Waterlogic Share Discussion Threads

[shanklin] 10/3/2007 07:42

CR

Have to say this share is a complete disaster... NOT

They muck up big time, with logistics guys destroying large numbers of Liebherr products, and management lose all credibility with some posters here.

However, despite this, EPS & PBT has grown 25% per year in the year just ending, and will grow by at least that much next year. And that's assuming DS's (IMHO) pen first, brain second, downgrade for next year has some basis in fact despite the RNS indicating that this year's problems all relate solely to the current year.

So, at at 78.5p:
- we're on a forward P/E of at most 8 and more probably 6.5 vs OME's forward P/E of circa 20
- with the NAV at just under 60p
- on a share paying a yield of 3.8%

Perhaps a massive over-reaction here and a share I will look to buy more of once I've had a chance to speak with the FD to confirm that all these exceptionals were one-off hits.

Cheers, Martin

[cockneyrebel] 09/3/2007 20:29

Exactly!

Brave aren't they, tipping stocks but not having their money involved. If they did hav they'd do a bit more research. I think there's more in the header than in that tip.

CR

[hattori_hanzo] 09/3/2007 19:27

CR - Actually, thinking about it, you're right about that, the company probably wouldn't say anything negative to the RHPS guy.
But it strikes me they probably still said some very positive things to him or he wouldn't have tipped WTL. He probably still feels stiched up.....but that's his fault for being a tipster instead of being down here in the trenches with us, the REAL experts.
Anybody who has the guts to do what we do for a living is worth a 100 tipsters.

[cockneyrebel] 09/3/2007 17:00

HH - I don't think the co is obliged to tell RHPS about a problem they have before telling the market.

Why were these so cheap a few weeks ago? It wasn't because punters thought profits would miss, it waas because the market thinks consumer products are finding it tough and sales would miss. Sales have hit the mark, they have an issur re IT and logistics that has been resolved.

I agree with DorQ - these look set to make the numbers for 2008 that were always predicted still, the broker adjustment looks pure precaution imo. Even if it is justified these are still cheap, compound 40% growth on a PE of 8. It just requires rational thought imo. I think there is a rational thinker out there too. The bid is a penny below the open yet there ar enet 50K sells today if you look at the trades - the mm's are getting stock for somebody.

CR

[hattori_hanzo] 09/3/2007 16:33

The interesting aspect is that the offer price is 1p more now than it was at 8.00am on Monday after it had been tipped by RHPS! lol!
So it's more expensive after the profit warning than it was initially after it was tipped!!
Hardly a collapse, is it!

However, I do agree with many of the comments about the management, or at least the FD. Questions do need to be asked as to why this wasn't flagged, because it surely must have been known about for a while. Those director sales look more than a bit dodgy.

But what looks really dodgy is the RHPS tip. It seems hard to reach any other conclusion other than a management representative must have lied through their teeth to the geezer at RHPS who tipped them (surely he must have spoken to someone from WTL, they usually do before tipping). That is really not good.

But the market doesn't really seem that bothered, atm, does it! Like I said, it was cheaper first thing monday morning! Fundamentally, it still looks good value. But I guess next week will be the acid test of sentiment, more towards the management than the share itself, imho.

That's my honest appraisal of the situation.

dorq - I twigged yesterday why you were worried about my HH initials. No, I'm not him. ;-)

....and I already know which share Liars is on about. But it's down more today, after releasing very good news yesterday, than WTL is after it's profit warning! You couldn't make it up! It's a funny ol' game, eh!

[doubleorquits] 09/3/2007 16:03

Excellent post Shanklin. That's where I'm seeing things too - there's huge upside potential from the Coolectrics acquisition once things are sorted out. I believe they have a large proportion of the European market already.

Yes, there are problems vis a vis management managing the company efficiently and whether they can be fully trusted. But for now their experience is worth backing for me and I believe inside 12 months we will have a trading update to say they are ahead. I think DS downgrade for this year is right - but I'm not sure about next year: I think 12p is still probable if everything goes to plan from here and trading remains robust.

[cockneyrebel] 09/3/2007 16:02

excellent Shanklin, cheers.

I suspect we might also see director buying when the punters have got their knickers out of a twist. If they don't like 40% compound growth on a fwd PE of 6-8 and a 3% yield there is always something like CLE on a PE of a squillion and mkt cap of £330m lololol!

CR

[cambium] 09/3/2007 15:58

Whilst DS have downgraded its still a buy to 110p

[shanklin] 09/3/2007 15:56

FWIW, I understand that most of the exceptional costs relate to logistics/warehousing. Apparently the Liebherr products are very fragile and an excessive number were being broken by under-trained staff who had to use inadequate packaging etc. Perhaps not surprising in the circumstances that the Logistics Director has been replaced.

