Renold Share Discussion Threads

[dozey3] 26/9/2023 14:23

PJ84, The read across from wincanton to RNO is highly relevant since it is the pension liabilities that are holding the market valuation back. Is anyone cleverer than me able to put figures on the likely re-valuation?

[pj84] 06/9/2023 18:41

I posted the following on the Wincanton thread but the pension comments may have some read across here.



Peel Hunt: Pension review will drive growth at Wincanton

Analysts from Peel Hunt see logistics group Wincanton (WIN) kicking growth up a gear after its triennial pension review.

Analyst Alexander Paterson reiterated his buy recommendation and target price of 300p on the Citywire Elite Companies + rated stock, which was trading at 236p on Tuesday.

The review of the pension started in April and is set to conclude imminently. The deficit has declined from more than £200m to just £11.9m at the end of March and we expect it to have declined further given a £5.7m contribution at the end of June and higher bond yields, said Paterson.

The group is also exiting low or no return closed-book transport and transitioning to lower-risk open book contracts and areas of higher value, which would provide capital to invest.

We see significant growth potential and commercial benefit from investing this capital where it can exceed the risk-adjusted returns from a share buyback, which would drive a rerating of the stock on higher profitability, said Paterson.

[essentialinvestor] 06/9/2023 16:52

Update very solid, all be it wider macro looks to be weakening.

If we get back near 28 pence on the offer might add a few.
I hold RIII and RNO comprises approx 7% of that fund.

Perhaps a fair chance this is taken out at some point, particularly if the pension situation starts to look better.

[robsy2] 05/9/2023 08:11

Looking good. I was just wondering if pension contributions could be reduced at some point now that interest rates have increased?

[this_is_me] 05/9/2023 07:30

It looks like business is on the up. Customers are not ordering as far in advance due to normalising of supply chains (no pun intended!)

[wigwammer] 05/9/2023 07:28

"As a result of the continued positive trading momentum, and an increase in activity from the recently announced Davidson acquisition, the Board now anticipates achieving results for the year ending 31 March 2024, higher than previously expected."... encouraging reduction in net debt also, suggesting the the business is generating high levels of free cash.

[essentialinvestor] 04/9/2023 12:54

FFS I should have checked that as sold my last trading lot on Friday post the acquisition news.

Have an indirect holding through RIII.

[disc0dave46] 04/9/2023 12:48

AGM Trading update tomorrow.

[hardupfedup] 01/9/2023 07:56

Acquisition of Davidson Chain PTY

Renold, a leading international supplier of industrial chains and related power transmission products, is pleased to announce that it has acquired the trading assets of Davidson Chain PTY ("Davidson") for a total cash consideration of AU$6 million (the "Acquisition").

Highlights

-- Established in Melbourne, Australia, in 1991, Davidson is a family owned manufacturer and distributor of high-quality conveyor chain ("CVC").

-- The Acquisition increases the Group's access to the Australian CVC market, building on Renold's existing strong market position.

-- Opportunities exist for significant manufacturing synergies between Davidson and Renold's current Australian operations.

-- The Davidson management team have transferred to the Group, bringing with them a wealth of industry experience and market knowledge, and will continue to lead the Davidson business, joining Renold's Australasian management team.

-- The Acquisition is expected to immediately enhance Group earnings per share, and be accretive to the Group's operating margin.

-- ROIC is expected to be in line with management's targets, and above Renold's weighted average cost of capital in the first year of ownership.

The Acquisition and financial considerations

Davidson was acquired on a cash free, debt free basis, for a total cash consideration of AU$6 million.

The Acquisition consideration represents a multiple of approximately 5.9x Davidson's June LTM EBITDA. There are a number of identified synergy benefits, the effect of which is expected to reduce the multiple to below 5.0x in the short term.

The Acquisition is funded from the Group's existing borrowing facilities. As at 31 March 2023, the Group's net debt to EBITDA multiple was 0.8x and following completion of the Acquisition remains broadly similar. The Group remains well placed, with sufficient borrowing headroom, to execute on further bolt-on acquisition opportunities from an identified pipeline of targets.

Davidson delivered revenue of AU$4.2 million for the 12 months to June 2023, generating an EBITDA of AU$ 1.1 million.

Commenting on the Acquisition, Robert Purcell, Group Chief Executive of Renold plc, said:

"The Davidson acquisition demonstrates further strategic momentum, supplementing organic growth through high quality bolt-on acquisitions which can expand our geographic presence, grow our product offering and strengthen our market position in key end markets.

"We are delighted that Davidson has joined the Renold Group, and believe that not only have we acquired an excellent business, but also retained the services of a very experienced team. The Davidson business is very much aligned with Renold, including an excellent long-established track record of manufacturing and supplying high quality chain products with an entrepreneurial culture that will fit well with our own.

"We welcome the Davidson team to Renold."

