Somero Enterprise Share Discussion Threads

[smallcapinvestor1] 09/1/2018 08:22

New all time high.. Nice. Patience is a virtue. This one could easily end up being a hundred bagger for me from my purchase price.

[glaws2] 08/1/2018 08:46

Finncap is the house broker so perhaps they are party to the trading update figures.

[rivaldo] 08/1/2018 08:42

Nice - Finncap have today increased their target price to 420p (from 350p). A hefty increase:

[adamb1978] 03/1/2018 16:59

Does anyone know when SOM are releasing a TU? Last 3 years have been 20th, 7th and 10th of Jan, so next week would seem likely.

As well as trading, will be interesting to see what they say about the tax cuts; wonder whether the latter might delay a TU a couple days given that they'd want to get the wording right (but suitably vague given that they wont have numbers yet....)

[rivaldo] 03/1/2018 07:31

Cheers glawsiain. Good to see the Unicorn fund managers so keen on SOM.

[glawsiain] 02/1/2018 15:07

Don't think anyone has posted this yet. From the telegraph's tips for 2018



Somero Enterprises

Market value: £162m
Turnover (2016): £59m
Pre-tax profit (2016): £16m

Somero Enterprises is a £160m business that designs and manufactures laser-guided machines involved in laying concrete.

Simon Moon and Fraser Mackersie, managers of the £660m Unicorn UK Income fund, said: “Despite its modest size, Somero is the clear global market leader in this specialist niche, with a strong presence in North America and growth in developing countries.

“The shares are not expensive, trading on 15 times earnings for 2017, with a dividend yield of 3pc and cash available.”

They said the growth in Somero’s business was organic as opposed to derived from acquisitions so it didn't require major expenditure, enabling the company to pay special dividends when it had built up excess cash.

“With significant US earnings, American tax reforms could also provide a meaningful boost to future earnings – Somero paid an effective corporate tax rate of 30pc in 2016,” they added.

[rivaldo] 02/1/2018 11:30

Indeed allstar07 - another reason for buying.

Regarding the tax cuts in the USA, I also note that the new legislation provides for capital expenditure to now be written off for tax purposes in the year it's incurred, which it can't be at present. SOM should therefore benefit from this as well as the more straightforward tax cuts.

[allstar_07] 02/1/2018 10:45

No reference to tax reform benefit then.

[death by donut] 02/1/2018 09:09

Think mm just read your post riv :-)

[rivaldo] 02/1/2018 08:32

Here's the IC's tip for SOM (thanks old chap!):

"High-tech concrete-levelling is not a business description that rolls off the tongue. But that shouldn’t detract from its commercial potential. Indeed, Somero Enterprises (SOM), which provides equipment, training and customer support for this process, reported pre-tax profits of $12m (£9m) for the six months to 30 June 2017, up from $10.4m a year earlier. And the group raised its dividend by 10 per cent to 2.75¢ while declaring a further special payment of 13.3¢. Despite these encouraging signs of progress, Somero’s shares are attractively rated.

Somero’s undemanding valuation has a lot to do with a trading update in June that highlighted flat performance in North America due to poor weather and political uncertainty, and slow trading in China. The news prompted a share price fall, and we downgraded to sell. But the latest results and the value now on offer suggests it’s a good time to revisit the investment case. Indeed, even when faced with regional challenges, overall revenue rose from $39.7m to $42.4m in the six months to the end of June. Management also attributed higher first-half profits to cost management, price increases and better productivity.

There are signs trading is now set to pick up. North American first-half sales were down 5 per cent year on year at $28.4m, but heavy rains subsided towards the end of the period. This resulted in the highest levels of trading seen all year at the end of June and positive indicators of a “solid” second half. North America constitutes around two-thirds of Somero’s overall top line.

The same story played out in China – first-half sales fell from $3.8m to $2.7m, but the best trading of the year was seen at the end of June. Management expects to see further improvements and is “re-looking at China” via a strategic review. China is estimated to use half of the world’s total concrete, representing a serious opportunity for Somero even if long-running fears of slowing economic activity play out.

Europe and Latin America were the group’s star performers, albeit starting at a lower base than North America. European sales rose 108 per cent to $5.4m, while Latin America’s leaped 750 per cent to £1.7m. The rest-of-the-world regions, including Australia, Southeast Asia, Korea, India, Scandinavia and Russia, also lifted revenues 79 per cent to $3.4m. New product sales contributed $1.4m, including the ‘S-158C’ model in China, the SP-16 Concrete Line Pulling and Placing System, and the ‘next generation’ 3-D Profiler System.

