Good morning, it’s Paul here with the SCVR for Friday.

To start you off today, here are a few stragglers from yesterday’s agenda, which I prepared last night.


Alumasc (LON:ALU)

92.5p (up 16% yesterday) - mkt cap £33.3m

It’s always worth looking at the top risers for the day, as there could be some important news out that could drive a bigger upward move. Some of my best investments have come from this, over the years.

This looks a belter of an update!

"Alumasc has begun the new financial year to 30 June 2021 strongly with record profits in the first quarter.
Each of our three divisions - Building Envelope, Water Management and Housebuilding Products - has contributed to this record performance. The restructuring over the previous year, which provided £2.4m in annual cost saving, undoubtedly benefitted margins, which were well ahead in the period, helping in particular Levolux and Gatic.
This profit performance has been accompanied by equally strong cash generation, reducing net bank borrowing of £4.3 million at 30 June 2020 to below £1 million at today's date, against total facilities of £24 million. Our borrowings continue to benefit from VAT deferrals of £1.8 million, payable later in this financial year. Furlough income received in respect of a low number of employees who have since become redundant has already been repaid to the Government.

Is this pent-up demand after lockdown? The company says it is too early to say, but says there is nothing abnormal about patterns of demand - implying that this might not be pent-up demand.

Export demand - described as “lively”

Order books - “robust in general”

UK Govt infrastructure spending - “early signs” of an acceleration, expected to “boost demand in the coming months”

The company’s products are well aligned with the environmental sustainability agenda.

My opinion - this is very impressive indeed, given the economic backdrop.

There’s a useful update note available from Finncap, which highlights the “erroneously low PER”.

Before we rush out and buy the shares, I would urge you revisit my notes here on 8 Sept 2020, for Alumasc’s results for FY 06/2020. I flagged the £19.3m pension deficit, which is sucking out £2.3m p.a. In deficit recovery payments - these are big numbers for a company valued at £33m. Companies with large pension deficits relative to their size, are usually valued…

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