Norcros Share Discussion Threads

[simon templar qc] 25/6/2015 21:15

I sense a re rating and I am minded to see the share price continuing its upward trend for a while yet. It wouldn't surprise me if wee see 30p sooner than later.

Why because I see forecasts being bettered with cross selling.

[loganair] 25/6/2015 19:04

Indeed, with £21m pre-tax profit (possibly slightly conservative) pencilled in for the following year, the PER drops to under 8, which even allowing that Norcros seems to trade at a discount to peers, continues to look very much on the value side.

[hastings] 25/6/2015 18:24

Thoughts may be of interest to others holding.

[simon templar qc] 25/6/2015 18:13

Better than what I indicated earlier, I stated at least £18 million pre tax. 500k out but I was being quite conservative.

Thanks Spangle I have been out and didn't realise my post had been edited.

[loganair] 25/6/2015 16:10

Croydex made EBITDA of £3.1mln for the 12 months to 31 March 2015 which hopefully means Norcros will increase their profits by much more than £3.1mln compared to last year otherwise Norcros would have made no organic increase in their own profits.

[spangle93] 25/6/2015 15:30

Simon - the police probably caught your link, but new information is

"The deal is in line with the group's objective of bolt-on acquisitions in the bathroom sector and clearly demonstrates that, now legacy issues have largely been dealt with, management can fully focus on potential growth opportunities," said Numis Securities analyst Christen Hjorth.

He now expects underlying pre-tax profit of £18.8 million this year, up from £15.8 million in the 12 months to March just gone, rising to £21 million next year. That gives adjusted earnings per share of 2.3p and 2.6p, respectively.

Net debt, having halved last year to £14.2 million, doubles to £27.9 million this year, according to Numis. But Hjorth thinks Norcros still has room for additional bolt-on acquisitions once Croydex is integrated.

Before the market's reaction Thursday, Hjorth said: "Norcros trades on an annualised 2016 P/E of 7.5x, EV/EBITDA of 4.7x and dividend yield of 3.6%. In summary, we see this as a positive step forward for the group and we therefore reiterate our Buy recommendation and target price of 30p."

[simon templar qc] 25/6/2015 15:15

Norcross worth 50% more say iii

[...]

[simon templar qc] 25/6/2015 15:11

Forecast before acquisition in 2016 of £15.5 pre tax.

I reckon with a bit of cross selling it should add another £2.5 million to bottom line. Should be making circa £20 million in less than 18 months. Plenty of cash flow to pay down debt.

[simon templar qc] 25/6/2015 15:00

Back to 20p this should well hold today the co rating is too low at moment.

[loganair] 25/6/2015 13:37

ST - I hope the directors do not go on a acquisition trail before they have completely integrated Croydex and settled them down into Norcros.

[ramridge] 25/6/2015 12:38

Loganair- muckshifter is right, NXR paper is not highly rated so a placing or rights issue may become expensive. Debt is the sensible route as long as they don't become over geared and take advantage of current low interest environment. Their balance sheet can support at least another acquisition of the same order.

[simon templar qc] 25/6/2015 12:31

Andre Byles is nearer the mark, acquisitions will only account for part the intention to increase turnover to £400 million, some will come from organic growth. I wouldn't concern myself with increase in debt good cash flow will assist on that front. In the meantime it wouldn't surprise me if they have their eye on something else as the directors are not buying shares at the moment.

[muckshifter] 25/6/2015 12:30

loganair,
Perhaps they would have had a rights issue if their share price hadn't been currently "fighting" against Schroder's steady disposal of 21 million shares in 4.5 months, with another 64 million potentially still to go. It may well be that Schroders sell out completely, and that might take another year at the same rate of sales. This would have put NXR in the position of having to do a low priced share issue whereas in perhaps 18 months time the issue could be at a sharply higher price. Bit of a dilemma in a situation where the moment is right for someone to sell out to them, but with interest rates as low as they are, and a lowish share rating with quite a high dividend / share payout to maintain, I can see why they might wait.
Regards.

[loganair] 25/6/2015 11:54

ram - no disagreement there. Just how are Norcros going to fund any future acquisition.

In these situations I always much prefer companies such as Norcros to have a RI for a particular purchase as not to increase their debt as Rolls-Royce had an RI when they took-over Alison.

[ramridge] 25/6/2015 10:57

loganair -
NXR's balance sheet looks pretty healthy to me.
Current ratio approx 1.7
Net Debt / EBITDA is less than 1.5
No funnies that I can see.
The pension fund deficit is large but it is being funded at a sensible rate.
So the company has head room for taking on more debt should they wish to.

Maybe the way to grow profitably for them is through acquisitions and not organically.

[loganair] 25/6/2015 10:36

What worries me is Norcros have taken on £20mln of debt to increase turn-over by £20mln.

Norcros are wishing to increase turn-over by £200mln, so another £180mln to go. Does this mean in order to increase turn-over to £400mln plus means taking on £200mln more in debt?????

[loganair] 25/6/2015 10:32

Numis said the deal was 'attractive' and reiterated its 'buy' recommendation and target price of 30p.

Analysts said the acquisition would enhance 2016 earnings by 14%, and 2017 earnings by 14%.

"There is scope for additional bolt-on acquisitions once Croydex has been integrated and management has reiterated that the pipeline remains strong," Numis said in a note.

[ramridge] 25/6/2015 10:09

CR - as they say you make your own luck :-)

[cockneyrebel] 25/6/2015 10:06

free stock charts from uk.advfn.com

[cockneyrebel] 25/6/2015 10:06

The stock is actually XD today so the rally is stronger than it looks imo.

Chart has a lovely bowl here imo - which tempted me in two days ago luckily.

CR

[ramridge] 25/6/2015 10:02

This is a good acquisition for Norcros.
- EBITDA multiples 6.5 (Norcros 7.6)
- EBITDA margin 15.5% (Norcros 5.4%)
- could add at least 25% to net profits without counting synergies
I guess it will take a little time for the good news to percolate.

[mesquida] 25/6/2015 09:02

Perfect acquisition - double digit earnings enhancing - share price obviously wrong level - clearly Andy Brough has his own agenda, but when he has finally finished selling this price will re-rate very quickly - the house broker really should organize a clear-up operation on the back of this excellent news.

[maurillac] 25/6/2015 08:59

muted response really to what looks like a good acquisition ..
m

[simon templar qc] 25/6/2015 08:12

Acquisition earning enhancing, I would have thought the share price will continue its upward trend for a while yet.