Renold Share Discussion Threads

[sausage7] 15/4/2024 21:13

So an interesting and encouraging review of Renold on BASH this evening. The poll of viewers came out at Buy 72% Hold 17% Avoid 9% Sell 2%. With such a Buy % a point not raised was who is selling? Intriguing. A company in strong recovery.

[greyingsurfer] 15/4/2024 16:26

Plus the pension deficit is coming down. Not sure what it was in 2007.

But resumption of dividends, when it happens, will potentially shift the valuation. I saw posted on X this morning an unattributed set of forecasts which showed a dividend being paid in 2025. If correct thats not far away.

[sausage7] 15/4/2024 15:36

Have signed up, thanks for the note DD

[davidosh] 15/4/2024 14:48

Now the trading update is released Renold will be reviewed on the BASH this evening

Mello BASH (Buy, Avoid, Sell or Hold)



Do join

[greenknight1] 15/4/2024 13:16

Revenue will be grown via "value accretive acquisitions". As long as they maintain margins through integration, this will continue to grow nicely.

[davidosh] 15/4/2024 13:12

I guess the most important question is how much higher can these earnings go. Renold will continue to get re-rated steadily if this 20% growth in profits can continue and it also looks like a dividend is on the cards.

The broker says...

We raise our Target price from 58p to 65p, offering significant upside with the shares trading on a P/E of 5.9x, which looks too low given recent upgrades and sustainable cash flow improvements.

That is more than 50% higher than where the share price is now and the order book is not discretionary spend as these are critical engineered items

[sausage7] 15/4/2024 12:24

Thanks for the note Essential. What I am driving at is the rating on this company and many others which investors ascribe. There has been a general derating on UK listed companies making them vulnerable to take over/take private. Renold which is clearly having a renaissance in its fortunes is a victim of this investor neglect. Let’s hope we and they continue to make progress.

[essentialinvestor] 15/4/2024 12:06

Just for a bit of context ..

the RNO share price traded around 60 pence in early 2006. It then climbed rapidly in to the spring/summer, 2007 - the pre GFC peak.

In FY 2007, adjusted EPS of 8 pence a share. Debt under £20 million.

So although I fully accept the point on arguable undervaluation, at the same time earnings have 'not increased' in 17 years. They are effectively now at 2007 levels.

The above is obvs being Highly selective with dates, you could equally look at more recent progress, etc.

[sausage7] 15/4/2024 11:24

I am not aware of such

[greenknight1] 15/4/2024 11:10

Has there been any dilution since 2007?

[sausage7] 15/4/2024 10:10

Welcome news indeed this morning. Let’s put this announcement in context. 2023 saw the Renold statutory operating profit come in at £22.9m. Stock price after today’s statement that it should be 20% ahead, 43p. In 2007 the operating profit was £9.8m, stock price 110p. Renold is symptomatic of the aggressive derating across all UK smaller companies and is currently too cheap for its own safety. This like many other companies we have seen recently is in danger of being taken out by private capital. A sad reflection on the attitudes of the institutional fund management community to genuinely world class smaller UK companies.

[this_is_me] 15/4/2024 08:05

Great news! "The results for the full year are now expected to be materially ahead of current market expectations1, with adjusted operating profit approximately 20% higher than the prior year, driven by a further improvement in margin."

Those who sold in March have lost out.

[davebowler] 15/4/2024 07:48

Cavendish The FY24 year-end update is very upbeat signalling trading being materially ahead of expectations, with a better-than-expected profit out turn and stronger cash generation. It continues to strengthen margins through efficiencies and investment in modern equipment. The order book remains close to record levels providing a robust view of future forecasts. In FY24E we upgrade EPS by 11% and in FY25E a significant upgrade of 27.6%. It looks capable of declaring a dividend in FY25 as well as management actively seeking EPS accretive acquisitions. We raise our Target price from 58p to 65p, offering significant upside with the shares trading on a P/E of 5.9x, which looks too low given recent upgrades and sustainable cash flow improvements

[c3479z] 15/4/2024 07:32

looks as though operating profit will be about £1m, 5-10% ahead of expectations?

