Portmeirion Share Discussion Threads

[my retirement fund] 19/9/2023 14:40

Listened to the presentation. Not really inspired tbh. Found the fact debt is increasing at a time they had to admit average borrowing at 7.5% shocking. Big red flag. I suspect they significantly overpaid for Nambe if truth be known.

Reading between the lines, this destocking cycle is more of an excuse to meet solvency obligations, i.e. to increase working capital to continue to meet ongoing debt obligations and meet forward energy costs now that previous generous hedging is coming towards an end.

I think the entire solvency of the company in the next few years may hinge on any recovery in the US economy. Thanks to the Arabs, that's not looking too great to me.

In summary, I can see (sadly) this is not a business with "business men" and with any "entrepreneurial skills" at all at the helm, but rather some very dull accountants who's fortunes are entirely beyond the control of their own skill sets.

Still, its nice they engage with stakeholders and you cannot knock them for that!

Myself, I certainly won't be buying right now!

[pugugly] 14/9/2023 20:01

Forecast yield 5% Can get that or more on cash - However after tax and inflation a very close run race - Gamble is on the economy -disposable income and share price movement.

[value hound] 14/9/2023 18:14

Also, Singer Capital Markets have this to say:


"Soft interims as anticipated with no change to FY guidance. North America retailer de-stocking issues had been well flagged, but set against this there is good evidence of resilient trading across UK, South Korea and ROW. We welcome current trading being in line and note encouraging Christmas orderbook/shipment commentary. Overall, we sense expectations have bottomed out. Given this the shares merit a closer look on recovery grounds for the medium term. They trade c.40% below NAV/share of 462p, and on our unchanged forecasts yield 5% with the FY24 P/E 7.5x and EV/EBITDA 4x vs a LR average of 13x/7.5x. We also note the share price is almost back to near the worst point in the pandemic, despite a sound revenue and margin strategy under new CEO. On valuation grounds we move from Hold to Buy."

[value hound] 14/9/2023 16:27

Re-tipped by Simon Thompson FWIW,

Exploit the overreaction to Portmeirion's issues

"Destocking by retailer customers in North America dented first-half profits, but next year is likely to see a marked improvement.

"Reassuringly, the group's strong order book for the key Christmas trading period is ahead of last year, so the previously downgraded earnings guidance should be achieved. It points to full-year revenue falling by 10 per cent to £100mn and adjusted pre-tax profit from £8mn to £3mn. On this basis, house broker Shore Capital expects annual earnings per share (EPS) of 16.8p, down from 46.5p in 2022. Also, the 15.5p-a-share annual dividend is safe as net borrowings of £15mn are expected to halve to £7.3mn by the year-end as working capital build unwinds, implying a modest gearing ratio of 11 per cent.

"Reassuringly, the group's strong order book for the key Christmas trading period is ahead of last year, so the previously downgraded earnings guidance should be achieved. It points to full-year revenue falling by 10 per cent to £100mn and adjusted pre-tax profit from £8mn to £3mn. On this basis, house broker Shore Capital expects annual earnings per share (EPS) of 16.8p, down from 46.5p in 2022. Also, the 15.5p-a-share annual dividend is safe as net borrowings of £15mn are expected to halve to £7.3mn by the year-end as working capital build unwinds, implying a modest gearing ratio of 11 per cent.

"Furthermore, the 5.4 per cent dividend yield and 38 per cent share price discount to net asset value highlight the value on offer ahead of an anticipated strong bounce back in earnings next year when Shore Capital predicts a doubling of pre-tax profit and earnings per share (EPS) to £6mn and 33.4p, respectively, on 5 per cent higher revenue of £105mn. The rapid improvement in profits reflects productivity gains, easing in shipping freight rates and the drop through of incremental gross profit in a positive sales cycle given the operational leverage of the business.

"It’s worth noting, too, that the group is now rated on a near-40 per cent discount to rival Churchill China (CHH:1,325p) based on their respective enterprise valuation to current year cash profit multiples even though Portmeirion’s earnings should recover strongly next year.

"So, having recommended holding onto your high-yielding shares for the recovery potential after management first highlighted the destocking issue (‘Portmeirion shareholders should hold their nerve after profit warning’, 20 July 2023), I maintain that advice. Hold."

[1tx] 14/9/2023 09:58

PMP will have to repair its margins over the second half if we are to see a maintained final dividend.I also feel that it is overstocked.It is a difficult time for manufacturers & PMP is & has been very much a victim of circumstances outside its control.Hopefully the US sales will recover in second half.....

