Synthomer Share Discussion Threads

[nomolos1] 11/1/2024 13:10

Apologies - I used the ADVFN tracker which said 750m m/c Wow

[last of the mohicans] 11/1/2024 11:53

nomolos1,

Sadly the maths is right.

The market cap is now all of £256M with 163.57M shares in issue.

LOTM

[nomolos1] 11/1/2024 11:03

I'd check your maths - not at 8p pre consolidation - still 800m mkt cap

[last of the mohicans] 11/1/2024 10:34

Value destruction here has been incredible.

Is a bit of an understatement!

The share price is currently under 8p (pre consolidation) & before that it had been over £5.

So some poor souls have lost over 98% of there money.

I was in at £3 (pre consolidation) so the share price needs to go to £60 to break even, which simply isn't going to happen.

I've been trading it for several months & mad a decent sum from it, to help bring down that break-even number.

GLA
LOTM

[nomolos1] 11/1/2024 08:43

As a former holder, took some as a trade for the retest of the 180 support range - but the value destruction here has been incredible.

[last of the mohicans] 11/1/2024 07:28

The Directors of this company need to take a a long look in the mirror at themselves.

There actions have completed destroyed shareholder value.

They are incompetent, the non-executive directors should all be resigning due to there collective failures to hold the executive directors accountable for there actions.

They allowed the £1B purchase to go ahead without proper financing to be in place at the time. A criminal decision.

They were probably told they were getting a bargain by the executives, when they clearly weren't.

The rights issue was a disaster from start to finish. The company is now worth £25M less than the £276M raised in the rights issue.

The executive directors should all be told there contracts will not be renewed & they will be leaving the business as soon as they expire. I'm not sure who would want to employ them afterwards having destroyed £1B+ of value in 18 months. They are inept

There will be no pay rises or bonuses or cheap share options for new executive directors or senior management for at least the next 3 years until this sorry mess is sorted out. Once they sort it out then they can be rewarded accordingly.

A complete cleanout is required from start to finish - end of story.

GLA
LOTM

[turvart] 10/1/2024 20:47

I am still an holder and actually topped up today. I agree it is baffling how this share price just keeps dropping when IMO the company is not really in that much trouble.

[ladywormer] 10/1/2024 16:42

Unbelievable how this august company can turn to dust like this

[my retirement fund] 10/1/2024 15:16

It's a sorry mess with inept management. Essentially, it's worthless in all, but name. Shareholders have lost everything

[queenbreguet] 10/1/2024 15:12

Over sold today IMO

[hamhamham1] 08/12/2023 11:26

Back in here, my magic 8 ball says 182p could turn to support after banging around it a few times recently.
A real tuck away one me thinks.



cast.com/news/broker-recommendations/berenberg-hikes-target-price-on-synthomer--14892640.html

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[wigwammer] 28/11/2023 17:48

Fair enough, rct. I really have little idea whether fundamentals here will get better or worse on a 12 month view. But I suspect the valuation is already reflecting a bearish consensus... Over the medium term I think SYNT will recover and the shares multiply. IMO etc..

[rcturner2] 28/11/2023 15:16

I think you are an optimist and I am a pessimist.

You: "things are bad but they will likely get better"
Me: "things are bad but they will likely get worse"

[wigwammer] 28/11/2023 11:50

rct - the company is not owned by the bondholders. And the reason the debt dwarfs the equity may well be because the equity is materially undervalued. The current EBITDA margin is running at 6.8% vs typical mid cycle EBITDA margins of 12-15%. Why would I price the earnings power of the business off cyclically depressed numbers? That just results in a pattern of buying high and selling low... It has been an expensive ride for holders - but I suspect the mix of business here is now as good as it has ever been, they have raised cash thus reducing interest payments, extended lending terms, and given themselves a decent cushion. ATB

[lonrho] 28/11/2023 11:05

Balance sheet net equity is about 1.2 billion compared to net debt of about 500 million. If however it is assumed that all goodwill on acquisitions is worthless then this brings net equity down to about 200 million. Current market cap is less than 300 million and so this is the assumption in the market.

