Portmeirion Share Discussion Threads

[illiswilgig] 15/7/2021 13:32

Whittler - thank you, I'd not seen that. Useful corroboration as far as it goes.

Looks like the price has been dragged down by Killik reducing their stake. I'm happy to have a few of those myself and am still buying as and when I can free up some funds,

cheers

[rmillaree] 15/7/2021 13:17

I didnt even realise there was a new? Singer update - so thanks for flagging that up.
A google search has failed to turn up owt (may be my failings)
If anyone can advise what they said that would be appreciated

[whittler100] 15/7/2021 12:55

I am sure posters on here will have picked the header note from Singer following the PMP update. Not massively informative but worth putting in the file although I rather feel many PIs do their own quality estimates anyway:
See Research Tree site for view of free header.

[rmillaree] 15/7/2021 07:26

Is it not a slight cop out to not provide projected figures ? Surely they could start with big range ref turnover and profits and at least give us something to go on.
I simply don’t accept that company don’t have internal estimates so why not let those be known clearly? Presuming they have a house broker they have discussions with surely they are given a nod and a wink so why say Dudley squat to shareholders?
Doesn’t put me off enough to sell but it is slightly frustrating not being given owt of use despite that info existing.

[illiswilgig] 14/7/2021 16:11

Whittler, thank you - that's a useful bit of insight into the limited range of H2 versus H1 sales.

The broker forecast on Stockopedia appears to be the same. Savagely cut from 67p to 37p in September last year and not touched since. Target shareprice remains at 920p though. Suggests to me that either the two analysts apparently covering it have stopped and/or they don't have any more information to go on than we do. I like that. It gives us an edge?

Thank you, Whittler, Asagi and all for your insights,

cheers

[whittler100] 14/7/2021 15:56

Agreed Asagi, historically PMP don’t tend to comment on the full year likely achievement against expectations until the January Trading Update. At least when the H1s are released, scheduled for 14th September we will have a touch more information and view of July, August trading. The only ref I have to expectations for 2021 is the broker forecast on SharePad which has £90m predicted turnover. I rather feel it will be significantly higher than that but we will have to wait for the January TU.

In terms of predictability of H2/H1 the range for the past 10 years has been reasonably predictable with a low of 2.4 & a high of 2.7 and remained in that range after taking on Wax Lyrical. I did have a long association with PMP pre S Korea; sold on the PW but reentered in 2020. Anyway, I am happy to hold and it’s reassuring that dividend payments will be reassumed.

[asagi] 14/7/2021 14:36

a bit unreasonable for anyone to be expecting a reference to full year expectations at this stage. Portmeirion have always been clear, H2 is hard to predict and SO important.

I very much doubt we will hear anything about the likely full year outturn until January 2022.

Asagi (long PMP)

[whittler100] 14/7/2021 13:21

Some good discussion regarding PMP both here and on Stocko; a few thoughts from me:
I have gone through the TU today from PMP and going back through recent years to 2018, accounting/deducting turnover from acquisitions it would appear that H1 for PMP is the highest or equal highest (we wait for the H1 results) since the incorporation of Wax Lyrical.

For the sake of brevity; my estimates are:
Usual H2/H1 for PMP is around 2.5 so, using the data in the TU and the H1 2019 turnover; it seems that the H1 for Pre-Nombe/100% Canada was £37m with an additional £6m from Nombe + extra 50% (full ownership of Canada). If we assume the usual 2.5 H2/H1 then “old PMP” alone gives a turnover of £92.5m.

Then we need to add in Nombe & the extra 50% Canada which I estimate as £6.0m in H1. Being cautious let's assume that this stays the same in H2 ie full-year = £12m
So, being cautious, I estimate a turnover for 2021, based on what we know at the moment, of say £104m against a brokers forecast turnover of only £90m for 2021, If all goes well that’s a significant beat in terms of turnover. As for PTP, we will have to wait until the H1s are announced.

Overall and including the return to dividend payments, I feel very confident about prospects for PMP.

[illiswilgig] 14/7/2021 09:23

Well that does surprise me! But then I am really bad at predicting a market reaction to anything.

So far the market doesn't think much of the trading update.

As a consolation I've bought a few more, cheaper than yesterday would have been.

cheers

[illiswilgig] 14/7/2021 08:28

H1 trading statement this morning.

