Norcros Share Discussion Threads

[davebowler] 09/1/2023 09:14

Zeus
Top Picks for 2023
AssetCo - ASTO LN
Bango - BGO LN
DWF Group - DWF LN
Equals Group - EQLS LN
Gooch & Housego - GHH LN
Inchcape - INCH LN

NORCROS- NXR LN

[kipper7] 16/11/2022 18:14

Investors appear to have realized that this stock is too cheap. Big volume over the last few sessions have resulted in a move to 200p. I expect 350 p minimum over time and remain fully long and picking up nice dividend

[kipper7] 13/11/2022 23:15

You clearly have no idea what a value trap is. Norcros is not a good example as it generates substantial cash,profits and can easily afford to pay dividends .hence its recent increase

[edmundshaw] 13/11/2022 22:47

Another point is that £18m of fresh equity was raised for Grant Westfield and some of those new shares might get sold back into the market on the shorter term (this happens frequently for one reason or another after equity raises).

[edmundshaw] 13/11/2022 22:38

That is a good interview. Nick Kelsall answered a lot of questions that people might want to ask (though relatively little is new to longer term shareholders).

One thing not mentioned is that some funds have been suffering from redemptions (as I mentioned above: I have heard them talking about exactly this issue - they are not willing sellers) so there are quite a few undervalued smaller companies on the stock market at the moment - good results are something funds can cash out into as other buyers come along. Whether NXR is getting some of this I cannot say, but it is certainly a neap tide that is lowering all the boats anyway. And a cursory glance does tend to throw up the debt and the pension: even though these are not real issues in Norcros's case, it is easier just to pick out the bargains that do not have those issues. I suspect when the debt from the recent acquisition disappears the share price might bounce back up quite sharply if it hasn't already...

[jeff h] 12/11/2022 14:00

Interesting that in the Q&A section of the Interims Webcast mention the possibility of a buyout of the Pension Scheme in the "medium term" (2-5 years) was suggested,



This would mean the end of the deficit contributions currently £3.8m pa plus the admin costs of close to £2m pa.

Additionally as Smiths News (SNWS) holders will be aware any remaining surplus could be returned to the company.

Paul Scott recently interviewed CEO Nick Kelsall and kindly put it up on his website, well done Paul.

[edmundshaw] 10/11/2022 22:21

People have been down on Norcros several times over the last few years, and every time they have defied market expectations of a downturn and gone from strength to strength. The yield is currently covered 3.4x and they have increased the dividend every year since I have owned these for the last 7 years apart from over the period of COVID. Earnins are UP from 2019, the nearest comparable year, and only a bit down on last year due to i) no exceptional profits from the post-COVID rebound in sales and ii) the greater number of shares in issue after the big (earnings-enhancing) acquisition 4 months before the period end. Debt is WELL within covenants and could theoretically be paid off from less than about one and a half years' projected earnings. Outlook is positive and the 2nd half has already started well.

Norcros has been growing turnover and profits and market share for years, and on that basis alone Norcros is certainly not a value trap. It's at once a well-managed growth story and at a rock bottom price.

I added yesterday.

[debsdowner] 10/11/2022 10:55

Although the compamy seem confident on prospects the company has got to be hit by the global downturn so the low pe which is being mentioned is misleading. If profits fall further which they have done then the pe rises if the share price remains stable. Unfortunately as cost of living rises people will spend less on their houses and there will be less people moving in fact which the Halifax has warned. Although the divi means a high yiled that yield is at risk, if there was a sudden downturn the first thing that will be cut is the divi to pay down bank loans which have increased.

On that basis above Norcross unfortunately is a value trap !

[edmundshaw] 09/11/2022 10:25

I am wondering if fund redemptions are hitting this, as selling into good news is often the easy option. Fund managers are sometimes significant forced sellers in the market these days...

[scooper72] 09/11/2022 10:17

Haven't held for a year or so. But just bought a few hundred shares as a tentative position.

[edmundshaw] 09/11/2022 10:03

PER around 5 for a company on a 6% yield and growing profits pretty consistently for many years.

