Plastics Capital Share Discussion Threads

[simon templar qc] 29/9/2015 19:49

Not much stock available in PLA looks and what is available being mopped up, we could see the share price pick up again soon.

[cerrito] 28/9/2015 08:39

I guess it all depends on what you understand by market expectations-or to be more precise what PLA understands to be market expectations; my understanding-which may be wrong-is that it this financial year it is for revenues of £50.2m and PBT of £5m and eps of 12.1p which would be a big improvement and if they are broadly in line to me that is OK-but as Imranawan says the accounting policies are confusing.
Good that Industrial Films- which last year with only 5 months of Flexipol-produced almost half of revenue and which is in the Packaging Section where all the profit is made got off to such a good start
I will try and get from the company their reading of market expectations.
I am currently a shareholder and with these prices will be neither buying or selling

[simon templar qc] 28/9/2015 08:06

good trading update, so far as I am concerned I am extremely happy with the update.

Acquisition going well and some of the other operations on track to improve further.

[imranawan] 28/9/2015 07:19

Rivaldo - take a look at the most recent examples - and look at the level of adjustments used to arrive at adjusted profit. For example they've added back admin costs to arrive at the adj profit figure (and adj EPS). In 2014-15 this was £1.1m and in 2013-14 this was £1.5m. Considering PAT for 2014-15 this was a material amount and doesn't look to be excpetional - as it seems to have occured for two consecutive years! I would argue this is an underlying cost of the business, and the level of adjustments made by them each year in arriving at adj PAT and EPS made me uncomfortable. Like you say they always look cheap but never quite deliver also. This coupled with lack of earnings visibility led to me selling out recently, as a gap in the order book would result in a profits warning.

[rivaldo] 28/9/2015 07:08

Agreed Shanklin - "broadly in line" is always code for "slightly below market expectations".

Not a holder, but have watched PLA for ages now and seen them at various investor shows. PLA always "seems" cheap, but never quite delivers in my experience. This may change of course.

Imranawan, I'd be interested to know what these "aggressive accounting practices" are if you have a minute to explain?

[imranawan] 28/9/2015 06:56

Shanklin - thats my reading of the TU as well. I don't have a position and moved on last month.

I think in comparison to last year's TU its better, but lack of earnings visibility was one of the reasons I sold up and moved on, as well as aggressive accounting practices.

[shanklin] 28/9/2015 06:30

But, don't they imply they will narrowly miss expectations and be H2 weighted pending a contract win which may or may not happen?

No position currently.

[tradermel] 28/9/2015 06:15

Good RNS today with some pretty upbeat commentary

[simon templar qc] 08/9/2015 12:19

Strengthening management in one of its subsidiaries, they are doing all the right things. Not that they had to release any news but the fact they did suggest to me they think the share price is undervalued.

[simon templar qc] 23/7/2015 18:24

Buyers are still coming in the company paying circa 5% dividend I expect the share price to continue its momentum upwards, the company looks to me like its on its next growth phase.

[simon templar qc] 15/7/2015 12:06

Some decent sized trades lately around 20,000 shares. It wouldn't surprise me if the institutions buying the odd 20,000 as limits are tight.

[simon templar qc] 03/7/2015 18:27

if there was any doubt about the future I don't think they would have increased the dividend as they have. I am quite optimistic after looking at the presentation.

[huttonr] 03/7/2015 17:30

ST
I've looked through the presentation now - as you say, 300K cost savings!

Very good level of optimism in the presentation - it will be interesting to see how much comes true.

[simon templar qc] 03/7/2015 14:06

Huttonr,

Have a look at the presentation (not the video) which I missed initially, the company has already i.e. the £300k cost savings! Which outstrips the cost of sale and leaseback.

I reckon the contribution from Flexipol will far exceed £2 million EBITDA in 12 months time and on its way to circa £3 million with further synergies, cross selling and organic growth.

If they can do more acquisitions like that with its other operations the company could well be on its next growth trajectory which has eluded the company up until now for about 5 years.

[huttonr] 02/7/2015 15:58

ST - remember the sale and leaseback - extra costs of £130K per year- reduces your estimate of extra profits slightly - but doesn't really affect your comment.

I agree - it looks a good deal.

[simon templar qc] 02/7/2015 13:26

Guys I don't know whether its of any interest but on the presentation on the website they have the contribution Flexipol made in the short time it was under PLA control....

"Flexipol contributed sales of £6.5m and EBITDA of £0.7m during the time we held it."

As I am a new investor could someone tell me how long it was under PLA control, I am stuck for time to do the research?

edit:

Unless someone corrects me Flexipol was under PLA control about 4 months, that makes a proforma contribution to group profits of in excess of £2 million with more expected through cost savings, synergies and cross selling.

Well I for one think that was a fantastic acquisition, both operations in the packaging and film business have a good customer base, some of the manufacturing techniques difficult to replicate.

[simon templar qc] 30/6/2015 21:52

eg.

