Small Cap Value Report (Fri 9 Dec 2022) - CTA, LOAD, TET, D4T4, K3C, LGRS, RBN, AFRN, PDG, BKG, PRV, PROC
Good morning just from Paul, with it being a Friday.
It’s got to be a fairly quick report today, as I have to travel into London for an investor Christmas party at a posh club, so will be spending most of the day eating, sampling lovely wines, talking about shares, and being generally affable. So I prepared some sections last night, to get today's report off to a flying start.
Agenda
These are all quick comments, with no sections below, to save time & cover lots of ground -
CT Automotive (LON:CTA) [quick comment] - dropped 16% to 102p in late trades yesterday, after a profit warning was issued at about 4pm. Supply chain problems (including semi-conductor shortages, and China lockdowns), and operational problems, plus a delayed order, mean FY 12/2022 revenues will be lower than expected at c.$120m, and higher costs, resulting in a thumping great adj loss before tax of $11m. Cost-cutting is being implemented. Net debt at 11/2022 was $11.6m, about half of available facilities. My view - I’m not familiar with the company, but it looks problematic to me, so I’ll be avoiding this.
Crestchic (LON:LOAD) - Sky News says that larger rival Aggreko (now privately owned after a bid from TDR last year) has agreed a 400p per share takeover offer with Crestchic. This is only a 12% premium to last night’s closing price, and looks far from generous, given how well Crestchic is performing. If the story is true, I think shareholders will be up in arms about having the upside snatched away from them. I would be inclined to reject the deal when it comes to a vote. If they want it, they should pay a proper bid premium! Stockopedia shows at 356p price yesterday, the forward PER was only 12.5, so a lousy 12% bid premium seems disappointing. EDIT: here's the announcement this morning, it's 401p cash, recommended by LOAD's Directors (why???). Big shareholders (including Harwood) holding 38.5% have agreed it.
Treatt (LON:TET) - a backlog item, I’ve had a quick look at FY 9/2022 results, published on 29 Nov. Adj EPS was down 27% to 19.8p, not very good really, and at 644p the PER looks toppy at 33x. This share is really all about the growth potential from its new factory, with much greater production capacity, and more efficiency. Balance sheet is strong, although inventories look much too high. Forecasts from Edison don’t look exciting enough to justify investing here, so shareholders must be hoping it beats forecasts. That needs to happen, as on existing forecasts, it looks overvalued to me. Could be worth keeping on the watch list, and diving in, if it starts issuing out-perform trading updates in future.
D4t4 Solutions (LON:D4T4) - interim results to 9/2022 were published on 30 Nov - not very good, with a adj loss before tax of £(1.3)m, down from breakeven in H1 LY. However, D4T4 has historically had soft interims, then produced good finals, and the outlook comments suggest a similar pattern this year, in line with expectations for £4.2m adj PBT. Balance sheet is great, with £26m cash pile. Looks an interesting company, but tricky to value at the moment.
K3 Capital (LON:K3C) - another one that’s had a bid approach, at 350p, but again it’s only a modest premium of 17%, and a forward PER of about 15 - hardly an exciting outcome. At this rate, the companies that are performing well are being taken private, and we’ll just be left with the dross!
Loungers (LON:LGRS) - interim results, for a strange 24 week period (why?). Figures look disappointing, with PBT of only £2.8m on revenues of £122m. Last year’s H1 was much stronger, at £12.8m PBT, but that benefitted from reduced rate VAT, and business rates relief. Balance sheet is quite modest, with NTAV of only about £25m, so no asset-backing to speak of. Upbeat-sounding outlook comments. I covered LGRS here in October, concluding that whilst it’s a well managed business, the shares look too expensive, in what is a horrible sector where it’s now difficult to make any money at all, due to cost pressures and subdued demand.
Robinson (LON:RBN) - here’s an interesting one. Another company which has successfully hived off its pension scheme liabilities (a “buy-in”), to L&G, announced yesterday. The same thing was recently done by TT electronics (LON:TTG) . This is clearly a positive development, as it means the uncertainty & funding costs of pension schemes have now gone. Although RBN says its scheme was already in surplus, and enjoying a contributions holiday. I wonder how many other companies could also shed their pension schemes? Could be interesting.
Aferian (LON:AFRN) - puts out an in line trading update for FY 11/2022. Revenues $91m (down 2%), and profit guidance is $7.8-8.8m. ARR up 15% to $17.5m. Bear in mind that AFRN recently issued a profit warning which I covered here on 24 Oct, so today’s in line, is achieving forecasts that are half what they were a year ago. Looking at valuation, the fwd PER is now about 13, which looks OK.
Pendragon (LON:PDG) - announces that potential bidder Hedin Mobility has stated it does not now intend proceeding with a bid, mooted at 29p, "due to challenging market conditions and the uncertain economic outlook". PDG confirms that trading for FY 12/2022 is OK - "The economic backdrop remains challenging, however the Board continues to expect to deliver group underlying profit before tax in line with expectations for the current financial year."