[this_is_me] 01/9/2023 07:56

That looks like an excellent acquisition. It looks like the owners want to retire, after nearly 30 years, and are selling a well run business.

[essentialinvestor] 29/8/2023 10:55

What the market did not want to hear was considering more acquisitions,
that's a reason why share price performance has been muted post a decent set of results.

[jimmywilson612] 23/8/2023 16:54

I don't think it'll be taken over for a little while yet.
There is a £62M pension deficit on the balance sheet, keeping Net Assets down at £39M.
I don't think the pensions are being re-valued until 2025.

I think in the current climate, the deficit should come down signifantly (although, tbh, I don't know how that all works)!

If they can sort out the pensions then yes, on current metrics, looks v.cheap.

[hardupfedup] 14/8/2023 10:47

whats the chances of this company being taken over i wonder

[this_is_me] 02/8/2023 16:26

Yes, It has been going up steadily all year and is now as high as it was both around 3 months ago and 18 months ago.

maybe someone has got round to looking at the numbers in the full years results published last month.

[hardupfedup] 02/8/2023 16:02

trying to pop...

[robsy2] 21/7/2023 11:33

Looks like a decent punt from here.

[essentialinvestor] 20/7/2023 20:03

rb, at least partly allowed for in the rating. But you are right to highlight it.

I would guess what the market may not have liked was the inference
more acquisitions are to come.

[rburtn] 20/7/2023 18:57

The spectre of a damaging pension fund buyout does raise concern. The fact is pension funds shadow the average demographic and an engineering firm would expect its beneficiaries to draw pensions for somewhat less time than say a software house. Other comparable schemes have generated surpluses but rno might well have messed this up.

[greyingsurfer] 20/7/2023 09:00

In general they seem to be managing the company pretty well. One of the big reasons for the low rating is the pension deficit, which seems increasingly under control. If the market fails to value this correctly perhaps the failure lies with them? In the meantime perhaps a profit opportunity for those who call it right.

[rburtn] 20/7/2023 08:43

What is one to make of this company? It has just reported profits - which it has retained - equivalent to 30% of its market cap. No one believes this apparently, the company value has actually fallen.

With increased debt it should have an extra 40m in the kitty. 25m euro of this went on YUK so what has happened to the 15m?

Was YUK actually in negative equity to the tune of 15m and was it appropriate to gamble such a large proportion of this company's value acquiring a negative value entity? Are the board simply empire builders?

Come on P.E., time you sorted this lot out. It has been hoarding profit for twenty years and all it has to show for it is a halving of its value - in much depreciated currency I might add. How does such incompetence survive and where has all the money gone?

[petewy] 17/7/2023 15:44

In an Ian King interview last week the CEO talked for ten minutes and very briefly mentioned the share price. Uninterested. Despite the upbeat results, Midas etc the share hasn't exactly rocketed.
All buys for share this morning but mall ones.

[pj84] 16/7/2023 20:20

The following are some other snippets from the above MIDAS share tip

“The company is integrating its recent acquisition, a Spanish industrial chain business known as YUK, which has meant taking on more debt, but the company is sanguine as YUK is performing above expectations.”

“The company has bitten off more than it could chew in the past, but there's no evidence that it's struggling to assimilate YUK at present, which is performing ahead of expectations.”

“When you post upbeat results, but your shares fall three per cent as the market rises, you might be forgiven for wondering what it is you've done wrong.

Robert Purcell, chief executive of AIM-listed Renold, was bemused by the market's reaction to his company's results last week.

'My honest view is that our shares are ridiculously cheap,' Purcell told Midas after he posted stronger-than-expected figures for the fourth quarter.”

[tole] 16/7/2023 09:12

https://www.dailymail.co.uk/money/investing/article-12300057/MIDAS-SHARE-TIPS-Renold-makes-chains-theme-park-rides-bikes.html?Midas verdict: British smaller companies aren't in favour right now, but Renold has a strong combination of innovation and manufacturing expertise which should keep its order book strong. The UK accounts for only seven per cent of revenue, too, meaning that our local travails shouldn't affect it too badly.Renold's valuation, at six times forward earnings, is undemanding, and though economic headwinds can't be ignored, they shouldn't blow this rollercoaster off course. Buy.

[davidosh] 15/7/2023 17:13

Just to let shareholders in Renold and potential investors know that the company results and the investment case for this company will be fully analysed by the BASH panelists on the Mello Monday show this week.



Monday 17th July 2023, 5 pm – 9pm

5:00pm Mello welcome and keynote presentation by Fatima Iu of Polar Capital
5:30pm Company presentation by Windward
6:00pm Company presentation by FADEL
6:40pm Stephen Clapham presents Behind The Balance Sheet
7:00pm Company presentation by React plc
7:30pm Company presentation by NASCIT
8:10pm Research and Regulatory changes, Gareth Evans of Progressive
8:15pm Mello BASH