My case against the Elektron directors is still on-going you need to get your facts right. Did you read the announcement correctly? The bit that stated a "appeal" !

You will find Elektron will be making another announcement in due course as I am going to the court of appeal!

Investors can please themselves how they invest and what to do, so will Downing VCT !

They took a stake here prior to my stake and think the drop is overdone.

You checked that out have you?

As for the legal costs those are being appealed against as well if the Judgement is overturned so will the legal costs.

[eg2mrb] 30/6/2015 20:33

All posters and readers be aware of Simon Templar QC and his ramping antics. His investment history is pretty horrific having lost 90% of the value of his holding in EKT, unsuccessfully suing the directors and then having been left to foot over £300k of directors legal costs.

He also posts with multiple aliases.

Stay clear!

[simon templar qc] 30/6/2015 18:23

Downing VCT agree with me...

"Plastics Capital plc, the manufacturer and distributor of specialist plastic extrusions, saw its value within the portfolio decrease by £360,000 reflecting caution regarding input prices. We believe that this concern has been overdone and continue to maintain the holding."

TTP://inpublic.globenewswire.com/2015/06/26/Downing+ONE+VCT+plc+Final+Results+HUG1932161.html

Outlook :

"The continued improvement in the economic environment is welcome for our unquoted portfolio after a challenging few years. More opportunities are arising to allow for both exits and new investments whilst asset values continue to rise. There are some signs that banks and other funding sources are starting to become more active, though not at levels that are expected to impact deal flow significantly. "

"For the quoted portfolio, we remain positive on the key drivers within the quoted portfolio on the basis of the fundamentals and the valuations on which they trade. Instead of predicting the outlook for the wider AIM index, we will focus on the existing portfolio and here we hold confidence and optimism for the longer term. "

Agreed!

In conclusion it wouldn't surprise me if Downing don't add more if they get the opportunity, they are unlikely to sell soon and will only do so once they have made a decent profit.

[libertine] 30/6/2015 17:27

Company said that it was a fall in raw material prices had helped its margins, but such prices were now increasing again.

Also its organic growth had fallen short of its targets.



``Commodity raw material prices edged downwards during H1 and then declined by 20-25% during H2. These polymer prices are somewhat linked to oil prices which had by then declined sharply. This had the effect of temporarily improving margins in our industrial films division during Q4 and contributed 3-4% of EBITDA for the year. However, raw material prices have increased sharply since the financial year end as polymer manufacturers have reduced capacity largely because of unplanned plant shutdowns. We anticipate that greater stability will return to commodity raw material prices during Q2 2016. Engineering plastic prices have been largely unaffected, although we are aware of some shortages in certain types of material and will need to remain vigilant.``

[simon templar qc] 30/6/2015 14:43

Interesting comments!

The company has a mixed batch of subsidiaries, however the latest acquisition fits well with the packaging side of the group. Although the company has seen no organic growth in the period the company has given a reasonable explanation in my view and also explained how they may be able to attain an organic growth of 5% going forward.

Net debt doesn't worry me too much the company does generate a reasonable amount of free cash for a small company and the growth in the dividend appears t show confidence in the future.

I maintain my view 50% upside short term and 100% medium term, the gloom over Greece isn't helping matters at the moment.

The company have admitted they were talking to the vendors for three years in respect of the recent acquisition that seems to be to be a prudent approach. They also say they have a list of potential acquisitions, if they can do a similar deal to the one they have just acquired to run alongside and or integrate with their other operations they won't be going far wrong.

Downing increasing their stake lately should be a good sign that the company is about to become a growth stock with a good yield to give the share impetus.

I've followed the company many years, but non invested and happen to think I have caught the right price to take a stake.

[simon templar qc] 30/6/2015 12:53

Fiona Cincotta, a senior market analyst at www.cityindex.co.uk, said: "Plastics Capital reported a pre-tax loss of £148,000 in its recently ended financial year having made a pre-tax profit of £1m in the previous year.

“However all is not as bad as it seems on first glance. The niche plastics products company reported the loss as it booked the costs related to its purchase of packaging manufacturer Flexipol. This purchase is actually significantly contributing to revenue growth, which increased to £39.6m from £32.5m.

“The results are in fact in line with management expectations; however turnover is expected to improve significantly throughout the year as the firm takes more and more advantage from the synergies created by the purchase of Flexipol. Going forward new business opportunities look strong however it will be Plastics Capital´s ability to convert these into actual sales which will paramount for its success.”

[simon templar qc] 30/6/2015 06:33

Dividend up 33% and company aims to achieve organic growth of circa 5% suits me. Turnover slightly ahead of forecasts. Industrial division where operational gearing is higher sees better outlook.

Other positives company have a list of companies they see as acquisition opportunities, all auger well for future growth of the business.

Looks good enough for me particularly in a world where growth opportunities are uncertain.

Forecast are for dividend growth of a similar amount.

Shares should bounce back imo, the company is showing a good yield. I would be disappointed if the shares didn't bounce back 50% in the short term and up 100% in the medium term.