William Sinclair Share Discussion Threads

[jimcar] 06/9/2003 17:00

I don't think you can look to far back on this company as it is now a very different animal after the disposal of the pets side of the business.

The usual problem on the horticultural side is that the weather is too wet for gardeners so this year it has probably been too dry. Wyevale reports next week so there may be a clue there. Alternatively their peat bogs will have dried up.

[diogenesj] 06/9/2003 15:27

Thanks, Andy. I expect you're right. Forecasts were for eps of 4.50p (-56%) for the year to 30 June last (PE 15.56) and a considerable recovery to 8.30p (+85%) for the current year (PE 8.43). Bearing in mind that they had plenty of cash and virtually no gearing, and that they have been buying back shares, I thought it possible that they might maintain the dividend (even uncovered) for one year. However, they did slash the interim, so I expect they will do the same to the final.

[andysand] 06/9/2003 15:09

Forward p/e is well desreved IMO. Earnings have been dropping steadily since 1997. Dividend was cut in 2001 and has only been maintained since. Could be another dividend cut in the pipeine as eps will be lower than dividend this year which makes no sense unless they are expecting a dramatic increase in margins (which are terrible), and therefore earnings. Not for me.....


Andy

[diogenesj] 06/9/2003 14:51

Shareholder value not looking too good at the moment. The price has dropped 15% in 3 weeks. This suggests to me that the results due in October are not going to be up to scratch. Is anyone aware of any broker downgrades, big sellers, or other adverse event that could explain the drop?

[thatsourlinda] 15/8/2003 08:01

Update thanks to colourfool on The Motley Fool. "dy 9.02" "and PTBV is now 0.56 and gearing 2.5%" should appeal to Value investors, amongst everything else about this company.


Dear All

One for consideration:

Figures from REFS based on price of 66.5p. They are now at 80p (relative strength if you like it) but just couldn't be bothered to recalculate:

dy=9.02
p/e=8.16
gearing -2.1%
PTBV=0.74
year end: 30 June
mkt cap: 11.0m

Forecasts:

03 04eps 5.4 8.4

I've worked through the interims and PTBV is now 0.56 and gearing 2.5% (not much). So still good value.

"The board remains firmly committed to the strategy of maximising shareholder value"

Regards

Colourfool

[thatsourlinda] 11/7/2003 15:01

Someone must have spread some growmore around the price today. Any specific reason for the rise, or just a general appreciation of the undervalued nature of this?

[ben franklin] 09/7/2003 07:32

Wyevale Garden Centres, who have 30% market share of the garden products business and run 124 garden centres in England & Wales, yesterday reported on trading for the 6 months to 29 June 2003. Like for like sales were up 2% on last year, and total sales grew 8.6%. The weather pattern was similar to last year with a good Spring followed by a wet May and a hot, sunny June.

In March Wyevale introduced "10% Discount Tuesdays" for the over 60's and a number of 10% discount weekends to combat increasing competition from DIY and supermarket operators. Some of this competition relates to bedding plants so would not directly impact William Sinclair. Wyevale maintained market share and drew in customers earlier this year.

The extra discount did not impact Wyevale's gross margins as its buyers brokered better deals with suppliers. That implies increased profits for suppliers like William Sinclair must come from lowered operating costs, volume increases and new products, which is consistent with Sinclair's own comments.. Wyevale's stock levels at the end of June were in line with the company's expectations, which is good news for its suppliers.

Wyevale's like-for-like sales in the first quarter to end March were up 4.4 per cent and in the second quarter grew 0.9 per cent . Like-for-like sales fell 2.9pc in April, after a 20pc increase in April 2002. They picked up 3pc in June and May.

Last year William Sinclair reported sales up 30% for the 10 months to end April, but then year on year growth fell back very sharply in May and June. It's encouraging to see Wyevale sales up 3% year on year in May and June.

Whilst the above isn't stunningly good news for William Sinclair, equally it's not bad news either. The company seems to have identified correctly what it needs to do to grow the business, and market conditions in the last 6 months seem to have been better overall than the comparable period last year.

