Tricorn Share Discussion Threads

[interceptor2] 12/6/2012 16:25

Strong buy recommendation from Growth Company Investor today.

Must admit, I dont know of any investors that are concerned that Tricorn is offering dividends with only £600,000 in net cash with substantial capital expenditure in China.

I'm not concerned at all.

ic2...

[paleje] 12/6/2012 13:56

Westhouse reiterated its stong buy target 50p this morning.

[glasshalfull] 12/6/2012 13:40

cfro - caught sight of your post.



33,164,000 weighted number of shares adding back dilutive shares (951k)

£1,252m profit divided by 34,115,000 = 3.67p EPS for Diluted adjusted earnings per share.

Regards
GHF

[rivaldo] 12/6/2012 08:25

I use the straightforward adjusted figure of 3.78p EPS, but that's just my preference.

Nice rise this morning already. The Birmingham Post has a summary of the results with very bullish comments from the CEO etc:



"West Bromwich-based Tricorn Group has posted a record set of preliminary results with revenue up by 14 per cent over the year ended March 31 2012.

The strong performance has prompted the manufacturer and specialist manipulator of pipe and tubing assemblies in the energy & utilities, transportation, and aerospace sectors to recommend doubling its full year dividend to 0.2p.

With facilities in the UK and China, Tricorn employs more than 300 employees and operates through the brands MTC, Redman Fittings, Maxpower and RMDG Aerospace.

The group's operating profit margin was up 31 per cent and adjusted earnings per share up 47 per cent to 3.78p.

The company turned over just under £25 million compared to just under £22 million in 2011.

Profit before tax totalled more than £1.6 million compared to just over £1 million in 2011 and the operating profit margin was 7.2 per cent up from 5.5 per cent.

Chief executive Mike Welburn said: "We have some big name customers like Caterpillar, JLR, Rolls Royce and JCB - niche markets that combine some strong margins.

"They are a record set of results."

Mr Welburn said the company was very positive about its future prospects and added that its Chinese manufacturing facility was on track to be up and running later this year.

"We have made good progress in securing new business," he said. "We are going to be setting up a new manufacturing facility in China to capitalise on the growing market out there. We have now got the facility, got the general manager and will be operational by the end of this year and earning money in 2013.

"We are aligned with major global OEMs and will continue to make good progress in China.

"I am optimistic about the mid-term growth opportunities and we are confident of making further progress over the current year.

"Aerospace is particularly well positioned. That business has returned to profitability this year.

"There is a fair level of momentum in the results already and an opportunity for further growth for us."

Finance director Phil Lee said: "We have strengthened the balance sheet and doubled the dividend payout. Revenue was up by 14 per cent and we saw improvements across all our business segments."

[cfro] 11/6/2012 18:44

GHF - How are you calculating your 'adjusted dilluted eps figure of 3.67?.....i work on the basic eps of 3.49p which is where we all thought it would be around.

Nice rise today and should be still plenty to go for. So much to like here in the results, i cant find any negatives at all apart form divi not paid untill Oct. Think i could put up with that tho! :-)

[interceptor2] 11/6/2012 15:51

Very impressive cashflow generation. Net cash flow from operating activities = £1.296m and Capex = £0.451m. So they had CFS of 3.91p and capex ps of 1.36p. And these figures dont included the sale of treasury shares of £0.278m, which are highlighted seperatly under cash flow from financing activities.

As well as the confidence shown by doubling the dividend, worth rememering that they paid off bank borrowings in October 2011 which were due in August 2012.

ic2...

[pugugly] 11/6/2012 15:41

Certainly not to be bought for yield - Currently 0.65% - but that said very promising results.

[alter ego] 11/6/2012 14:36

agree GHF, still very undervalued.

[glasshalfull] 11/6/2012 14:18

Catching up with RNSs...and delighted with TCNs results.

I'd 3.55p EPS pencilled in but a quick check shows adjusted diluted EPS 3.67p...so they beat my own internal upgrades.

Importantly cashflow and margin improvement also highlight progress and nice progressive dividend policy now in place with a doubling of the dividend...although they could surely pay it a tad quicker than mid October ;-) Another of my holdings OMPP announced this morning...tripled their interim dividend and it goes ex-div this Wednesday with payment in 3-weeks. That's more like it!

Anyway, back to TCN. Surely they are too cheap on a historic PER 8 with further growth flagged in the coming year and strong b/s not to memtion net cash position to fund organic growth? I'd have thought that they deserve a rating c.12 and would imagine that they should produce EPS 4p+ this coming year...so I'd suggest at least 50% upside to more reasonable valuation.

Regards,
GHF

[rivaldo] 11/6/2012 14:15

Good coverage here - note the broker comments:



Extract:

"House broker Westhouse Securities said Tricorn delivered a strong set of results on improving margins across the group.

"While there was significant capex [capital expenditure] in FY2012 [fiscal 2012], this will be substantially higher again in FY2013 with the recent customer-led move into China. The Transportation and Energy & Utilities divisions both traded strongly throughout FY2012 and the Aerospace division was returned to profit," Westhouse analyst Robert Sanders said.

Going in to bat for his client, as any house broker would do, Sanders suggested Tricorn is "substantially undervalued", especially as there is scope for the strong forecast organic growth to be boosted by acquisition in due course.

