Norcros Share Discussion Threads

[cwa1] 27/7/2017 08:08

Well, that certainly sounds sound and steady as she goes, thankfully.

[xxx] 27/7/2017 08:02

It is a +ve statement, but it would have been helpful to hear about margins and or nett debt. I find it difficult to get a handle on overall progress in the business.

[edmundshaw] 27/7/2017 07:45

Yes. For an in-line statement, it makes pretty good reading! :-)

[1fox1] 24/7/2017 10:50

Jeez this is a frustrating share.

[dan_the_epic] 22/7/2017 16:42

Really don't like the bond proxy this play is. Not convinced any turnaround in the core business will prove a sufficient price catalyst given the large impact a small change in bond yields can have

[edmundshaw] 11/7/2017 17:36

Already been tempted at this level, and have a decent holding; I will look again if it dips further.

[cwa1] 11/7/2017 10:00

Morning All

Decided to have a nibble at a few as they look "sensible" value at these levels to me. No doubt they will go lower still but, hopefully, in the fullness of time, etc.......

Anyone else remotely tempted?

[edmundshaw] 06/7/2017 16:39

Don't mention it Andrew, it's great to hear some good news...

[death by donut] 06/7/2017 13:16

id be happy to reach 217p! ?

[nigelmoat] 06/7/2017 13:11

Canaccord ups target price here from 217p to 315p telling clients it is potentially the most undervalued stock in its sector. Let's hope for a good tick up.

[kazoom] 04/7/2017 23:26

Thanks for looking that up jg.

I must confess that I'm surprised they have (or had maybe) such a high exposure to bonds. But then not all bonds are equal (for eg. as I understand it short dated bonds are much less volatile) and one has to take a degree of faith that the fund managers know their business!

Your last point though about hedging is interesting (in a potentially depressing sort of way). I don't know when they set up these hedges, but it strikes me that it might be one of those behavioural traits that come back to hurt you. It would be unfortunate if after been hurt by 'volatility' they used hedges to neutralise the effect just at the time that the volatility would swing in their favour.

Anyway that's probably toooo much speculation on my part, I think it's fair to say that increasing bond yields will be beneficial to some degree.

Personally I'm quite sanguine about pension deficits - have been for some considerable time and surely one day I'll be eventually correct!?!

[jg88721] 03/7/2017 20:36

Hi Kazoom

Your post spurred me to have a look at the latest annual report (esp note 22). This confirmed a couple of points: 1. there is a large exposure to bonds, and 2. the liabilities and assets do move in value together to some extent, but the annual report does not quantify this. Ie, they show sensitivity for movements in the value of the liabilities (eg, discount rate), but not for movements in the value of the assets (eg, interest rates).

Further info. re: 1. 157m of the 404m pd worth of scheme assets was in bonds at March 2017 (and there's 199m in equities and absolute return funds).

re: 2. "Interest rate risk – a reduction in corporate bond yields would result in a lower discount rate being used to value the scheme liabilities and consequently result an increase in scheme liabilities. Additionally, an increase in inflation would increase the scheme liabilities as the majority of the pension payments increase in line with inflation, although there are a number of caps in place to
ensure that the impact of high inflation is minimised. To mitigate some of the investment volatility a proportion of the scheme assets are held in liability-driven investments which involve hedging some of the Plan’s exposure to changes in interest rates and inflation by investing in assets that match the sensitivity of its liabilities. This means that if interest rates or inflation expectations
change, assets and liabilities rise or fall together, and the funding level of the Plan should be less volatile."

[kazoom] 03/7/2017 10:33

Yes AB thanks for that - confirmation of what I think we all know is happening anyway.

jg - going back to your earlier point (missed it before), I would doubt that any pension fund has much of it's assets in bonds right now, there really doesn't seem to be a credible case for buying / holding them right now.

The increase in inflation though is the negative side of the coin with regards the net pension deficits - overall though we will be seeing positive movements, but it could be a while before they are reflected in published numbers.

[jg88721] 03/7/2017 10:20

good spot AndrewByles.

On further reflection, I guess part of the answer to my earlier comment is that there is a deficit. Ie, the liabilties are smaller than the assets. Even if both assets and liabilites fall in value by the same amount, because the liabilities were bigger to start with, then the deficit (gap between them) has still reduced. (and vice versa if interest rates are falling).

[edmundshaw] 30/6/2017 09:55

Asset returns were strong over 2016, but did not keep up with the liability measure for the large majority of UK pension schemes, Norcros presumably included, due to interest rate falls having a greater effect. Most pension funds do not hedge the change in yield of bond rates, so when these rates go down, the IAS19 pension deficits increase.

Conversely, if interest rates rise, bond assets will fall, but generally this has a much smaller effect on the total liabilities.

[jg88721] 29/6/2017 21:05

thanks AndrewByles
But does an increase in yields also suggest the value of the bonds held as pension assets has fallen? I would have thought so. Ie, the yield has increased because the price to buy the bond has reduced - hence the yield increases. And if interest rates keep rising, we might expect shares to decline in value (as the discount rate used to present value the expected cash flows from investing in shares has increased).

I think - and am very happy to be hold I'm wrong - that an increase in yield has both a positive and negative impact on the pension deficit. The direct and positive impact from reducing the future value of pension payments (as the discount rate has increased); and an indirect and negative impact from a reduction in the value of most of the assets held in the pension scheme.

[edmundshaw] 22/6/2017 22:13

Only 73% upside? Well add in a a year or two of few dividends it's over 80%.

Sounds a good deal to me.

[batham1] 22/6/2017 19:28

Yes, just received weekly tips from Alliance Trust with NXR tipped in Shares Mag...Numis price target 300p

[grahamburn] 20/6/2017 19:22

Also could be rising before the ex-div date of 22 June.