Pressure Technologies Share Discussion Threads

[zoolook] 10/12/2014 13:25

I think it is fair to say that the price got a little carried away so a correction is in order triggered by the cautious outlook statement and that there is a period of consolidation required to integrate the acquisitions as they transition to being a larger group against an unfavourable economic backdrop. The consolidation and economic backdrop both present risks so will be interesting to see where share price goes over the next 6 months.

[undervaluedassets] 10/12/2014 12:18

Just a bargain here ... great results ... well run company.

The oil price is the oil price.

does not detract from what is on offer here.

[andyview] 10/12/2014 12:17

I've added here, this looks to be overdone on the back of such results IMHO


Gla

[cockerhoop] 10/12/2014 10:38

Shankin,

We know from the results that £39.6m (or 73%) of revenue is to the Oil and Gas sector of which £14.8m is from Oil/Gas Cylinders (I've taken out the Defence and industrial gases sales and ignored the inspection services).

This £14.8m is for capital equipment which IMO is most vulnerable when the oil price is low. We also know from the results that cylinders order book is similar to that of last year but they expect sales to be lower in 2015 but probably not falling off a cliff.

The remaining £22.5m Oil/Gas is from the EP division (which will be split in 2 for 2015) which will be a mix of capital equipment and renewable/consumable items so is hard to judge how connected to the POO.

Hope that helps a little.

Cheers

[shanklin] 10/12/2014 10:06

Hence the need for PRES to talk about the extent to which their business is exposed to the PoO. If I could get a handle on this, I could take a view on whether the broker estimates are reasonable or pie in the sky... ...and thence make a decision as to whether I should be long PRES or not.

Obviously PRES are progressively diversifying in to markets which are less exposed to the PoO and they have been a little unfortunate that the PoO has fallen so far, so quickly, when they still have significant exposure. But does this mean all new orders are likely to dry up in 10% of their business or 50% or what?

Any ideas?

[cockerhoop] 10/12/2014 09:56

I'm not sure attaching numbers would help in this particular case. PRES has undergone dramatic change in the last year with Kelly, Roota, Greenlane and Quadscot joining the group and CBG finally starting to contribute. Comparisons would be pretty difficult to make with a single number for the order book.

Regards clues I think statements within the Interims along with the continuation of the weakness of the POO meant that Ultra Large Cylinders were always going to have a tough time going forward and was predictable. Posts 973, 982, 988, 1001 all alluded to caution in the results.

I'm fascinated that in Oct the share price was £7 and the 2015 Forecast was 46.5p and now the 2015 forecast has improved to 49p and the share price is £4.50 :-)

Efficient Market Hypothesis anyone :-)

[shanklin] 10/12/2014 09:29

revoman

That's obviously a fair point, but all I am suggesting PRES do is routinely include indications of their order book and its composition.

For example, HAYT's most recent results (interims as it happens) state

"Order intake up 7% in H1 2014/15 at £27.6 million (6m to 30 September 2013: £25.7 million);

Order book at 30 September 2014 at £33.2 million (at 30 September 2013: £33.6 million);

There is then discussion of the composition of the order book.

If PRES did something like this on a routine basis, the discussion would naturally gravitate to the state of the order book in the parts of the business exposed to the PoO. I am not suggesting HAYT are perfect in this respect and PRES are useless but I do think HAYT are providing more usable information.

All IMHO.

[revoman] 10/12/2014 09:20

"If a few more clues had been given on this sooner, we would all have had more information on which to make trading decisions earlier, perhaps at higher SPs, to our significant financial benefit."If a few more clues had been given on this sooner, the share price would have stumbled sooner. It works both ways.

[nfs] 10/12/2014 09:17

if you cant assess the future,better not to attach any numbers to it-simply state what you do know and can say

[shanklin] 10/12/2014 08:55

So, you are happy to have blind faith in these numbers despite knowing that a significant proportion of their business (we don't know how much?) is heavily dependent on the price of oil?

My view of PRES depends greatly on whether their current order book is (say) £10m or £100m... ...and as you indicate it would be helpful to know which FY these orders are likely to be converted in to sales.

Why do you see it as reasonable for PRES not to provide this information?

[cockerhoop] 10/12/2014 08:46

Shanklin,

Not sure why you're getting so worked up on this issue, they have released a wealth of information regarding the current state of play in each division. Even if they gave definitive numbers you wouldn't necessarily know in which period going forward the orders fell as some have long lead times.

John has always come across as a straight up guy to me so I would be happy that the house broker forecasts whilst obviously subject to change are a reasonable stab with the current available information.