Based on what I've managed to find out from shop floor contacts, I have no clue why DS have downgraded next year's EPS. I'm half guessing that the guy there has engaged his pen before his brain in producing next year's forecast.

Anyway breakages of Liebherr producucts which were running at 7-8%, against a budgeted allowance of 2%, are now down to 1.7% and the guys there are aiming to get it down to 1%.

Reading between the lines my guess is that:
- the Logistics Director didn't manage the problem either openly or very competently.
- the DS downgrade is unjustified given that sales are described as "robust" and the logistics/warehousing issues are resolved

Volumes of Liebherre sales are also rapidly on the up which is hardly surprising given the mkt share they typically achieve in Europe vs the paltry historic levels of sales in the UK.

HTH. Not buying any more WTL until I've spoken with the FD, hopefully on Tuesday for confirmation of what I've heard through informal channels.

Oh, and remember, don't ever try to juggle more than fridge at a time :-)

Cheers, Martin

[masurenguy] 09/3/2007 14:52

A balanced view DoQ.

This has been on my Watchlist for a while but so far I have not been tempted to invest. Last years 'exceptionals' were a warning flag and now we have a repeat performance. The company still appears to have good potential for the future but management need to regain credibility to encourage further investors IMO.

It appears that profits will now be 10% below last year. Assuming a similar tax liability the historic PE will therefore be circa 15. Debt servicing is still covered by over three times earnings and the forward PE will have to be determined from new broker forecasts. I'll be interested to see them.

[doubleorquits] 09/3/2007 14:35

Well whoever he is, he's only just turned up, reads what he wants to read and copy and paste is his only strength.

Don't mind a contrarian view - and agree it was a profit warning for this year. but that is it. DS note is being too cautious for next year.

Anyone wanting to speak to the company and find out what their take on it is then the Financial director will be away until Tuesday but I'm sure they'll answer your questions. Until then Hawkwind should get back on his silver machine and disappear.

The comments made about management credibility etc. are constructive and I have to agree that it has dented my faith in them. No problem with that view and no counter to it - although I am happy to hold.

However, again a telephone call to the company would be a much more worthwhile exercise than listening to the likes of Hawkwhinge (not that I'm suggesting that the contributors of the negative views on management do in fact listen to the likes of him you understand). One may say they are bound to put a positive spin on things but ask the right questions and one tends to get the answers (and the wriggling and squirming in amongst long, fumbling silences gives it away anyway - not that I'm saying the management would do that you understand).

Anyway Hawkwhinge who has just turned up and appears to have no previous form worth listening to is now filtered.

[masurenguy] 09/3/2007 14:08

I agree. Management credibility is crucial in any investment and, while the fundamentals look good, this appears to be the second consecutive year that exceptionals or one-offs have hit the bottom line. Knowsleymans point about the FD making provisions over a period of time is absolutely right. They did not wake up on Monday and suddenly discover these incremental costs.

[knowsleyman] 09/3/2007 13:51

I have read, carefully, all the comments made today and have come to one simple conclusion and that is that a false market has been created in WTL for some period of time and certain people have taken advantage of that, it appears to me. A costs overshoot of £500K does not appear overnight. The FD should have been aware of these accumulating costs for a considerable period of time. That being the case should it not have been reported to the market MUCH earlier than today? Has this company grown beyond the ability of the present FD to manage? Can we be certain that the problems have been resolved and that down the line we are not hit with another bolt from the blue?

[cockneyrebel] 09/3/2007 12:59

might be his cross-dressing hermaphrodite brother?

CR

[diogenesj] 09/3/2007 12:52

Thanks, Liars. Do you think Hawkwind could be a reincarnation of Fusebox?

[liarspoker] 09/3/2007 12:29

DJ - check your hotmail account.

CR - you have mail as well.

[cockneyrebel] 09/3/2007 12:20

" Hawkwind : - I bet Tom Bullford at RHPS as had a few words to say to them.

Cant do much for the reputation of his tip sheet, although he is one of the very best around.


Well if you are a RHPS follower windy I think that sums you up.

The fact is the EPS here year on year has been 5p, 7p+, 10p+(e) and even if investors have been disappointed they are holding cracking growth on a fwd PE of just 8.

You were promised a Bentley for free and got given a Merc, is that so bad?

And a 3.5% yield

CR

[nickcduk] 09/3/2007 11:35

Those director sells in December could do with being investigated. Seems like a case of insider trading unless the problems only miraculously arose in the last 2 months.

[diogenesj] 09/3/2007 11:24

Do stop crowing, Hawkwind.