[wigwammer] 15/4/2024 07:27

Great stuff... rapidly paying off the cost of the acquisitions... "Strong cash conversion, and careful management of working capital has resulted in a year end net debt position of £24.9m (31 March 2023: £29.8m and 30 September 2023: £28.3m)"

[chrisdonohue] 13/4/2024 13:41

Following the recent large fall, it seems that those who wished to sell have already done so and the prospects of a recovery to the more reasonable prices it reached earlier in the year look promising. Part of the reason for the large fall may have been selling before the end of the tax year, which has now passed. What happens when a significant number of weak holders sell is that peoples' stop losses are repeatedly triggered and a small fall gathers an unstoppable momentum. The fall does not appear to have been triggered by any concrete events or any significant change in the company's prospects. Time to hold on until the damage has been fully reversed.

[pj84] 12/3/2024 21:52

I have previously posted the post below that I made on the Wincanton thread before the recent takeover and whenever the next triennial review of the Renold pension fund happens I expect we will see that the pension issue has disappeared or significantly reduced.

I continue to believe Renold is undervalued and am more than happy to continue to hold.

PJ84 26 Sep '23 - 09:01 - 2492 of 2543 Edit



some excerpts from the article: -

"It was the stock market surprise of the week: Wincanton, the trucking company, delighted investors on Wednesday by announcing that its staff pension scheme had dramatically swung back into surplus for the first time in decades.

The company would not now have to make previously promised contributions to the scheme of about £25 million a year for the next four years. And it was immediately released from restrictions on how much it could pay shareholders in dividends."

.....

"Like many UK companies with long histories, Wincanton had been the prisoner of defined benefit pension promises going back decades. It has a market value of about £400 million but until recently its pension fund was three times bigger with about £1.2 billion of outstanding promises to 12,800 current and former lorry drivers and warehouse workers."

[tightfist] 12/3/2024 10:56

IMO the only reason the Pension Deficit is a problem is because we keep talking about (affecting sentiment) - a bit like the Princess' weekend family photo.....

[davidosh] 12/3/2024 10:15

I do not think the pension defecit is a problem and it was very well covered on the show...I think the issue is more that potential investors see it as a problem. Wincanton which also had a sizeable pension defecit has received multiple bids so clearly not a problem at all if being absorbed by a much larger entity.

The end result was that 64% of the audience rated Renold a Buy with 4% stating Sell, another 4% Avoid and 28% voting to Hold.

[calougra2000] 12/3/2024 10:07

From interim results 16-Nov-202:-
IAS 19 pension deficit reduced by 29.6% to £61.3m (31 March 2022: £87.1m)

From interim results 15-Nov-2023:-
IAS 19 pension deficit reduced by 15.3% to £52.7m (31 March 2023: £62.2m).

Looks to be making good progress to reduce the long-term liability..

[robsy2] 12/3/2024 08:39

Oh dear. I couldn’t stay til the end so i missed that. Not sure if folk fully understand pension deficits and i claim no expertise but if interest rates are normalising ie going up, then this would be a big positive for RNO. We are seeing the positive effect with other companies reporting reduced deficits and reduced funding requirements.

[tightfist] 12/3/2024 08:09

The Mello BASH got awfully bogged-down with opinions on the pension deficit (non?)aspect, overshadowed the global business and established brand IMO. Today's a new day...... let's see where the opening tick-up leads.

[melloteam] 08/3/2024 12:44

Renold will be one of the companies discussed by the BASH (BUY,AVOID,SELL,HOLD)Panel on the MelloMonday webinar, starting at 5pm on Monday 11th March 2024.

Full programme:
5pm Fireside chat with Chris Boxall, Co-Founder and Director of Fundamental Asset Management
5:40pm Company presentation by Kinetiko Energy
6:10pm Company presentation by Galliford Try
6:40pm Introducing Clipper Automative and our Tax Efficient Investment Show
7pm Company presentation by Taseko Mines
7:30pm BASH with Mark Simpson and Kevin Taylor (RNO)

Use code MMTADVFN50 for 50% OFF.

[sausage7] 08/3/2024 11:15

Thanks Texas. I am working a small buy order in the middle, topping up.

[texaspete2] 07/3/2024 16:35

I think its just a normal retracement back to where we saw the last high volume mid Jan 24, that's where new orders are likely to be imo. Providing we bounce from here then the move higher should continue hopefully, that's my take on it at least for now, gl