Synthomer Share Discussion Threads

[rcturner2] 24/6/2022 11:29

I have doubled up on SYNT at 240p.

[turvart] 23/6/2022 18:28

I honestly didn't think we would see these present share price levels the markets really are bearish ATM just unbelievable. I added today and my average is now 272p LOL.

[al101uk] 23/6/2022 00:31

Found a site with proper broker numbers so I can see the differences in their model compared to mine.

The problem is underlying operating profit doesn't seem to relate to underlying earnings per share & it's underlying EPS that is used to caclulate dividend.

My fault for thinking EPS=profit/shares in issue I guess :-/

That's why my yield is so much higher than the broker estimates and I can do nothing to correct it without understanding how the underlying EPS is calculated.

Anyway I think I'm done posting here for feedback as there seems little point. Just thought I'd correct my previous posts in case anyone actually reads them and is trying to create a similar model.

[tuftymatt] 22/6/2022 15:57

Yeah if this can be circa 5% based on 300 and produce a reasonable next trading statement then I think we can move back towards 3 rather than 2.

[edmundshaw] 22/6/2022 15:36

12p - 15p feels about right to me, should be the good end of that if the year pans out as it has started and according to expectations. Of course if you believe al101 it will be 24p, but I find that a tad optimistic myself.

[montyhedge] 22/6/2022 13:34

After that massive dividend of 21.3p I really think it should have been called including special dividend. Now back to normal what's the forecast yield now 5% to 6%.

[rcturner2] 22/6/2022 13:33

Net debt in the last accounts was 114m, so really very small for a business of this size.

[edmundshaw] 22/6/2022 13:16

Debt is not problematic. Proforma net debt:EBITDA leverage on 1st April was 1.9x.

Trading update on 28th April was pretty good.

[elsa7878] 22/6/2022 06:16

It’s all about the debt darling.

[edmundshaw] 21/6/2022 09:14

Well I am not complaining about my entry point, even without the latest acquisition this looks cheap enough!

[al101uk] 20/6/2022 21:21

That sounded snarky. Genuinely, if you can make sense of broker forecasts (which was what I was trying to do), I'd be greatful.

Again, I leave all things equal barring the acquisition and extrodinary profits, so a shift in business numbers would change my assesment, but the business appears to expect growth in most of it's segments this year.

To correct for extrodinary profits, I assumed no revenue at all for six months and then a resumption of typical margins pre-covid as guided to by the company for H2.

[al101uk] 20/6/2022 21:18

Underlying operating profit per share was 75p last year. I'm expecting that to fall to 60p this year. A fall of 20%.

Brokers consensus earnings per share for this year is 42.5p per share vs 48p last year. A fall of 12%.

Consensus dividend is forecast to be cut by 50% to 15p. I can't work out how that could be the case and I can't find a forecast for Operating profit.

I'm looking at the new Adhesive Technologies division doing £866 million of revenue and £144 million of EBITDA.

That's because according to Eastmans "The total sale price represents a multiple of 11 times trailing twelve-month adjusted EBITDA.". It's also pretty consistent with all of the other divisions margin at around 15%.

I don't think that covers the entire windfall profit of last year, but it goes a good way towards it.

Interested why you think a 20% fall in operating profit is exceptionally bullish when the company has spent a billion quid on new business ;-)

[edmundshaw] 20/6/2022 18:36

10% of £2.40 is 24p. If that is 40% you are expecting around 60p as underlying earnings next year? Sounds exceptionally bullish, I look forward to exploring the expectations from the acquisitions properly! :))

[al101uk] 20/6/2022 18:20

edmundshaw,

The dividend is 40% of the underlying earnings per share.

Normalised margin is around 15% for the operating profit. The exceptional profit came in at around 50% for that division.

I've already done the work if you go back to my previous post and a few posts before that. I was feeling my way, so it's a bit long winded and I correct myself a few times.

Basically windfall tax will be mostly made up by the profits generated in the new acquisition. None of the acquisition costs etc are included in their underlying figure so shouldn't effect dividend.

Most analysts seem to be using a simple 40% of profit, rather than the underlying number which I think (given acquisition costs and one offs) should be a bigger number, hence a bigger dividend than they are projecting.

Obviously I'm holding everything but the exceptional profit equal... so any business change is not in my estimates.

[onjohn] 20/6/2022 18:14

May warn and the. 130p

[edmundshaw] 20/6/2022 17:51

On the dividend they said the payout was "in line with their dividend policy" without any mention of what that policy is (I haven't found it in a search, but that form of unsubstantiated "policy" is is pretty common with listed companies). On looking back, payouts look like around 40% of earnings. If that is their policy then it explains why they did not call part of the dividend "special".

A 10% dividend is possible but I think this management wants to grow the business, so I don't really project it (unless they do 25p earnings). I could try to extrapolate next year's EPS from the two big acquisitions and the expected synergies I guess, but there are so many variables it is quite a lot of extra leg-work, maybe later this week.

[montyhedge] 20/6/2022 15:44

Must admit I don't know why they did not call the last dividend part final, part special, if it's a one off.

[linton5] 20/6/2022 15:22

I think synt will eventually be taken out

[al101uk] 20/6/2022 15:18

I would assume the risk here is that they are cyclical and the cycle is potentially turning against them. I don't think we've seen definitive evidence of that from the company though.

I've stated my position on the dividend (post 657 were my final thoughts), all else being equal I think the analysts have got it wrong (as they got it wong last year). The recent purchase will bolster operating profit and offset much of the one off profits from last year. That won't prevent a dividend cut, but will reduce it somewhat.

A 10% dividend on the current price seems more than do-able in my view.

[edmundshaw] 20/6/2022 15:04

Well I am assuming that was a one-off dividend due to exceptional COVID-related sales; but the retained cash seems to be being actively spent on growth, and a 12p+ dividend seems pretty likely with a 5% yield being pretty attractive for this sector. So I remain a bit perplexed right now by the relative weakness even against the rest of the market...

[adejuk] 20/6/2022 14:56

when it looks too good to be true it isn't always a lie
can current divi be over 12%?
surely not.