Tricorn management reckons it is set for growth this year, even without an acquisition. "With our proven ability to deliver operational improvements we are confident of making further progress in the current year," the company said.

The share price rose 7.5% to 32.25p. "

[rivaldo] 11/6/2012 09:57

Terrific results today. 3.78p historic EPS puts TCN on target for say 4.2p minimum EPS this year, and perhaps 4.5p+?

The doubling of the dividend is a big clue as to confidence going forward.

And the outlook statement backs it up, with the aerospace turnaround particularly pleasing news:

"Outlook

Our alignment with major global OEM customers and our expansion of manufacturing to serve the expanding markets of South-East Asia positions us well for the future and we are very optimistic about mid-term growth opportunities.

Tricorn has a very sound basis for future growth. With our proven ability to deliver operational improvements we are confident of making further progress in the current year."

[tigerfedor] 11/6/2012 09:25

puts a smile on the face after a few tough weeks, tcn my largest holding, this company is so solid.

[apad] 11/6/2012 09:22

Cash flow flattered by sale of shares held in treasury.
apad

[interceptor2] 11/6/2012 08:48

Very nice indeed. So many positives. Net margins 4.68% now vs 3.15% Last year, and aerospace division turning around quickly now. See half year breakdown below.

Aerospace PBT/LPT
2010 H1 = -0.169M
2010 H2 = -0.114M
2011 H1 = -0.045M
2011 H2 = +0.070M

Welcome APAD, nice entry price imo.

ic2...

[daz] 11/6/2012 08:45

Also like the fact that the Chinese factory is effectively going to be paid from cash resources: existing cash and this years cash flow, and will be earnings enhancing from next year (March 2014). So cash earning a pittance in the bank is being used to fund organic growth to generate cash for further growth/dividends, exactly what you want to see.

[cfro] 11/6/2012 08:35

Its the way they've turned the business around from debt to a net cah position which is impressive. Also margins up and Aerospace division nicely in profit.

[apad] 11/6/2012 08:15

Impressed.
Particularly like the costs and timetable for China. Cashflow very good.
Bought an initial holding.
apad

[shauney2] 11/6/2012 08:06

All very positive.
Good to see the problem Aerospace division is now growing profits.Growth in China to come and net cash.

[cfro] 11/6/2012 07:38

Yes very good. Basic eps around 3.49, so what we were all looking for. Net cash over half a million which is rather comforting.

[cornishman33] 11/6/2012 07:25

Sales up, profit up, margins up, EPS up, net cash up, divi up. Outlook 'we are confident of further growth in the future'. These look pretty good to me.

[apad] 02/6/2012 07:47

A few further thoughts...
The companies in the TCN group are each very impressive, from an engineering viewpoint. Nevertheless they do depend on the big groups sending in the orders and that depends on the economic environment (Royces less so than Caterpillar).

cfro
I had a quick look at CMH a while back (seem to remember that it was two businesses), will have a look again (Castings is my benchmark). Don't know PLA. Ta.

All bets are off for a while, because of the US figures. I'm now expecting the printing presses to roll again, otherwise there may be a Mormon figureheading the US.

apad

[apad] 02/6/2012 07:20

GHF & cfro
The numbers and management case is, and was, agreed.
What I can't get my head around is those bloody funny patents (header) and how they have a technical edge. If I am Royce's is my choice for a bit of bent pipe from a number of suppliers and is TCN competing mainly on price (whatever is said about quality, etc.).
Having said that the customer base is very good and expanding.
But, following the rise between summer 2010 and summer 2011 the share price hasn't gone anywhere much.
I'll have another look when there is a full year set of results to mull over.
apad

[cfro] 01/6/2012 22:17

Same here. I wouldnt buy IMI myself, no way.

If you are looking for two more in the sector APAD then have alook at CMH and PLA.

Meanwhile, results due here next week.

[glasshalfull] 01/6/2012 18:44

APAD - Just had a quick look & comparison with TCN & IMI, who I only knew from reputation to be a Goliath in the industry

TCN

Year end 31/03/12

Market Cap £10.1m
Net Cash (current value of net cash unknown)
Released two "trading ahead" statements this year
2012 PTP (estimate for year ended) £1.6m
2012 EPS (my est. for year ended) 3.5p
Prospective PER 8.5

IMI

Year ended 31/12/11

Market Cap £2.7 billion
Net Debt £101m

Adj PTP £363m
Adj EPS 81p
Historic PER 10.5
Prospective PER 2012 is 10

There is no way to make a meaningful comparison but the exercise left me with the thought that with TCNs experienced management line up all holding senior roles with ICI & Rolls Royce, and with TCN only being capitalised at £10m then if they achieve a small fraction of success & ever achieve a valuation of 1% IMIs market cap, then I'm sure myself and a lot of TCN shareholders will be absolutely delighted ;-)

Reminds me of my study of NBI and then looking at the the daddy of the sector, Aggreko (AKG).

I'll stick to the small caps.

Regards,
GHF

[apad] 01/6/2012 10:03

Decided against this because I can't see its technical edge over IMI (mind you as it's run by an ex IMIer - WDIK).
DPLM and RBN (bloody big spread and no trades other than delayed director buying) are left on my shortlist of specialist engineers.
Any other views on potential growth companies in this sector?
apad