Fenner (370p and 3% of JIC portfolio): I have bought a holding in Fenner today. I have held the shares in the JIC portfolio before but sold out last May at 400.2p. Since the pre-close trading statement on 7th March which wasn't terribly bearish but neither was there enough to drive the shares on in the short term, the share price has come back some 15%. At this level it seems attractive to me on an August 2013 PE ratio of 11.3x, falling to 10.1x August 2014 (10% growth) and 9.1x August 2015 (10% growth). Its forecast dividend yield is 3.1%.
What does it do? The following is taken from the 7th March trading update:
Fenner PLC is a leading global provider of local, engineered solutions for performance critical applications. The group operates through two divisions: Engineered Conveyor Solutions. The ECS division, trading under the Fenner Dunlop, Fenner and Dunlop brand names, is a recognised leader in the global conveying market. The division offers a unique, comprehensive suite of products and services, which cover the conveying needs of mining, power generation and bulk handling markets. Advanced Engineered Products. The AEP division excels at solving customers' most challenging application problems. Drawing from an unprecedented array of polymer, elastomer and textile technologies, the division routinely develops innovative performance- critical components for OEM customers in markets from underground oil exploration/mining to satellites/aircraft, speciality off-road vehicles to implantable medical devices, and from bank note dispensers to wind turbines. The Division's trading names are recognised globally and include Hallite, CDI Energy Products, EGC Critical Components, FAST, Fenner Precision, Fenner Drives, James Dawson, Secant Medical and Xeridiem.
The balance sheet is okay with net gearing estimated at around 50% at the half year stage, following £60m of acquisition payments and it is highly cash generative. It is a cyclical business and in the 7th March trading statement it warned that things had been a little slow in its December - February quarter but that it was "well positioned to respond to generally improving demand drivers and looked forward to continuing to make progress through its traditionally stronger trading period".
Conclusion: The shares have fallen back over the last month and in my view now look ripe for a good bounce, which will be helped if the Company can give a more positive update with its half year results due towards the end of this month. (see transaction history)
Filed Under: Industrials,
"The investments and any other products mentioned in the johnsinvestmentchronicle website should not in any way be considered advice to buy or sell anything. Any information on the website is given in general terms and does not constitute personal advice to any individual. Readers are responsible for developing and applying their own strategies based on their personal circumstances and furthermore readers should obtain independent financial advice from an FSA regulated intermediary before investing money. Information or views in older blogs may become outdated and should not be relied upon unless confirmed by recent comment." "johnsinvestmentchronicle takes every care to ensure that the factual information on its website is accurate but cannot guarantee this."