It's bonkers. Pretty soon cash is going to be burning a hole in the Norcros pocket...

[kipper7] 09/11/2022 07:31

Solid interims. Dividend increasedP/E ratio insane. Shares very cheap

[kipper7] 09/11/2022 07:30

Where's the fall in profits????

[spangle93] 25/10/2022 13:07

Norcros (LON:NXR) – Looking inexpensive ahead of interims

The interim results for this bathroom and kitchen products supplier are due to be announced on Wednesday 9 November.

They are expected to show sales for the 26 weeks to 2 October were some £220m (£200.9m) reflecting a robust first-half trading performance, with gently weaker UK sales being boosted by stronger figures from its South African operation.

Despite macroeconomic uncertainties the group’s management has confidence in the current year – which hopefully will be reflected in the accompanying Outlook statement with the interims.

Analyst Peter Ashworth at Shore Capital rates the undervalued company as a Buy

‘The shares currently stand on a full-year 2023 price/earnings ratio of 4.5x based upon our forecasts of earnings per share of 39.1p and a full-year dividend of 10.5p, offering a yield of 5.8%. This rating significantly undervalues the group.”

With a one-year High of 349p and a recent Low of 165p, the shares closed appealingly at just 176p on Friday night.

[jeff h] 25/10/2022 10:30

Norcros

Investors are unsure which number is larger — the total of people improving their homes rather than moving, or those postponing such projects in favour of heating and eating as the rise in prices outruns wage increases. Hence a renewed focus on the property sector and, in particular, the world of DIY.

Norcros is best known for Triton and Merlyn showers, Croydex bathroom accessories, Abode taps and Johnson tiles. It estimates that sales for its half-year to October 2 were £220 million compared with £200.9 million in the same period last year and £181.2 million for the first half of 2019. The company cautiously predicts “no less than £21 million” in underlying operating profit, compared with £22 million a year ago.

Within the sales total, those in Britain slowed by 3 per cent while they grew by 10 per cent in South Africa, the company’s other main territory. The group used to be in several other countries, including Nigeria, India and Australia, but during an eight-year absence from the stock market most of the other overseas interests were sold. Last year South Africa accounted for a third of total turnover and a quarter of operating profit.

The UK has a far more fragmented home improvement market than South Africa and Norcros is constantly looking at taking advantage of this with takeovers. The group also wants to develop the international pipeline, which may add risk as well as reward, of course.

This column last examined Norcros four years ago, which seems a world away. The shares were 214p then and recovered strongly from the Covid outbreak to breach the 300p watershed at the start of this year. But the Ukraine war and the cost of living crisis have dragged them down with the rest of the stock market.

If there is only a modest increase in earnings per share to 40p for this year, the shares are trading on a 4.4 price-earnings ratio. An unchanged dividend would give a 5.6 per cent yield. We will know more when the company reports its full interim results on November 9.

ADVICE Buy

WHY Undervalued shares that more than take account of foreseeable downsides

[edmundshaw] 17/10/2022 10:26

Yield looking forward is probably closer to 6% even at a buying price of 185p...

[tole] 17/10/2022 07:30

https://citywire.com/funds-insider/news/expert-view-bp-marks-and-spencer-rank-group-norcros-and-moonpig/Shore Capital predicts rally for Norcros sharesShore Capital is anticipating a rally for bathroom and kitchen products group Norcros (NXR) after a strong trading update from the 'undervalued' company.Analyst Peter Ashworth retained his 'buy' recommendation on the stock, which was trading down 0.8% at 177p on Friday afternoon.He said the first-half performance reflected 'the strength of its focused operating model, market-leading brands, broad distribution channels, well-developed supply chain infrastructure and stock availability'.'The shares have fallen from a recent high of 352p in January to 178p currently, reflecting no doubt the general market weakness,' he said.'The shares currently stand on a full-year 2023 price/earnings ratio of 4.5x based upon our forecasts of earnings per share of 39.1p and a full-year dividend of 10.5p, offering a yield of 5.8%. This rating significantly undervalues the group.'Ashworth added that he would 'anticipate a rally in the share price given [yesterday's trading update] ahead of the interim results on 9 November'.

