Renold Share Discussion Threads

[pj84] 12/7/2023 15:23

“Dividend

The Board fully recognises the importance of dividends as part of the overall value creation proposition for shareholders. However, the Board has carefully reviewed its capital allocation priorities, and believes that both organic and inorganic investment opportunities that are available to the Group will deliver higher levels of shareholder return over the medium term than the payment of dividends in the near term. The Board will continue to review this approach over the coming periods. As such, the Board is not recommending the payment of a dividend on the ordinary shares of the Company for the year ended 31 March 2023.”

I was pleased with the results but slightly disappointed at the lack of any dividend but at least using funds to put to good use in generating future profits is far better than the number of companies who can’t find anything useful to use excess funds for and instead buy back shares. I understand the theory of buy backs but in practice they often appear to deliver very little.

I had a quick look to see if this morning’s presentation to analysts was available on the website but it isn’t available yet, but the slides are there.



Slides 7 and 8 show that £11.7m of cashflow was generated from trading activities but after taking into account discretionary spend on capital expenditure and investments there was a net cash outflow from the business of £16m increasing the debt by that amount. The largest component was the acquisition of YUK for £18m which will add to future profitability and in an era of rising interest rates it probably makes sense to delay any dividends whilst the debt is rising.

With basic eps of 5.7p and adjusted eps of 6.5p this still seems to be very undervalued.

[this_is_me] 12/7/2023 11:18

I bought some more.

[wakeland] 12/7/2023 10:05

You hate to think what would have happened if they had released bad results!
Is this just sector related or historival distrust?

[tiswas] 12/7/2023 09:02

"The majority of Renold's business is denominated in US Dollars and Euro's."

I guess £ strength in recent weeks and months will impact.

[greyingsurfer] 12/7/2023 08:29

No, they were clear, they think they will give better medium term returns to shareholders by reinvesting. I'm happy with that.

[texaspete2] 12/7/2023 08:10

Outlook statement was quite vague I thought

[prokartace] 12/7/2023 08:09

Reads very well but predictable share price movement. They might think they give better returns by withholding a dividend but the market thinks otherwise

[essentialinvestor] 12/7/2023 07:46

Thought results were next week!. Reads relatively well on a first glance.

[this_is_me] 12/7/2023 07:39

Very impressive final results confirming what was said in the end of year trading update. Everything is on an upward path and this looks like this will continue into the future.

[rburtn] 11/7/2023 11:33

Since 2004 I have received a total of £45 in dividends on my holding - paying over £1 for some of it back in the day. 2005 was the last time a shareholder - other than the prefs - saw a sniff of income. If you add up the amounts retained from profits, then this company should be worth spectacularly more than it is. I can't wait to see that show up in the price.

[retsius] 11/7/2023 07:40

All very quiet before tomorrow`s figures?

Anyone about with views?
R.

[mesb48] 20/6/2023 10:04

Capital Markets video is a good watch. I liked the "are we allowed to talk about the new business we've won" remark in the Q&A (1hr 25). Overall just thought there was a glint in Robert's eyes that things are moving in the right direction. The next acquisition could make things interesting and they were at pains to say they can do one without dilution - not only does this dilute the pension scheme impact but also the central costs that are surely too big currently for a group this size.

[thirty fifty twenty] 15/6/2023 18:45

chart looking increasingly full of potential.
trading volume today of over 900k compared to an average daily of 300k.

i wondered from the capital markets day presentation why they presented nothing at all on non-chains.... does anyone know would it be practically possible to sell this Torque business. any sales price above 5 times ebitda would all value to RNO plc and of course would then give them fire power to make further acquisitions to consolidate the sector.

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

[matt123d] 15/6/2023 17:40

Obviously been a seller here for a while, maybe cleared today with the better than average volume

[hardupfedup] 15/6/2023 15:37

its been trying to move up for last couple of days, share price should be double this imo

[jaf111] 15/6/2023 14:34

Can we push up over 30p?

[pj84] 13/5/2023 13:45

I am expecting the current years eps to be above 5p.

Last year’s basic eps was 4.7p and the adjusted eps was 4.3p.

From the latest trading update it says: -
“As a result of the stronger sales, the impact of the YUK acquisition, benefits of cost reduction and efficiency programmes, and the successful implementation of inflation cost recovery programmes, the Board now expects underlying trading profit and margin for FY23 to be materially ahead of the previous upwardly revised market expectations (1).”

and note (1) says: -

“(1) Company compiled market consensus for 2023 revenue, underlying operating profit, and underlying PBT is GBP238.3m, GBP19.8m and GBP14.3m respectively.”
From slide 6 of the Capital markets day presentation on 10 May, it looks like the unaudited revenue is £247m and the adjusted OP is £23.5m.

Renold PLC - Capital Markets Day (With Q&A) (brrmedia.co.uk)


It is a long watch, just under 2 hours and whilst it is the company selling themselves, it is nevertheless very informative, and they seem to be very focussed on both inorganic growth and further acquisitions and to be very focussed on a very disciplined approach to capital expenditure for both investment and acquisitions. It also explains that even though Renold is not regarded as a tech company, it is benefitting from the new economy through businesses in all sectors increasing automation and demand for its products which is continuing to grow and in my view even following the recent increase in share price the PE of Renold is far too low.

The following is the summary from the FinnCap update on 17 Apr: -
“The Full year trading update to March 31 is positive pointing to underlying trading profit materially ahead of previously upgraded expectations. Revenue has increased by 18.8% on a CER basis and up 13.4% on a like for like basis excluding the gain from the YUK acquisition. Strong sales momentum in Q4 coupled with gains from the YUK acquisition, cost and efficiency measures and inflation recovery actions to achieve this positive result. Net debt at £29.8m was also better than expected. In FY23 we upgrade EPS by 21% to 5.8p. This places the shares on a P/E of just 4.3x, which clearly looks too low. We also raise our TP to 58p, on a modest 12x P/E target, the shares should respond well to this positive announcement.”

I’m not sure how they arrive at 58p from 12*5.8p unless the 12 is a typo and should be 10*5.8p otherwise it should be 69.6p.

[essentialinvestor] 12/5/2023 16:27

Nice week.

[this_is_me] 12/5/2023 16:21

It will be another 2 months until the results. An eps of above 5p is likely and a P/E of 12 would see the share price double from around the present value. that is quite possible. Not much hope of the share price getting to £3 it was in 1997!

[pj84] 11/5/2023 19:57

Actually just realised the underlying PBT of £14.3m that I was using from the trading update was what Renold believes was the market consensus at the time and they expect the results to be materially ahead of that so will be very interesting results.

[pj84] 11/5/2023 19:45

With an unaudited underlying PE of less than 5 I can't see why not and if not before the final results are announced then hopefully very soon afterwards.

[prokartace] 11/5/2023 16:14

Wonder if we can get to 40p

[battyliveson] 09/5/2023 15:08

Looking perky today after new facilities showed a vote of confidence in business for longer term. Continued higher interest rates will also lessen pension deficit.

I hold and tempted to top up.

B