Norcros Share Discussion Threads

[spangle93] 08/7/2021 07:57

CMO Group launches on AIM this morning

[sooty snipes] 06/7/2021 14:10

New 13 year high! Good luck all Sooty

[tole] 24/6/2021 19:36

https://www.fool.co.uk/investing/2021/06/24/best-shares-to-buy-now-the-top-growth-share-id-buy-with-2k/Norcros (LSE:NXR) just jumped right to the top of my picks for the best shares to buy now. The £245m market cap business supplies high-end bathroom and kitchen branded products. Most wouldn't look out of place in a posh Kirsty and Phil makeover, like Abode sinks and taps, and Johnson ceramic tiles. UK homeowners splashed out £39bn in the last 12 months on property improvements, according to recent surveys. It's understandable, with more people working from home and seeing upgrades they'd like to make. And I really like the figures I see in the Norcros back-end. Net profit is expected to jump 72% from £15m to £25.8m in 2021. And yet the shares are trading on a forward P/E of less than 10. So there's value plus growth potential here. Bosses have continually improved the company's profitability over the past few years. Return on capital nearly doubled from 6.8% in 2020 to 12% in 2021. This shows me it's a well-managed business. Some of the country's richest investors seem to agree these are the best shares to buy now. Premier Asset Management, the company's largest institutional shareholder, upped its stake by 773,000 shares on 16 June. It now holds more than 11% of the business.OutlookThere are a few dampeners to consider. It's not all sunshine and roses, and as an investor, I need to keep a calm head and not get overexcited. Group revenue for the year to 31 March 2021 dipped around 5%, to £342m. And Norcros's South African arm pulled in a slightly lower percentage of the group's revenue this year than than the year before. "Group revenue outside the UK has decreased in the year to 41.6%, reflecting the impact of Sterling strengthening relative to the Rand," Norcros said. South African currency markets have experienced significant volatility over the past 12 months. And as local business reporters note, that made it bad news for anyone moving funds out of the country. But looking further ahead, I can see Norcros expects its revenues to keep growing, along with those tasty net profits. And earnings per share (EPS) are forecast to jump from 22.4p to 31.5p next year. That 30% EPS hike comes at good value. Price-to-earnings growth stands at less than 0.5. Anything under 1 is generally considered excellent value.

[deanowls] 17/6/2021 09:52

It is Dave.

On a lower multiple though. I wonder what those assets are and whether they are tangible? NXR also has overseas diversification and varied revenue and work streams.

But that’s the game and it’s great they are listing as it has a comparative read across and hopefully helps the valuation here

[davebowler] 17/6/2021 09:00

According to Companies House Victorian Plumbing Group PLC (the new entity readied for the flotation) has £320m assets as at May 21 (can't follow why!) and its predecessor Victorian Plumbing Ltd made £26m profit as at Sept '20 on turnover of £210m.

Surely Norcros must be worth more than the proposed Victorian Plumbing business with its higher profits!!.

[spooky] 10/6/2021 09:44

With this stock everyone is busily hunting around for the slightest negative to explain the low rating. With others they ignore big red flags and the shares go to the moon.............temporarily. Management has done a great job here over a number of years, if the market doesn't rerate the stock it will get taken over IMO.

[edmundshaw] 10/6/2021 09:24

All the metrics look good. Of course there are uncertainties about pent up demand and its tail effects, stock levels and future virus effects, but we had those uncertainties a year ago and there seems no reason to be especially pessimistic then or now.

[thorpematt] 10/6/2021 08:27

Previous gudance was:
"... 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."

That's come in at
£30.6m pre tax, £33.8post tax.


Pension scheme
has reduced
to GBP18.3m at 31 March 2021
from GBP48.9m at 31 March 2020,


Divi
re-instated, cover by 3.8 times

Balance sheet
Gone from debt £36.5
to cash £10m

Small deferred VAT to go back


Forward earning forecasts, not trailing EPS is what we must look at here. I will await any update on that butthis is heavily mis-priced on forward outlook IMO.

There is no longer a debt problem a PD problem so a sensible PER is warranted.

[zipstuck] 10/6/2021 07:51

Sustained investment in new product development will continue to drive organic growth alongside our market leading brands, customer service and best in class quality. Our product vitality rate, the percentage of revenue in the period derived from new products launched in the last three years, was, as expected, lower at 28% (2020: 33%) mainly due to the COVID-19 related disruption to supply chains and the temporary closure of retail showrooms during the year. Our vitality rates are market leading and are expected to increase this year as our new product launches are accelerated back closer to pre-COVID-19 levels.

[pugugly] 10/6/2021 07:48

Shame that Shaun is leaving but James seems to have an excelent background.

[zipstuck] 10/6/2021 07:48

Underlying operating profit increased by 4.6% to GBP33.8m (2020: GBP32.3m). Our UK businesses delivered underlying operating profit of GBP26.9m (2020: GBP24.4m), and our South African businesses generated an underlying operating profit of GBP6.9m (2020: GBP7.9m). Group underlying operating profit margin was 10.4% (2020: 9.4%).

Underlying operating profit includes GBP3.3m of UK Government assistance in respect of the Coronavirus Job Retention Scheme and GBP0.2m and GBP0.8m respectively from the Irish and South African governments in relation to similar schemes. The support received is net of a GBP0.7m repayment, made in June 2021 of Coronavirus Job Retention Scheme support received from the UK government in relation to furloughed employees that were made redundant as part of the COVID-19 related restructurings.