[thorpematt] 13/10/2022 19:49

kipper7

Well yes of course. But the thing with the PI world "sell it to the city" is that you have PIs (or in this case undergraduates) who are presenting their favourite ideas and then 3 very experienced fund managers putting thier own side on that stock. And I think that there are many interesting things that can come from that. And I applaud all thoseinvolved for it. FWIW I thought that young Rachel did a very nice job and so by the look of it did the 3 FMs.

Where she slightly failed is in answering their questions on the PD. FWIW I would have answered by saying that I "account" for it in 2 ways: First by continuing to extrapolate the reduction in earnings in line with the recent payments (which have led to a surplus), so therefore giving a margin of safety to the calcs; and second by adding any actuarial defecit to the EV for the purpose of fair valuation calcs.

I would also have pointed out that the management has done very well indeed to not only create a surplus but also to diminsh the proportion of payments to earnings via the method of expanding the company through acquisition (but in turn seeing the pension stay the same size).

------------------------------------------------------------

Onthe TS and I have it as on track. Which ain't so bad given the backdrop. And although I have to confess (like most things I held at the turn of the year) I have cropped this holding significantly early in the year. I really like the brands here and the progress the company has made latterly and I am starting to the price at these levels too.

[kalai1] 13/10/2022 14:19

Norcros plc issued a positive H1 trading update this morning. The Group has delivered a robust H1 performance reflecting the strength of its customer proposition and the breadth of distribution channels. Group revenue for the 26 week period is expected to be at record levels at approximately £220m, up about 10%. Following its acquisition on 31 May 2022, Grant Westfield has been integrated into the Group and continues to perform strongly in line with the Board's expectations. The outlook provided is reasonable, management expect to report an underlying operating profit in the first half of the year of no less than £21m. The balance sheet remains strong with net debt of approximately £60m. Following a 45% share price correction valuation is now also very attractive, forward PE ratio at 4.5x and PS ratio at 0.4x are both top quartile for the sector. Lack of share price momentum and the weakening macro outlook are the main clouds for the investment case and suggest that NXR is still a share to monitor for now...

...from WealthOracle

http//wealthoracle.co.uk/detailed-result-full/NXR/581

[deanowls] 13/10/2022 09:55

Agree Edmund, the company is much stronger and will have more levers to pull than ten years ago, yet is roughly the same price despite a haughty quality of earnings, brands, product and diversification. Pays a good dividend, one to keep tucking away for me.

[edmundshaw] 13/10/2022 08:33

Not only has trading been good for the first half, it is easy to forget Norcros has made a serious acquisition which should boost turnover quite significantly (note the numbers in today's trading statement are LFLs).
They made the major Grant Westfield acquisition for £80m (plus earnouts which should be financed from profits from the acquisition). (The acquisition includes assets of £53m.)

A placing raised £18.6m and at year end Norcros had net cash of £8.6m.

They recently said "Following the acquisition of Grant Westfield in May 2022, proforma leverage is approximately 1.0x EBITDA".

So really Norcros is in a good place for the medium term, and there is happily no debt problem that will surely bite more leveraged companies as interest rates rise. For me anything under £2 is really very cheap.

[kipper7] 10/10/2022 18:54

If my view on norcross changes listening to an undergraduate playing a game I shouldn't be a professional investor !

[tomps2] 10/10/2022 11:30

Sell it to The City – October 2022

University undergraduates pitch their best UK small-cap stock pick to leading Fund Managers Andy Brough, Schroders, Judith MacKenzie, Downing, and Stephen English, Stellar Asset Management.

Rachel Lyu, Cutty Sark Investment Society, Clare College, Cambridge University pitches Norcros (NXR)

Watch the video here:

[kipper7] 03/10/2022 14:20

and as i said market has moved so fast simply PE ratios of a depression not a recession!!

[debsdowner] 03/10/2022 12:30

kipper

It is building and retail related however that is why I posted the pe ratio on Persimmon. What I was trying to say was both property and retail on surprising low pe ratios because of poor oulook.