Net cash and debt to equity of 0.2
Margins and profits hit hard due to lockdowns but these should be recovering now?
Seems to be a sitting duck to be taken out.
Triple bottom around 1030p??

[philanderer] 01/11/2021 15:46

Had a trading update last november (20th)

[philanderer] 28/10/2021 18:01

EI, it just seems it won't turn around just yet ;-)

[essentialinvestor] 28/10/2021 16:10

Phil, very good bearish call here by your good self.

Added a small amount.