Sprue Aegis Share Discussion Threads

[the big fella] 18/12/2017 10:22

The online limits tell a tale. I can sell my entire holding at c 180p. Someone wants in.

[melody9999] 18/12/2017 09:15

Joined in myself with an initial purchase today as a long term hold.

[masurenguy] 15/12/2017 16:31

Yeah - Downing added circa 640K shares over the past few days with probably the last tranche of 200K @181p yesterday.

[the big fella] 15/12/2017 15:36

Encouraging to see an institution increasing their holding.

[the big fella] 14/12/2017 16:29

You need to get out more.

[mr hangman] 14/12/2017 16:10

Yes great post GHF, certainly better reading, then playing Solitaire all afternoon

[the big fella] 14/12/2017 15:43

Just seen that post GHF, superb as always. Just seen a chunky 200k gone through. Interesting

[speedsgh] 12/12/2017 18:06

Excellent summary, GHF. Thanks for sharing.

[glasshalfull] 12/12/2017 17:59

Evening folks,

Couple of updates as I appear to have opened the Genie’s bottle (sorry PJ ;-)

*Newall stake - I can confirm The Big Fella’s post above. I’ve spoken to Sprues’s management a number of times concerning Newall. SPRP have a good relationship with them. A few of you may question this, especially in light of Jarden/Newall's ill-advised bid from a few years back. However, I’m also led to believe that Newall have evaluated & are NOT sellers as TBF mentioned. I have no reason to disbelieve SPRP.
Glaws is quite correct & shows an about-turn on behalf of Newall who I believe initially were looking to sell.

Highlights the fact that Newall clearly see value in Sprue, all IMHO.

* Forecasts - Here are the latest forecasts from Stockdale.

2017 est.

Turnover £60.6m
PBT £4.6m
EPS 9.1p
Dividend 9p (Yield 5%)

Earnings Growth 65%

2018 est.

Turnover £64.3m
PBT £6.1m
EPS 12.0p
Dividend 10p (Yield 5.6%)

Earnings Growth 31.6%

2019 est.

Turnover £72.3m
PBT £9.3m
EPS 18.3p
Dividend 11p (Yield 6.2%)

Earnings Growth 52.8%

——-

I believe that 2018 & 2019 forecasts are conservative & that Sprue are back on a growth trajectory.

My rationale centres on a number of factors that include: -

* Margins - Focus on improving margins (H1 2017 highlights gross margin improved 6% to 31.7%). Much of the recent spend has been on developing the next generation of technology & product set that should command a higher price (in theory).

* BRK Stock - Following termination of the Distribution Agreement with BRK/Newall this will result in a cash payment to Sprue of at least £3m according to H1 result statement

* Distribution Agreement - Removal of £2.9m annual fee payable to Newall.

So, c.£6m cash windfall for SPRP in 2018.

*FireAngel Brand - Consolidation of product range & focus on FireAngel brand that will result in cost savings due to reduction in maintaining large product range, materials, marketing, etc.

*Home Connected - Considerable investment over last 2/3 years which will hopefully support increasing sales over the next 12/24 months. Home Connected sales are currently in their infancy & we have observed via recent results that Sprue have invested further in software capabilities & recently announced partnership with Samsung SmartThings.

* Germany - Search of this thread will confirm the opportunity in terms of retrofit & 10-year replacement cycle. Recent results also highlighted that German retail opportunity with Sprue winning contracts with OBI & Bauhaus. Again, increased European sales will also benefit from the current Euro/£ exchange rate.

* France - Market died following massive sales ramp up of 2014 & overstocking by suppliers. This appears to have normalised & hopefully provides a better backdrop to improving sales.

* CO sales - Success of Project Shout & increased penetration in new markets

* Natural Gas Alarm - Recently launched products. Untapped market

* Trade - Sprue spent 2/3 years developing the SONA brand which is in the process of being rebranded to FireAngel. They only have a small share of the Trade market that is estimate at £60m in the UK (from memory - please check). SPRP therefore have an opportunity to substantially increase market share in a higher margin area over coming years against EI Electronics which is the market leader in this sector.

*New territories - New geographies (such as Poland) & legislative moves may also assist the sales cycle in coming years.

*FLEX - Improved efficiencies, plant in Europe (vs previous Chinese supplier). Accelerated product development & release to market.

Think that’s enough for getting on with at the moment.
Personally I’m confident in Sprue’s ability to capitalise on many of these opportunities having been invested for 11 years & watching their progress not too mention the challenges during the journey.

Others may disagree...and that’s what makes a market.
I’m content to invest in the company at this stage thus locking in a 5% dividend yield. They are cash rich with £10m net cash & have considerable iP invested in their product portfolio & an established & well regarded brand.

Please DYOR.

Kind regards,
GHF

[speedsgh] 12/12/2017 16:16

GHF - Have EPS forecasts moved at all since your post #1555 i.e. FY2017 9.1p, FY2018 12.0p (+32%), FY2019 18.25p (+52%)? If not, the current 185p offer puts it on PE 15.4 for FY2018 which isn't especially cheap? Forgive me if I have got the figures all wrong. Dunce's hat at the ready!

[the big fella] 12/12/2017 16:02

I had a conversation with him about a month ago and he said they were not sellers.

[glaws2] 12/12/2017 15:23

That's a change of stance then; when the new deal was first presented Graham stated that they would sell - but would do so in a structured way and that he had already had discussions with institutions.

[the big fella] 12/12/2017 14:00

I raised this with Graham Whitworth and he said that they want to keep their share holding and have no intention of selling.

[pugugly] 12/12/2017 13:53

Remember largest shareholder BRK Brands Europe Ltd 23.2% has given notice and will be no longer supplying - Surely this generates a massive potential overhang and until cleared will (imo) act as a negative to share price moving north irrespective of all sell side buy notes -

[martinthebrave] 12/12/2017 12:01

Looks promising GHF & PJ1. I have also been adding here.

[glasshalfull] 12/12/2017 11:08

LOL! PJ

I did my Christmas shopping in SPRP’s shares yesterday...so apologies.

Radio silence until t/s in January.

Kind regards
GHF

[pj 1] 12/12/2017 10:59

On a more serious note,imo, at some point in the future the 240 ish will be a key level, offering last resistance, and which was also a previous support level.

[pj 1] 12/12/2017 10:52

Whilst I am discreetly adding I would greatly appreciate no posts on the thread or any positive news from the Company!!!

TIA PJ

[glasshalfull] 12/12/2017 10:45

2 months since any posts on this thread. In that time the shares have retraced -10% on the absence of any news.

Courtesy to inform that Stockdale have released an update this morning reaffirming Sprue as a BUY with 250p t/p.

The indicate currency movement will create a favorable tailwind - we’ve all observed the £ strengthening vs the $ while remaining weak vs the €.

You may have also observed an RNS concerning a site visits by Institutional investors recently...& I don’t imagine that the company would go to the trouble of arranging such if there was any issues concerning trading.

The share price currently offers a 5% div yield with earnings growth est. in FY17 of 65%.

FY18 est. is for 32% growth & FY19 for 52%

I added 25k yesterday as irrespective of any short term noise, I believe that we will observe the forecast earnings growth materialise over the next few years & removal of the previous Distribution Agreement will also add a fillip to the bottom line.

Kind regards
GHF

[martinthebrave] 13/10/2017 08:22

Encouraging as always to see you here GHF. Best of luck!

[glasshalfull] 12/10/2017 18:52

Snap! I had a few nibbles today (@195p) & topped up my holding.
I've spoken with the company following last months results & share similar thoughts to TBF.

Kind regards,
GHF