[spooky] 10/6/2021 07:40

Stunning figures on every level, post covid revenue and profit recovery, cash generation, debt reduction, fall in pension deficit, dividend increase and future guidance indicating 23% revenue uplift on 2019 pre covid numbers. Management have done a great job.

[spooky] 12/5/2021 09:28

Strange move this morning.

[spangle93] 26/4/2021 17:01

Another Edison analyst report upgrade was released last week

[rmillaree] 16/4/2021 22:39

here are details of the pension scheme liabilities each year end for the last 4 years the trend here does look fairly clear. The numbers look fairly consistent with the 4% annual decline in members mentioned by Jeff H above.

2017 467 mill
2018 447 mill
2019 428 mill
2020 410 mill

[deanowls] 16/4/2021 14:22

Buy for the extra 10p value

[jeff h] 16/4/2021 14:08

Norcros: ‘attractive’ name in a recovering market

Bathroom and kitchen products supplier Norcros (NXR) is an ‘attractive’ way to play the repair, maintenance and improvement (RMI) market, says Peel Hunt.

Analyst Sam Cullen reiterated his ‘buy’ recommendation and target price of 310p on the stock, which closed up 4.2%, or 12p, at 300p on Thursday.

Cullen said the group continues to benefit from a recovery in the RMI market in both the UK and South Africa, prompting it to raise full year guidance just two weeks after its last upgrade.

‘Operating profit is now expected to be at least £33m, a 6% upgrade on prior guidance, with net cash of £10m,’ he said.

‘The shares remain cheap at circa 9x current year 2022 earnings and we believe the company remains an attractive small-cap way to play the recovering RMI market, while the potential for further M&A should not be discounted.’

[jeff h] 16/4/2021 14:07

Interesting discussion regarding the DBS guys. I have noticed how the number of members of the scheme seems to decline by about 4% a year, presumably as it is a "super mature scheme" ie the age profile of the membership is on the very mature side.

I was thinking that the reduction in total members would be followed by a reduction in total liabilities although somebody pointed out to me in certain pension schemes the spouse of the member sometimes carries on receiving the pension benefits...not sure if that is the case with the Norcros scheme?

In any case the amount payable in annual benefits paid from the scheme has near peaked meaning the task of generating income from the assets to pay the benefits has also near peaked and I guess soon we will be descending down the other side of the mountain needing to pay out less cash in annual pensions with an overall pension deficit being replaced with an overall pension fund surplus.

[edmundshaw] 15/4/2021 22:16

Welcome Volvo. Good to see you here. I have been holding this for 5 years and it has not disappointed. And it does lookas if it is about to make another forward step.

The performance in the last year has been commendable; I particularly like the way they have been taking market share, both in the UK and South Africa... that bodes well for the future.

[daz] 15/4/2021 21:55

Good points Rmillaree
Reading the interim's, the asset value of the pension scheme had been revalued but the increase to the end of September had been cancelled out by an increase in liabilities.

So the pension deficit to be reported in the finals will only include the increase in asset values since October but nonetheless as you say this should also help the deficit.

[rmillaree] 15/4/2021 18:02

Daz
There is additional reason to be optimstic ref the pension defecit - if you look back for the last few years the size of the scheme liabilities has come down every year - this suggests (i am no expert) that the scheme is reasonably mature and in natural decline mode now - thats quite a rare thing really as most companies i look at still have increasing scheme liabilities. The less the level of liabilities owed out the less chnace there is that there will be large material future increase.

There is a fourth reason too - at 31/3/2020 equities had taken a hammering so the stong equities performance since 31/3/2020 should hopefully give tham another boost all other things being equal.

If ever there is a good time for Chairman to go its probably at the same time as a bumper set of good news. Hopefully if there is more to the story its just that there was some difference of opinions rather than us being worried about the reliability of the info we are being provided with ? in that regard its probably the CFO that is more important perhaps?

[effortless cool] 15/4/2021 11:49

The resignation of the Chairman is interesting. He has only been there a year and, apart from his own little company, has no other active UK directorships. It's hard to square this with his claim that: "my other business commitments do not allow me sufficient time to devote to the Company". Also, he has resigned with immediate effect, whereas the normal course of action is to remain in place until a successor is found. NXR are hardly effusive in their thanks to him, either.

In my opinion, there is more to this story than has been made public.

[daz] 15/4/2021 10:01

I think there is cause to be a little optimistic on the pension deficit for two reasons
a) The unfortunate result of the pandemic is that a lot of older people have died reducing pension liabilities
b) Bond yields have risen, which reduces the implied pension costs..

[this_is_me] 15/4/2021 09:11

He has only been a director for less than a year; he has 50,000 shares. (More than I have!)

David McKeith has less than 18,000.

Nick Kelsall and Shaun Smith have been buyers over a period of time and Nick has around 1,700,000 shares.

[thorpematt] 15/4/2021 09:09

I think this is a great statement. The NXR full year is bang in the period most effected by COVID.

The hit it took in the first period was heavy. But the second half was saw a fantastic recovery which led to a beat on the previous year. That's pretty darn impressive.