No reason at this stage to suppose the broker forecasts of a maintained 6p dividend and current year EPS of 8.25p won't be achieved. That's a yield of nearly 7.9% and a PE of just over 9 at the current 76p.

Following the recent market rebound, not many companies are offering this combination of high yield and relatively low PE.

[ben franklin] 17/6/2003 09:35

Sinclair's broker Arbuthnot last week published a comprehensive buy note on William Sinclair, rating the share a buy for both income and value investors.

Arbuthnot say Sinclair will maintain their total dividend at 6p for the year to 30 June 2003, meaning a 4.5p final dividend payable in October and a yield of 8.6% at the current 70p offered. Currently the FT shows Sinclair as having reduced its total dividend, but this interpretation seems incorrect. It is simply a matter of changing the balance of the interim and final dividends to better match the seasonality of the business.

There is some downside with a pension deficit to be resolved, but equally there is upside as Sinclair are operating in a consolidating market (thus with the possibility of takeover) and they hold valuable peat reserves in Cumbria. English Nature may seek to stop Sinclair using some of this resource, and if they do compensation is likely to be payable to Sinclair. Sinclair's competitor Scotts were paid £17m for ceasing use of their peat reserves.

The broker is forecasting EPS of 8.25p for the year to June 2004, putting the company on a PE of 8.5x 2004 earnings. Sinclair has annual sales around £45m, and its market capitalisation at 70p is under £12m.

For a business selling much of its output into what is surely a growing leisure market, the PE multiple seems low compared to other participants in the same market. With an annual cash return of over 8.5% on an initial investment at 70p, the shares seem good value.

[thatsourlinda] 27/5/2003 08:07

I dont know the reason for the big rise on Friday but strangely enough, I was in Sainsburys and saw piles and piles of Arthur Bowers teraccotta bark chips on some sort of promotion. If this selling to supermarket chains is a trend, then I would expect to see Sinclairs turnover shoot up this year.

The shelves in my local garden centre are full of Bowers products as you would expect, but now in new packaging. The brand carries premium prices.

Do any gardeners read this? Even I have heard of Arthur Bowers, and confirmation that they are the lead brand in gardening materials would be nice.

SNCL may appear to be in a somewhat boring business, but leisure is a growing area, and gardening spending is growing rapidly within that sector. Given that, and also the very cheap rating applied to Sinclair, it looks a good buy to me, before everyone else latches on.

[a0002577] 23/5/2003 14:00

Interesting large rise today - is there another move on the cards for this one?

[rma] 08/5/2003 18:49

Any news here? Appears good asset backing and divi payout.Comments please.

[ben franklin] 11/2/2003 17:04

478,000 shares traded at 55p in 2 blocks earlier today - significant volume for this company.

[thatsourlinda] 28/11/2002 23:11

£2 million cash generated, from 2 redundant properties on the books at £1.75 million. A further 2 properties sold raising another quarter of a million. They have plenty of cash on the balance sheet, and the cash announced today will be used to lower debt. We should soon hear more of the approx £4.5 Million from the sale of the pet food business likely to be returned to shareholders by the financial year end., and that is additional to the 11% dividend already paid.

[washbrook] 23/10/2002 09:07

Interesting this morning .On 2 trades, buy at 55p ex dividend and a sell at 55p, one hour later.I tend to agree with Thatsourlinda seems to be strength in the stock.

[thatsourlinda] 22/10/2002 20:10

Not quite 2.5p per day rise today, but a bumper 9p, being 18%. I expected to look at the trades today and see lots of buys for tomorrows 3.6p dividend, but no, all I saw were 4 or five small trades, mainly sells. No published news whatsoever. It appears to me that there must be a big buy in the wings for that sort of price rise. Brokers can split a big buy order into several smaller orders, and buy those individually without a trade report until after the final chunk has been bought. If this is the case, and it certainly looks like it, then it seems that there is at least one more buy (from a bigger order) to be satisfied. Of course there may be many more than one also.