[rcturner2] 28/11/2023 10:48

At the last set of interim results EBITDA had more than halved to £72m. They may well do £150m this year, but how do you know that is the bottom?

The debt dwarfs the equity here, this company is owned by the bond holders.

[wigwammer] 28/11/2023 08:32

Many don't, and go on to multibag. It requires research to differentiate. They are earning £150m EBITDA in a depressed year, and post RI, are likely to face a £50-60m interest charge next year. 3x covered. Hence the banks have extended terms. Using numbers, what is your take?

[rcturner2] 28/11/2023 08:29

wig, many cyclical businesses go under when they expand and over pay at the top of the cycle and can't service their debts at the other end of the cycle.

[wigwammer] 28/11/2023 08:24

This is a chemicals business, with cyclical components. I very much hope posters here have the sense to understand why you don't price the company off profits achieved over an isolated 1 or 2 years... ATB

[rcturner2] 28/11/2023 08:20

Assets are only worth the income you can generate from them.

Much more likely they collapse under their debts.

[wigwammer] 28/11/2023 07:52

Hi Darrin. I think they overpaid for Eastman, but they are probably decent assets and the overpayment seems more than priced in at this level, IMO... Back of envelope - they paid circa £650m for Omnova, £720m for Eastman, and the average value of the legacy Synthomer business over the prior decade was about £1Bn. So that gets you to £2370m. Minus the £200m laminates business they sold gives £2170m, versus the £950m EV now. Of course, any revaluation back toward that £2170m falls into the laps of shareholders. That represents quite a lot of gearing given the current market cap is £300m... Short term voting machine, long term weighing machine... ATB

[darrin1471] 27/11/2023 22:40

wigwammer. Thanks for the heads up on McBride 18 months ago. Last months rise makes it my biggest holding. I continue to hold MCB as I see further upside in re-valuation and even higher profits.

I've had SYNT on a watch list for a few months and now the dust has settled I have taken a deeper look and I quite like the look of what I see.
The strategy of a specialist chemicals company looks sound. The price SYNT paid for Omnova and Eastman’s Adhesive Resins looks reasonable.
The Eastman’s timing is unfortunate but at the time of the acquisition (28/10/2021) BofE rates were 0.1%, we were exiting covid and the SYNT share price was near all time highs.
The sale of non core business and the return of normal trading conditions should lead to a significant recovery.
I hold no position in SYNT at the moment.

[wigwammer] 24/11/2023 07:38

"And then if we feel good about the moat, then we try to figure out whether the lord is going to try to take it all for himself..."Well done. You now recognise the moat comes first. And re Synthomer, the lord is currently bound and gagged somewhere in the cellar... if you want a contemporary example of how this works in practice, take a look at McBride over the last 12 months... ATB

[al101uk] 24/11/2023 00:36

“When a management with a reputation for brilliance tackles a business with a reputation for poor fundamental economics, it is the reputation of the business that remains intact”

I love that you used that quote, but I'm not sure it's saying quite what you wanted it to say.

I'll leave you with WB quote of my own, about moats:

"What we're trying to find is a business that, for one reason or another, it can be because it's the low-cost producer, it has a natural franchise, because of surface capabilities, its position in the consumers' mind, it can be a technological advantage, or any reason at all, that it has this moat around it.

But we are trying to figure out why that castle is still standing? And what's going to keep it standing or cause it not to be standing 5, 10, 20 years from now. What are the key factors? And how permanent are they? How much do they depend on the genius of the lord in the castle?

And then if we feel good about the moat, then we try to figure out whether the lord is going to try to take it all for himself, or whether he's likely to do something stupid with the proceeds, et cetera."

Anyway, good luck with your investment.