Berkeley group (LON:BKG) - mid cap housebuilder. H1 results “robust”, profit flat vs H1 LY. Guidance unchanged for FY 4/2023 at £600m PBT. Guidance for the next 2 years’ profit is lowered from £1.25bn to £1.05bn. “Good order book visibility”. Strong balance sheet, with £343m net cash. Remember that large housebuilders are effectively being hit with a new 4% surcharge on corporation tax, called RPDT, plus cladding remediation costs, and a “building safety levy”. So we’ve seen peak earnings in the sector, and forecasts are now falling - already reflected in lower share prices. BKG has done big buybacks, so share count has fallen a lot in recent years.
Porvair (LON:PRV) - this looks a good update for FY 11/2022. Revenue up 18% on LY, 5% of which is forex help. Adj EPS expected to be ahead of market forecasts, also helped by forex. Net cash £18.1m. Order book “healthy”, and lead times returning to normal. Looks good, and for the first time in years, the valuation actually looks quite reasonable. Could be a buying opportunity maybe?
PROCOOK (LON:PROC) - profit warning. Weaker sales in recent weeks mean reduced revenues for FY 3/2023 of £60-65m, and only breakeven profitability. Costs higher. “Beginning to see the benefits” of lower priced new stock intake, and cheaper shipping costs. So margins expected to improve in new financial year. Identified £3m in overheads cost savings. Last balance sheet looked reasonably OK, so I’d say it should survive, and has previously been highly profitable. Could make a turnaround at some point, but for now probably best avoided I reckon.
Associated British Foods (LON:ABF) - owns cheap clothes retailer Primark, which it today says is seeing "encouraging" current trading. Full year outlook unchanged. Experiencing "further significant input cost inflation", but less volatility. This might refer more to its food division? Primark comments confirm that retailers at the value end are doing fine.
Explanatory notes -
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74 comments
anyone know why Quiz (LON:QUIZ) is down 10% Today?
Here is my next meander for a Friday afternoon...
What do you do with Property Franchise (LON:TPFG)
I think that it is a sound company, that the house sales will slow but folks are going to continue to have to move for various reasons, and rental is going to hold up and carry it through the next year or two, and there is going to be the continued option to add more smaller companies into the franchise.
But on the checklist it is 20% down this afternoon which should trigger the sale thereof, this is a manual rather than an automated stop loss.
Looking at the chart a clear downward trend, and no obvious news upcoming that I can see is going to knock that the other way
But then is this a build a larger stake for the future, as it is currently ~1% (so small) of ISA, and there are the recent Truss/Kwarteng dance floor experiences in my mind of watch everything bounce straight after you sell... memo to self find my inner Vinney!
I also hold Belvoir (LON:BLV) which is moving around a lot currently too, a similar 1% holding.
Pearls of wisdom appreciated
Thank you
Tommy
I hold Property Franchise (LON:TPFG) Belvoir (LON:BLV)
Hi Tommy
I am fortunate enough to be on holiday today and have been looking through my portfolio with a view to cleaning out the no-hopers I have been holding on to in the vain expectation they might come good.
My criteria was to look at each and try to answer the question, ‘Is there a good possibility that they could up by 50% in the next two years?’ This is quite ambitious, but I like to think is doable given where we are in the bear market and it focusses the mind. So how could this happen?
So I have dumped some stocks which did not pass the ‘50%’ possible rise test.
However, I kept Belvior and Property Franchise as their previous longer term growth in profits and share price has been good, they are quite cheap and the letting side of the business is probably booming, so there is a limited downside. Also, as far as I can tell, their balance sheets look OK, and they are generating cash.
So I think 1 has applied until recently and 2 is definitely true, and hence if I see the share price going up indicating the bottom is finally in, I will probably add to my very small holding.
I hope this helps.
Happy to hear a contrary opinion!
David
Thank you David
Hi Tommy
Property Franchise (LON:TPFG)
Worth checking the rental % for the business.
If it drops below the previous support of 230 its anyone's guess where that might end up...180? If I were to buy that share now, I would be on a tight stop at 227 maybe.
The share looks good, although increasing debt and decreasing margins going into a housing recession would worry me a bit, and of course the housing recession itself. Rent could offset if a big enough percentage of the business, but its a big if because rental availability is drying up.
I hold Foxtons of which rent revenue is a high percentage, and its under pressure on SP also, so short term I am not hopefully it will hold above my stops, although I bought at the lows a month or so ago...
I tend not to deviate from my trading plan including stops as its rare I am rewarded with lowering stops, and you could' what if' yourself into an early grave.
If you have not read them Tommy, Naked Trader has great books, 'trading like a shark', a must read if you intend to do this full time (ditch construction mate its god awful this time of year, as I well know! ;-D). Naked Trader is no B.S straight forwards trading tips, and it has kept me on the straight and narrow, cutting losses and moving on. I could not recommend his no nonsense books highly enough!