[wad collector] 14/9/2023 09:42

Yes I was confused by skyracer's post too!
The BB header title is rather inaccurate at the moment too; no profits on a plate this HY!
How much confidence do investors have that this is a temporary dip from circumstances? Quite a lot I suspect.
Not sure I understand the diversification into smelly candles and oils - is it really synergistic? Can't see much clay being used there.

[boystown] 14/9/2023 09:06

I was certainly referring to PMP FWIW.

[zangdook] 14/9/2023 08:53

This is the PMP board, not CHH. Both had results today.

[boystown] 14/9/2023 08:19

If they meet those expectations, then the current price makes no sense at all when you look at the balance sheet. This seems inexplicably cheap?

[skyracer] 14/9/2023 08:11

Robin Williams, Chairman of Churchill China, commented:

"We are pleased to report a healthy increase in revenue and profit in the first half of the year and that despite some market headwinds the Group is in a good position to meet the Board's profit expectations for the full year."

[aublune] 17/8/2023 12:16

I hope it csn hold onto 300. Nice business

[aublune] 15/8/2023 09:25

The share price is lacking momentum unfortunately but give it a year and hopefully back towards 400

[illiswilgig] 08/8/2023 17:41

Same here.

Think there is a reasonable probability its an over-reaction that is.

If so. The share will recover in the short term.

If the boards prudent view turns out to be the actual case, despite the current customer data (till rolls), forward order book and sales of US best selling lines. And anything might happen. Then the share will recover in the long term.

Looks like a good deal to me.


In the mean-time if the share falls much below 280p I'll add a few more,

cheers

[aublune] 08/8/2023 08:28

you could be wright wad collector

[wad collector] 24/7/2023 09:26

I took the view that it is an over-reaction to bad news and added at £2.95. I think the company is sound in the long run.

[zho] 21/7/2023 11:43

>>If I am missing something please tell me>>

I thought it was a curious and possibly contradictory statement for the same reasons as you, but I guess the sentence to which we should pay greatest attention is "... resulting in the Group's ... profits for FY23 being significantly below current market consensus", not least because as Paul Scott points out, those new earnings estimates probably come directly from the Company itself.

[melody9999] 21/7/2023 10:48

The US de-stocking plus increased interest charges have caused the downward earnings revisions.

I get that retailers are de-stocking. I also understand that end consumer demand remains robust. So how long does the de-stocking cycle go on for? Well the company should know best and they caution that this could continue for another 6 months.

And thats all fine .....even with increased consumer demand, retailers could still be running down stock.

But then I read that in the US market 'there is a strong forward order book for Christmas'. From this I understand that retailers are placing orders now for delivery in the Autumn and sale pre Xmas.

So if the retailers have already undergone a level of de-stocking, and if they are ordering strongly now to enable Xmas sales, how is that consistent with the statement that 'it is prudent to assume that this caution (de-stocking) will continue through H2'?

Either retailers are not ordering (exercising caution) or they are ordering (de-stocking ended)

If I am missing something please tell me.

Where our BOD are certainly at fault is not being clear in their communication and worse, leaving it to brokers to deliver the numbers. They should read some RNS from NEXT or other quality retailers.

[eeza] 20/7/2023 17:47

- Emma Bridgewater

[volsung] 20/7/2023 15:17

Sold half.
Profit warnings come in 3s so might be another around the corner

[pugugly] 20/7/2023 14:17

IC Kiss of death?

[zho] 20/7/2023 14:16

Portmeirion shareholders should hold their nerve after profit warning

A ceramics maker has been hit by destocking by retailers in North America, but there is recovery potential next year.

[whalehq] 20/7/2023 11:15

Haha Glavey is that the share price or some Pottery :)

[glavey] 20/7/2023 11:05

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[whalehq] 20/7/2023 10:37

Horrible trading update and even more horrible broker notes.

I don't track high street retail in the US but can only assume it's suffering from a similar demise to here, however large parks with the right mix of shops in my experience are still quite busy.
Nonetheless department store destocking could be a nasty grinding headwind for PMP.

I do think there durability in the product offering however and honestly believe them when they say week to week sales data is resilient. Management clearly have to find alternative routes to market which they clearly are doing via the website.

As stated horrible day but even if you lop 10m of the inventory it still has a strong balance sheet as I see it.

Divi seems to be c. 6% of todays price and net debt to reduce by year end. Thats comforting.

[the codger] 20/7/2023 09:47

A buy on my list