'Sales for the first half of the year will be approximately £43.0 million (2020: £32.0 million), representing an increase of 34% compared to the prior period'

Which has blown my forecast right out of the water. Though it is only H1 traditionally the weakest half by far.

But it doesn't stop there....

Against pre Covid-19 performance in H1 2019, our like-for-like sales at a constant currency are up by 6% (excluding the benefit of Nambé acquired in July 2019 and the remaining 50% of the issued share capital of Portmeirion Canada acquired in August 2020).''

Growth on pre-covid levels is pretty impressive for H1. And it looks as if Nambe has also done well. Should improve H1 margins - which are always low.

'We have also continued to see strong sales growth in online channels in our major markets.'

Especially since on-line direct sales are higher margin.

My forecast for 4p eps in H1 now looks too low, but its hard to put anything more than a finger in the air right now - but if I did I'd go for 6p+.

Once we see the outlook statement with the H1 results in September we'll know more as a lot of the export Christmas orders will have shipped by then? But it looks much better than I'd expected.

cheers

[illiswilgig] 28/6/2021 13:14

Eric - thank you for the link to the Richard Beddard article. I do respect his opinion. Though we don't alwys agree on whether its a buy or a sell.

I had also begun to feel that Portmerion had lost its way and that the purchase of Wax Lyrical and then Nambe might have become a distraction instead of an opportunity.

Then I listened to a webinar presentation on 'Investor meet company' - and realised that Mike Raybould, previously FD and now CEO, not only knows the company inside out, understands the market and the opportunity but also knows what needs to be done in order for it to get back on track. For the first time it seemed that someone understood how to fit it all together. It may turn out that the pandemic has strengthened his hand in allowing him to make changes much more quickly than otherwise would have been the case. I reversed my opinion and started buying again. So its useful corroboration that Richard Beddard is coming to the same view.

cheers

[davr0s] 28/6/2021 12:44

Sorry disagree - share price will move up if buying pressure increases for any reason. There does not have to be news for that to happen. And it can equally go down in the same way

[asagi] 28/6/2021 12:31

for the share price to be much higher, stuff needs to changes and plans need to come together.

sort out Korea
strong performance online
make economies in the factory
Wax Lyrical and Nambé to start firing

not saying that none of this will happen. But I think that the market wants to see proof that we are set for success first. Hopefully July's trading statement will help and then again in September with results to end-June.

Asagi (long PMP)

[aublune] 28/6/2021 11:38

this is a lovely group of brand and a cheap company price. Does anyone know why the share price is stuck at 700. It should be much higher

[pireric] 26/6/2021 16:53

Caveat that 2019 was a down year for the business as a whole, and Wax Lyrical was still generating £15m or thereabouts of revenue.

The article makes a good point that until the new management team the Portmeirion story had lost its way. There was no clear focus on margin improvements, eCommerce or the like. Many of the manufacturing improvements they are finally putting through should have been done 5 years ago, frankly.

I wouldn't at all bucket Nambe into the same discussion as Wax Lyrical. They'd only bought Nambe in the middle of 2019 and then walked into covid. As much of their channel is through retailers, surely there is no real surprise that it did not contribute to profit last year (when the whole group's profit was only marginally positive)

Eric

[asagi] 26/6/2021 16:09

and hopefully we will learn more with the planned trading statement in July. I'm hoping for good news on Korea and some warm words about margins thanks to the shift to online sales.

Hopefully takes us to 800p.

The Nambé and Wax Lyrical situation is depressing.

Asagi (long PMP)

[pireric] 25/6/2021 17:43

Good Richard Beddard write up that published mid afternoon today on PMP. Concludes more favourably on it than he expected to.



The forecasts leave PMP on 12.3x 2021 forecast EPS, 10.4x 2022 forecast EPS. If they execute against those numbers then the stock is left looking rather cheap.

Eric

[asagi] 09/6/2021 14:35

I understand that Portmeirion will issue a trading update on H1 in July and that proper H1 results will be released early September.

Asagi (long PMP)

[whittler100] 29/5/2021 11:32

Asagi, I don’t expect the management to be overly bullish with words at the H1 or Q3 updates but I think we should hopefully see the progress ourselves in the revenue numbers in the RNS. It’s then up to Mr Market to respond I guess.

