Norcros Share Discussion Threads

[stpalm] 08/4/2021 00:16

I guess its down to whats available at a reasonable earnings multiple as far as aquisitions go. Also the risk is changing, so also cost of debt. Like anything in life you pays yer money and you take your choice but value will out. Over 8-10 years Ive owned them theyve paid reasonable divs. my average is about 160, sold some about 230 back in for more on the way down too soon at 200 then christmas last martch-april got some 145. Im selling some when it hits previos top at 300 hang on to the rest, see what happens. Hope the bod dont get greedy!!

[driver7] 07/4/2021 18:02

To their credit NX have run a very tight ship. Solid. But is that 'business' or financial management? Low debt is great. High debt is bad. But businesses that don't deploy borrowings to drive aggressive growth on favourable terms miss the opportunities to outperform the market. As an investor, you won't suffer risk, but you won't enjoy stunning growth either. The question is: what is the strategy? Buy-and-build may not be enough.

[edmundshaw] 07/4/2021 17:30

Yes, it's a good update. On a P/E under 10 even now, solid balance sheet and good trading and prospects, this is a hold for me.

[jeff h] 07/4/2021 12:40

Edison latest:-



All good stuff - profits, EPS, Divs all up and makes the point with the Balance Sheet now free of net debt acquisitions (which Norcros have a history at being good at) are very likely.

[deanowls] 01/4/2021 16:29

Need to see if that’s any furlough cash, government loans or a big reduction in inventory first. However the company continues to reduce the pension deficit as well as growing the business. I’d expect another takeover to come in as they still have aspirations to build the group out, that could be the real game changer here.

[zipstuck] 01/4/2021 10:06

Associated with the removal of debt will be the removal of the finance charges in the accounts going forward.

[thorpematt] 31/3/2021 17:58

FWIW I felt the share price should have risen more following the last update.

I haven't raised my Fair valuation here on today's because I prefer to remain cautious that there are still fluctuations in earnings. And therefore I remain at £4.56 as my target and base underlying earnings at a cautious £28m mid term.

There is HISTORICALLY a low(ish) PE ratio applied here. Somewhere around 10x has been the average. The reason this has IMO been the pension defecit (which at times has been many multiple of the annual net profit).

In reality we are now in a very different place to where we were 5 years ago. As a proportion of company operating profits the PD is now very manageable. With underlying profit in one year being capable of wiping out around 60% of it in one hit.

The debt reduction this year is proof of the principle that this share does not have a pension defecit problem ANYMORE. It is deceased - like the norwegian blue in the Monty python sketch. It's not pinin'! It's passed on! This parrot is no more! It has ceased to be! It's expired and gone to see its maker! This is a late parrot. It's a stiff! Bereft of life...etc. etc.


So, where does that leave us?
A. We can value this stock on its merit.

Is it a good company with a strong balance sheet? Good product brands, barriers to entry, etc. etc.

If it is just an average one, it should warrant the average PER of the UK listed companies (which is currently 16.5 - and that includes all those companies with huge debt on thier balance sheet....as well as those minority with actual net cash).

So, still too cheap.

[jeff h] 31/3/2021 12:29

Yes, cash pouring in. From the 3rd March trading update:-

"..This robust trading performance and continued operational focus has reduced Group net debt (pre-IFRS 16) further since the half year to circa £5.7m at 7 February 2021 compared to £36.4m at the start of the financial year..."

...and then today 31st March:-

" ..The balance sheet remains very strong, and we expect to end the year at 31 March 2021 with no net debt (on a pre-IFRS16 basis) compared to net debt of £36.4m at 31 March 2020..."

[sooty snipes] 31/3/2021 10:42

Had a cheeky little top up at 250p too :o)

[edmundshaw] 31/3/2021 10:30

Anyway the update is a 10.7% profit upgrade. In 4 weeks. Stonking trading then in the last month...

[zipstuck] 31/3/2021 09:21

If EPS in 2nd half equates to c 18p then an annualised EPS would be 36p

[zipstuck] 31/3/2021 09:21

If EPS in 2nd half equates to c 18p then an annualised EPS would be 36p

[spooky] 31/3/2021 08:23

Cash generation is very impressive.

[this_is_me] 31/3/2021 08:18

We are happy here and at MMH!

[edmundshaw] 31/3/2021 08:05

No mention of the dividend (this is just a brief "trading ahead" note), but with debt wiped out and underlying EPS strong (similar to last year) and 6% down on 2019 at I'd guess around 28p+ it's hard to see why that wouldn't be restored at previous levels.