Meanwhile, first-half cash flows from operations rose 62 per cent to $9.4m, leaving the group with $18.3m net cash at the end of June. The healthy balance sheet underpinned the decision to pay the special dividend, which is expected to take the full-year yield to nearly 7 per cent. Further special payouts could be on the cards, adding to Somero’s appeal.

IC View

An expansion to its Fort Myers headquarters in Florida, accommodating future growth, will cost $1.3m, with most expenditure occurring in the first three months of 2018. But, while the shares are trading on a multiple of just 13 times forecast 2018 earnings, we think a re-rating is probable. Buy."

[glaws2] 02/1/2018 08:10

Martin - This has been discussed at length previously - search the thread for SIPP

[martinthebrave] 31/12/2017 19:06

I received a Dividend of 103.8p equating to $1.39 @ 1.34$/£. This means I had 30% deducted by Halifax which I am not happy about when other platforms seem to deduct either 15% or Zero.

When I queried it with Halifax I was told - "W8BEN agreement is only in place if the company pays the dividend through Intesa (the usual system for US dividends). This is not something we have any control over I'm afraid, and as this is how the dividend has been paid to ourselves".

I would have thought that all platforms would be paid the same way?

I have the same issue with #DGOC & I am currently awaiting a reply from X-O to see how they treat these Dividends. I will be opening an account with somebody that reclaims the Tax. All very unsatisfactory!

If anyone else receives Dividends that are not Taxed, I would like to know who you are with please?

[dan_the_epic] 29/12/2017 09:33

Would post but don't want to breach coyright

[rivaldo] 29/12/2017 09:30

Nice - a main tip of the week in today's IC. Should bring in more buying after the New Year:



Anyone got the full text please?

[death by donut] 23/12/2017 16:05

Jan 1st by look of it.

[adamb1978] 23/12/2017 15:59

Does anyone know whether the new US tax rules come into effect immediately so we could assume that we can assume that SOM will benefit in 2018? Its around 4p EPS so around 50p on the share price. Hugely material...

[rivaldo] 21/12/2017 09:14

They may have been worked buys over a period - whatever the case, such large buying is the only way to explain the sudden move up which occurred just prior to their being reported.

[tiswas] 21/12/2017 09:04

The spread was 288/293 at the time and were not delayed trades so I would be surprised if they were buys being below mid.

[rivaldo] 21/12/2017 07:49

Two nice buys totalling £1.34m at 290p yesterday, which caused a decent move up.

[rivaldo] 20/12/2017 08:58

The US tax cuts will be good for the short, medium and long-term in PAT and cash flow terms. The deferred tax aspect is merely an accounting entry.

Anyway, SOM are due a trading update in early January, so not long to wait. Given September's outlook I'm pretty confident it will be solid at worst and excellent at best:

"With the solid H1 2017 performance and healthy momentum carrying over into H2, the Board expects Somero to deliver another successful year of growth in line with current market expectations."

[carcosa] 20/12/2017 07:55

Re US Tax cuts; whilst good for the long term it's a negative outcome for the deferred tax assets the company has.

[rivaldo] 19/12/2017 11:40

The House of Representatives is expected to clear the US tax cuts Act this afternoon after some Republicans withdrew their opposition. Looking good for SOM.

[grabster] 18/12/2017 11:16

Yes, some allowance always has to be made for the relevance of storm damage when reading across from plant hire companies. Equipment hired for pumping and above-ground repairs will dominate the stats. Floor slabs and floor screeds may come into the reckoning if there are earthquake issues or if flooding has caused subsidence, or if building collapse has ruptured concrete floors or multi-storey carparks, but otherwise the role of Somero equipment is predominantly in new-build, of commercial buildings/bridges/concrete highways/airfields.

[rivaldo] 14/12/2017 08:37

The Senate last night finally agreed the tax cuts package at 21% for corporation tax - the final vote is next week and then sent to the House for final passage:



I note that AHT's results this week were excellent - particularly from their Sunbelt operation, which is most relevant to SOM. There was good business resulting from clean-up operations post-hurricanes etc, but hopefully this is still a good overall pointer for SOM.