They are:

Estimates for 2015 are now for sales of £73.0m, normalised pre-tax profit of £9.0m and eps of 49.03p. For 2016, estimates are for sales of £80.5m, pre-tax profit of £11.0m and eps of 60.50p. At the current share price this results in a forward multiple of approximately 10x 2015 estimates falling to 8x for 2016; a seemingly modest rating.

[shanklin] 10/12/2014 08:29

By not divulging the size of the order book, I can see no way of assessing whether the broker estimates of sales in 2015 and 2016 are realistic or just fantasy. Very frustrating. No idea why its such a secret; surely shareholders and potential shareholders should have this information? All IMHO.

[cockerhoop] 10/12/2014 08:22

Investors Champion Comment:

[cockerhoop] 10/12/2014 08:18

Cheers Revoman,

It does highlight the great job John Hayward has done in broadening the business since 2010. Roota and Quadscot are high quality engineering companies with high margins.

[shanklin] 10/12/2014 08:18

So, CS have no information on the size of the order book. I wonder why PRES don't just stick this in their RNSes like (say) CLLN did this morning.

[revoman] 10/12/2014 08:05

Charles Stanley yesterday:

A year of substantial progress and change
The Group has reported a 98% increase in normalised EPS in FY2014. All three
divisions experienced significant growth in revenues and operating profit. The
acquisitions of Roota Engineering, and Greenlane Biogas and Quadscot after the
year end, have continued to diversify the Group’s activities, proportionately
reducing the exposure, through Chesterfield Special Cylinders (‘CSC’), to large
contracts for drill ships, rigs and submarines. Engineered Products (‘EP’), and
Alternative Energy now represent 83% of forecasted divisional operating profit
in FY2015. This compares to a position in FY2010 where CSC accounted
similarly for over 100% of operating profit. Management remains confident in
the growing strength of the Group and its positioning in highly attractive
growth segments and the statement notes a 14% increase in the order book in
its core businesses compared to a year ago. Nevertheless, there is a natural
tone of caution around the impact of the oil price on larger oil and gas projects
with the Group seeing reduced order flow in both CSC and Hydratron, following
the recent steep decline in the oil price. As a consequence we have reduced our
forecasts by c.5p in FY2015 and FY2016 and our PT from 760p to 700p. Our
new EPS forecasts are still ahead of the levels prior to the earnings enhancing
acquisition of Quadscot on 1st October.

[cockerhoop] 10/12/2014 07:51

Shanklin,

No, not yet. Investors Champion usually produce a piece with updated forecasts from the house broker - maybe today.

Reports from yesterdays David Stredder organised lunch would also be welcome.

Regards the order book we know the LFL order book is up 14% and within that CBG is up 30%. Cylinders are at a 'similar level' to last year and EP is ahead.

[shanklin] 10/12/2014 07:42

Has anybody seen a broker update for PRES following yesterday's RNS please?

Details of the absolute size of their order book, including the LFL element for the businesses they have owned for over a year, and how much of their business is independent of a strong oil price would be of great interest.

[pyemckay] 09/12/2014 16:44

results were ok, short term outlook is poor imo 1-2yr view.

currently over valued due to limited visibility of future earnings. 400p now a likely target medium term

[rcturner2] 09/12/2014 15:38

Pug, the facts are in the results.

In 2013 80% came from oil and gas and in 2014 it was 70%.

[pugugly] 09/12/2014 15:26

Further to HE's point above the Enginering Division is also very oil and gas centric. From the coys web site

"Al-Met is a niche manufacturer of specialised, precision engineered valve wear parts used in the oil and gas industries,"

"Roota Engineering is a specialist in subcontract machining and was acquired by Pressure Technologies plc in March 2014. It produces a range of high precision machined parts for the oil and gas market"

"Quadscot Precision Engineers provides award winning CNC & conventional precision engineering services, primarily to the oil, gas and petrochemical industries

"Hydratron designs, manufactures and sells a range of air operated high pressure hydraulic pumps, gas boosters, power packs, hydraulic control panels and test rigs. Hydratron has established itself as a leading supplier of quality high pressure equipment to the oil and gas industries"

So (imo) the growing engineering division (which many see as a protection against the pressure on cylinders" is also very exposed to declines in Oil & Gas capital expenditure.

This could be the reason why today's fall is more than expected and (imo) may well not bounce backas fast as many and the House Broker (today's target reduced from 760p to 700p expect) .

Before checking the make-up of the engineering division I had been thinking of buying back having sold at higher prices but now back on the side.

[tintin82] 09/12/2014 15:26

IC recommend locking in profits in todays tip update.