PE still in single digits here... and strong trading momentum...

Another update in 15 days time(!) and results on June 10th, so lots of newsflow coming up!

[this_is_me] 31/3/2021 07:34

Great news this morning. Things are getting better very quickly.

[rmillaree] 19/3/2021 17:30

Almost feels like NXR is a normal compoany now with mention of P/E of 10 being cheap (their words) ! - heady days.

Mind you look at what happened last time we got to this same position last January - so lets not get to carried away with the recent resurgance :)

[jeff h] 19/3/2021 12:34

Norcros potential not in share price, says SVM’s Veitch

SVM Asset Management’s Neil Veitch says bathroom and kitchen products supplier Norcros (NXR) has strong growth prospects which are not reflected in the share price.

The Citywire A-rated manager of the £164m SVM UK Opportunities fund said Norcros’s revenue dropped over 40% during lockdown but ‘the strength of the recovery since then has been impressive’ and it has gained market share at the expense of competitors.

‘We expect these market share gains to prove sticky,’ said Veitch, who added that minimal net debt means the company can also grow through M&A.

‘Trading on an estimated March 2022 price/earnings [ratio] of less than 10x, we believe that Norcros’s impressive operating performance and growth prospects are not reflected in its current share price.’

[pj84] 05/3/2021 16:03

The Edison note not only shows the forecast increase in profits heading back towards the previous highs but it is also nice to see that those profits are showing a trend of reducing debt leading to net cash of £5.9m for YE 23.

[mrx001] 04/3/2021 08:10

Some bad timing with me selling out on these, haha held for all that time and then missed the trading update. :0(

[deanowls] 03/3/2021 15:17

If you look at the last company presentation the number of people within the plan naturally decreases but the fund level has been staying relatively high. As it is closed I think it will not be as bad as projected.

[spooky] 03/3/2021 12:04

Much too cheap and i would be surprised if private equity companies haven't taken a look at it.

[thorpematt] 03/3/2021 11:36

I have been in and out here quite a bit in recent times.

NXR has always had strong brands and great ability to spin cash. The PD weighs on the share price but I think that it's now wellunder control considering the underlying profits now being produced.

Where the BoD has done well is that it has expanded the company's top and bottom lines - partially through acqusitions and partly from organic, to a point where the PD is now proportionatly MUCH smaller than it once was.

We're now in the territory of have no debt but underlying profits of close to £30m
PDs are hard to pin down but even if we add £50m onto the M.CAP here we have a very cheap metric.

FWIW my fair valuation here is £4.56 (includes a £50m PD deduction).

[tole] 03/3/2021 11:07

https://www.proactiveinvestors.co.uk/companies/news/942828/hiscox-slumps-into-full-year-loss-after-475m-of-covid-19-claims-942828.html9.38am: Kitchen products firm sees strong recoveryNorcros PLC (LON.NXR), has built up a strong gain after a recovery in demand for its kitchen and bathroom products. Its shares have jumped 18p or 7.66% to 253p after it said full year profits were likely to beat expectations.A strong recovery in the second quarter of its financial year has continued, with revenues for the four months to 7 February 2021 rising by 117% compared to the same period last year. New houses being built in the UK boosted demand, as did increased activity levels in repair and maintenance in the UK and South Africa.It said: "The Board remains confident that the Group's leading market positions, established brands, broad distribution channels and experienced management team will deliver further growth, notwithstanding that economic conditions are likely to remain uncertain as our main markets continue to adjust to the impact of the pandemic. Consequently, it is now expected that reported underlying profit for the year to 31 March 2021 will be no less than £28m on a post-IFRS 16 basis and ahead of current market expectations of circa £25m".Peter Ashworth at Shore Capital said: "This update is highly positive. The Group's trading performance in the second half has improved markedly, with revenue ahead of the comparable period by some margin...The indication that underlying profit is likely to be no less than £3m ahead of consensus demonstrates the overall strength of the Group's trading performance, in challenging market conditions, given the pandemic. The shares have performed strongly in the last three months to date, rising by 20%. Further outperformance is likely, given this positive trading update."

[edmundshaw] 03/3/2021 08:37

96% of revenues from last year LFL. Some hit in Saffer turnover due to forex.

My view is that margins should be good going forwards as there is clearly great demand for the products, so earnings will certainly support a solid final dividend. Especially as they did not pay last year's final or an interim.