Renold Share Discussion Threads

[thirty fifty twenty] 18/4/2024 17:52

thank you melody9999 for taking the time to give such a detailed summary. the underlying biz seems very solid and i think undervalued, then there is the lure of one off military contracts, and , to me, it seems an ideal biz to be part of a larger group.

All IMHO, DYOR and BoL,
RNO is in my top 5 hldgs

[c3479z] 18/4/2024 17:28

greenknight
his thoughts were that turnover and profit growth would be hard to come by, I think,

[greenknight1] 18/4/2024 14:43

Excellent summary - thanks Melody. Very happy here.

[melody9999] 18/4/2024 14:36

Some notes from the meeting yesterday:

Robert very upbeat about the company's prospects. feels it is undervalued. His and Jim CFO management style is cautious and conservative - safe pairs of hands.

Strategy is to continue to focus on what they do best. Increase share in existing market. Customers are very sticky which is good news; but also means that new customers take a long time to acquire. Organic growth not likely to be significant.

They have good pricing power as demonstrated in the pandemic when they increased margins as well as passing through rising costs.

No customer represents more than 3% of total revenue. Production risk mitigated as they can flex manufacturing between their different factories in China , India and Germany.

Capex is likely to increase due to robotics kit. But this represents a great ROI / cost reduction opportunity.

Margins at 12% are conservative – Robert targeting mid teens

We may get an RNS soon re military contracts. Total revenue £13.6M? Type 26 frigates.

Currency – US$ the largest drag.

Acquisitions – refinancing agreed in May 23 so funds have been available for some time. Company made bullish noises about future acquisitions – and indications that pipeline was looking good. Suspect things will happen but will take time. Apart from increasing customers and scale, this can also bring product / process improvements.

Pension – under control and benefiting from higher interest rates.

I am happy with my investment and hopeful they may attend Mello next month to deliver their message to a larger audience.

[greenknight1] 18/4/2024 14:13

What is the reasoning behind this?

[c3479z] 18/4/2024 13:38

Boxall thinks it could be a value trap...
is this a widely held view on this board?

[davidosh] 18/4/2024 10:35

melody9999.....Well done for organising and hopefully Renold will join us at Mello2024 next month too.

[melody9999] 18/4/2024 09:22

Meeting at RNO yesterday was positive. I'll post some detail later.

[this_is_me] 17/4/2024 16:47

More than recovered the March drop.

[greenknight1] 17/4/2024 16:38

Lovely move today. Still further to go. So undervalued here.

[davidosh] 17/4/2024 16:34

The share price is on fire this afternoon....Is that linked to the Signet investor site visit I wonder?

Any reports from on site?

[bubloo] 15/4/2024 22:24

some funds who brought in 20's selling as they have virtually doubled. hence Renold has high weighting in these funds. hence top slicing. expect some more selling before it settles in the mid thirties

[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.