So I expect a 3 or 4p drop tomorrow to account for the xd, followed by some sort of rise as further buys from a big order go through. The fun will be over, as far as this trade is concerned, when a large buy is reported. It has to rise an aweful lot more before this looks anything like being reasonably valued in my opinion.

[washbrook] 22/10/2002 09:25

Since it bottomed on 15.10.02 at 45p keeps moving up at 2.5p per day on little volume.
85.25p in dividends since 1991,seriously undervalued.

[bryan2] 26/9/2002 07:47

Is this sale of of the profitable part of the business to family/major shareholders at a knock down price part of a recent trend?
Silentnight,Send group, Regal hotels are all examples.
All thats required is a cosy relationship with the board most of whome will have been appointed by them!

[thatsourlinda] 25/9/2002 21:33

Released after the market close, Sncl selling pet foods unit for cash, cash to be returned to shareholders at end of financiual year.



After a quick look it looks like about 25p per share will be returned soon.

Current price is 50p, net tangible assets 100p, price to book is 0.5.

Disposing of 25p of those assets and returning that cash to shareholders can probably be acheived with little effect on the current share price, given the very undervalued nature of the company.

The P&L will be enhanced considerably this year with the write back of previously written off goodwill to the tune of a net £4.8m (after deducting carrying value writedown).

Pre-exceptional profit to be reported at £3.3m, up 14% from £2.9m last year.

All great news, tempered by weak trading of the first two months of the current year. The very high dividend looks safe though, the capital re-organisation will enable these payments to be made into the future.

All in all, after a brief look, I would expect a step up tomorrow even in this terrible market.

[thatsourlinda] 09/9/2002 23:43

StewJames asked for any ideas on property revaluation and the decrease in value. I have an idea, just speculating of course.

The property review is every 3 years, and due now. SNCL has during that time ceased production from some peat bog or other, probably due to regulatory or simply green customer pressure affecting demand. Noe non-cash generating, I should imagine the value of the land has plummetted, and probably accounts for more than the expected £2m property depreciation. To put this into perspective, the tangible net assets at the last results were £21.8m, so the effect of the write down on tangible assets woukld be equivalent to £19.8m at that time. Contrast this with the current market capitalisation of £12m (or maybe a little more after today's rise).

The reduction in the tangible book valuer of that bog may well be ephemeral since the company is applying for parts of the bog (if that is the right word!) to be declared a site of special interest. According to the company, 'The outcome of this process may enable the Group to pursue a commercial resolution to its lost resource'.

As to bricks and mortar, I can't imagine that being worth less than 3 years ago, and probably substantially more. The group is currently rationalising its operations and property will be/is being released for sale. Great - I hope they sell it quickly into the current property market.

I always like shares rising in price before results on virtually no trades. Makes me think the market makers know something concrete the rest of us don't.

[washbrook] 09/9/2002 09:08

My best performer today.

Bought at 52p .
div cover 1.2x
consensus buy
days since low 55
proj yld 12.45%
proj PEG 0.59
proj P:E 5.75
CPN=£12.5m
Fridays figures.
16th TOP gainer

[stewjames] 25/7/2002 15:53

Not that it's particularly important but I notice they're revaluing freehold properties this year and are expecting to write values DOWN fairly significantly. This seems rather curious considering the buoyant property sector! Any ideas why?

[washbrook] 25/7/2002 15:27

Welcome to shareholders I'am in for 10k today the only trade.
Undervalued.
Being waiting to buy this stock on my watch list.

[thatsourlinda] 26/5/2002 19:15

Old Mutual has earnings per share of 9.3p this year rising to 10.2 p next year. At 59p, this gives a current year price/earnings of 6.3, and next year of 5.8. Dividends are forecast at 6p giving a yeild of 10.16%

That beats Earnie, banks, building societies, the lottery (unless you're very lucky), and most other value shares.

[farmsted] 20/5/2002 08:32

Pleased to see that the overheads are being addressed, assuming the chairman has taken his pension.

[glennborthwick] 17/4/2002 13:54

Combination of good weather and the value of this share. First time Ive looked at this but do like it.