Incidentally, this is PMP thread is a good one & whilst we could be proved to be wrong with our optimistic thoughts, there is some good reasoned analytical thinking on the thread; that in itself is very refreshing compared to some threads on bulletin boards

[pireric] 26/5/2021 18:32

All things equal, with the new capacity at Wax Lyrical, lapping contributions from Canada, Nambe et cetera, I'd be surprised if the full-year revenue out-turn doesn't look closer to £100m than the £90m that is currently the broker forecasts. Unless the global economy takes a turn for the worse, that delta is probably big enough to make positive noises about during the third quarter if they wanted to, and still leave a little in the tank for what Xmas trading looks like

Eric

[asagi] 26/5/2021 18:12

I expect some rather good trading updates starting in Q2 & Q3.

sorry whittler100 but I disagree. Actually, as I write that, I may have changed my mind.

I was going to put that management won't say anything on expected the full year outturn until Christmas is done with and that we would have to wait until early Jan for that knowledge.

However, we will naturally hear more with H1s, which might help move perceptions further but I'd doubt that management would try to move guidance i.e. the house broker forecast. Let's see.

Asagi (long PMP)

[whittler100] 26/5/2021 13:58

Interesting reading pieric & illiswilgig. My estimates are along similar lines & note the AGM update tells us “Our sales for the first four months of the year (to 30 April 2021) have increased by more than 50% on the same period in 2020”.

Taking the base H1 for 2019 “On a like-for-like basis, our sales for this period are slightly ahead of pre-Covid levels achieved in the same period in 2019” adding in the H2/H1 seasonal nature of “pre-acquisition PMP” (full-year turnover usually 2.5 x H1 turnover), then adding back a modest without growth, turnover for Namb & 100% ownership of PMP Canada, I get a rough estimate of turnover of around 15% higher than the current brokers forecast for turnover. Note: this is without the further rollout of the management strategy. I expect some rather good trading updates starting in Q2 & Q3.

[asagi] 25/5/2021 21:02

excellent contributions (if I may say?) from illiswilgig and pieric: thank you.

Asagi (long PMP)

[pireric] 25/5/2021 20:06

That sounds about right to me, illiswilgig. Base revenue of £34.9m, slightly ahead is maybe +2% = £35.6m

Plus maybe £4-5m in Nambe sales for 1H = £40.1m
PMP Canada was 50% owned and their first half is probably the bigger half as they are June year end so H1 includes Xmas. so maybe £1m or so to come from that and you get to £41.1m for the half.

What is interesting is that underlying trading of slight growth on 2019 on a like for like (excluding acquisitions) basis includes a chunky fx headwind I think. So true like for like could be more for a middle single digit rate of growth. With a backdrop that most of the first 4 months of the year had UK retail pretty much nailed shut, and non-online channels is 50% of overall revenue... is rather impressive. South Korea and the US are probably getting back towards normal now in the second quarter, as will the UK (you would hope)

There is a lot of latent value in Portmeirion's brands, as we all know. The business in the past has been turgid. Little direct to consumer, all through distribution channels, little true nurturing of the brands or developing them outside of annual product releases. There are so many easy wins that are being put in place, about developing that higher gross margin DTC channel, replacing rusty old inefficient machinery and manual labour processes with higher efficiency automation. There is a lot I'm sure they can do with their historic assets too. This gives a very good sense of all of the old patterns/moulds the company has and could digitise to create new ranges, or re-invent old ones.

These are some of the Spode mould stores (moulds for prior patterns):

Also

Given the fixed cost base, the developments on gross margin will probably end up being quite significant. The forecasts are for this to get back to a bit shy of a 11% operating profit margin business in 2022, generating EPS of 57p. If you take Churchill China as a decent example, they have been running at much closer to 16 to 17% operating profit margins servicing hospitality (rather than retail).

As with any stock, for the stock to re-rate upwards, the story needs to be good, and I think they've got a good one to tell here. If they get the manufacturing, and online channel angles working well, this could in time quite feasibly be a 15-18x forward P/E stock again. Earnings forecasts here for for 67p of EPS in 2023. Getting back to a 4-digit share price is thus very possible. In my eyes at least, the stock should be closer to 800p today to be more like fair value.

Eric