Alumasc - sell or sit on ones hands?

Wednesday, Mar 14 2018 by
9

Profit warning from Alumasc (LON:ALU) this morning. As expected the lowly rated share price has been caned. The company quantifies the effect of the profit warning citing a 5% reduction in revenue and 15% reduction in profit before tax. I am not sure but my best guess is that this translates into EPS of 17p for the year to June 2018. There is also a post tax pension deficit of £17.1m as at the recent interim results.

The dilemma now is whether to sell or sit tight. Stockopedia research suggests the former. Alumasc appears to well managed and the reasons for the profit warning are creditable. On top of which directors hold about 20% of the equity.

All thoughts and observations welcome.

Jonno


Filed Under: Behavioural Finance,

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The Alumasc Group plc is a building products, systems and solutions company. The Company's segments include, Solar Shading & Screening, Roofing & Walling, Water Management, and Housebuilding & Ancillary Products. The Solar Shading & Screening segment offers Levolux's architectural solutions, which are used to shade and screen buildings. The Company creates bespoke balcony and balustrading solutions. The Roofing & Walling segment provides waterproofing systems for flat roofs, roofing support services, exterior wall insulation systems and facade systems. The Water Management segment provides a range of industry solutions to help manage water originating inside or outside of the buildings and convey it in a controlled and safe way to discharge into water courses, sewers of the ground. The Housebuilding & Ancillary Products segment offers house building and ancillary products, such as ventilation products, cavity closers and trays, access panels, loft doors and dry roof verge products. more »

LSE Price
128p
Change
 
Mkt Cap (£m)
46.3
P/E (fwd)
6.8
Yield (fwd)
5.9



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10 Posts on this Thread show/hide all

Mike888 14th Mar 1 of 10
8

I have simple rules on profit warnings especially when the market is so angry about it, sell, relax and wait for a re-entry when\if things start to improve. I know there is always the potential for market overreaction, but in my experience what follows next is more often than not a flatlining of the share price within a narrow trading range or indeed further falls.

I used to spend days trying to determine what to do for the best, and during that time I generally became more anxious about the situation unfolding, the longer I deliberated the more painful it got and the harder the decision. There is no science in my method, it just takes the stress out of it for me and I invariably feel better for it.

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jonno 14th Mar 2 of 10
1

Hi Mike
That sounds like very good advice. As you say, subject to a bid, which is I think is possible, though who knows, the stock price is likely to flatline at best, until the next set of results.

Cheers

Jonno

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jonno 14th Mar 3 of 10
2

In reply to post #338183

Just taken my medicine and sold at 132.5p.. It eliminates the anxiety and frees up cash for hopefully a more profitable and insightful purchase.

Jonno

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andrea34l 14th Mar 4 of 10
1

My opinion is similar to Mike's... except I wouldn't bother looking for a re-entry point, as I have long considered Alumasc (LON:ALU) to be a pretty dull performer. General rule - sell on bad news (there's likely to be more coming) and buy on good news.

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willhampson 14th Mar 5 of 10
2

Sorry to see the losses being incurred; I agree entirely with Mike. For what it's worth, I would personally be very weary about holding a cyclical stock that is not performing during the supposedly buoyant phase of its cyclical movement pattern.

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racthompson 14th Mar 6 of 10
2

This is a well managed business. No knee jerk reactions from me. If it falls lower, it's a buying opportunity!

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Meanmrmustard 14th Mar 7 of 10

In reply to post #338373

I'm with you on this one, bit of a shock this morning however it still looks a good business and I have time so I think i'll ride it out.

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TangoDoc 14th Mar 8 of 10
1

I live near Alumasc (LON:ALU) and know it to be a good company with a stable workforce, well sited for transport and making high quality products. I only have a small holding, so have no intention of responding to a 5% fall in expected profits in the short term by consolidating a loss. I just wish I had been able to buy more when it had fallen by 25.8% but was unable to get free time to do so. I shall watch tomorrow with keen interest.

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Mark Carter 14th Mar 9 of 10
2

I sold out in February when the shares tanked on their half-year report. That really was the signal. Although I stopped following the shares thereafter, I noticed just now that the directors made some really lame-arsed share purchases. This was very telling: it tells me to be bearish.

I'm with Mike88 on this one. "I have simple rules on profit warnings especially when the market is so angry about it, sell, relax and wait for a re-entry when\if things start to improve."

I also don't hold out much hope for a bid. Bid speculation is usually way off the mark.

I don't know where the share price will go from here, but I do know I am glad to be out.

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tripuram 14th Mar 10 of 10
2

thanks for starting the discussion.

I hold and bought some more @125. One thing that prompted me to buy
-  fundamentals and including high stock rank
- really liked the clarity of the RNS and wish every company provides in the similar way. Other companies generally glorify the positive and put a spin to the negative but ALU was straight.

Based on Ed's profit-warning analysis,
1. Share price will tank to the lowest end of day or @4pm.. However sp recovered by 10am and stayed almost at the same level. This shows in my view the fundamentals are good and the sharp sell off could be due to stop-loss triggers? may be....
2. another point from analysis, the ones that recovered and become multi-fold are the ones where the quality rank is greater than 70+. ALU's quality rank is 86.... I am not expecting this to be a multi-fold but expect this to climb back to atleast 150 level

I am expecting this to be a not a falling knife... only time will tell!!  Wish me luck :-)

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