Good luck with that share Tommy am afraid I could not call it, depends on the rentals and even then mmmm.
Paul
Paul, I could not agree enough regarding Robbie Burns books!
Thanks Paul
This is the bringing in the rule on selling a couple of years back, and trying to control the emotion on what always seemed the inevitable bounce back, but this has been serving well the last couple of years overall, yes I invest but that does include the ability to take profit and cut losses.
Tommy
You definitely deserve your downtime Paul. Enjoy your bash. Cheeese
Enjoy your party Paul.
Best wishes,
Andrew
K3C, share price is now down, can buy at 318p, 312p to sell, I thought this was an almost done deal,anyone shed any light on that, Im tempted to top up.
Crestchic (LON:LOAD) is around 400p.
Crestchic (LON:LOAD) is a verified cash offer, K3 Capital (LON:K3C) is a possible offer only. Hence the disparity. It should be remembered that the possible offers for GB (LON:GBG) and Darktrace (LON:DARK) both fell through, leading to instant reversal of the SP. The market is simply trying to discount the probability of a cash offer eventuating.
As a holder, I’ve sold a third at a 10% discount to the potential sale price. In that I’m mirroring (and part of) the market attempting to discount the probabilities.
Thanks. Just surprised the K3C, share price fell today, so not such a done deal as I thought.
I did hold GB (LON:GBG) and did sell, can't remember if there was a bid price, anyway I managed to get out with a small loss.
Unless trading is worse than forecast, the risk reward on £k3c at 315p is pretty good. Downside only likely to be 10% if Sun pull out and longer term upside (subject to trading) likely to mean a SP in excess of 350p. If Sun don't pull out a guaranteed 10% in six months isn't too bad. Can't understand why anyone would sell at 315p
Thanks. Not thinking of selling at 312, maybe 340+, I was actually looking to trim my shares, as it's one of larger holdings, if not I would probably be topping now.
£Crestchic has share option schemes for their directors, two of them exercised those in May for 102p, if the takeover goes through at 401p then they've got a nice little multibagger with an immediate cash-out rather than sitting on their hands to see if the growth comes good over future years; jam today chaps!
The majority stake is held by funds, isn't there a convention that institutional investors are expected to take the cash when offered, as it represents a certain gain for their clients, rather than holding out for a better tomorrow?
Crestchic (LON:LOAD) is what I should have typed!
On the subject of K3 Capital (LON:K3C) thank you to rmillaree and others for your observations on the takeover bid at 350p. Very thought provoking.
PROCOOK (LON:PROC)
“Beginning to see the benefits” of lower priced new stock intake, and cheaper shipping costs.
I wander if this is a sign that the high inflation issues may have peaked - presuming the important relevant spot prices stay where they are - eg oil shipping rates etc. Signs that prices are actually coming down (rather tahn simply increasing by less) suggests to me that perhaps the high inflation worries may somewhat recede thankfully going forward?.
Must admit my thoughts here are very simplistic - i feel that quick signs that inflation will be back in control does seem quite necessary to avoid the spiral into recession. 8% is bad enough as one off but 8% on top of 8% really would be a bit of a disaster. Does anyone have a handle on how quickly inflation rates may ease ? - is that likely to flow through to interest rates too ? ie could they go back down as quick as they went up.
hi rmillaree
The one thing often overlooked about inflation is that it goes down as quickly as it goes up generally speaking. The trick is to arrest it before it gets on an exponential upwards curve and the key to that (particularly with supply led inflation) is to ensure wages go up less fast. That is probably why the government and utility companies are holding so firm on limiting wage increases, despite strikes.
Bond market says that interest rates go up and come back down next year. I think pricing in circa 4% peak back to around 3% over next 2 years now.
For inflation, this is what I'm looking out for next year:
- wage driven inflation. If too many people get pay rises, then that fuels demand driven inflation
- food driven inflation. This year has been bad. But with less fertilisers being used this year, and also maybe more climate shocks next year, we could see even worse food supply shocks, and that is going to be felt hard through inflation measures, globally.
Have a good time Paul. Enjoy it. Give my regards to Alan when you see him.
Look at On the Beach!
(Note to self: big drop followed by thumbs up from Paul = consideration for a flutter)
Maybe next time.
20% in 24 hours! I didn't participate.
Good to see specialist fund manager Foresight group (LON:FSG) continuing to surge ahead since it was discussed on here by a small group of users a fee days ago. Still looks good value though and very well positioned given its focus on renewable assets and infrastructure. For me, looks a much better bet than the mainstream equity fund managers, which are frankly ten a penny and very exposed to wider market movements.
Share price was around 340p at the time and gained 33% in the week since. Totally agree with what you've said, plenty of potential upside. Very good fundamentals. Cant understand the lack of coverage generally. Might get more attention now its appeared on the slater zulu stocko page.
Indeed, and it is actually held in the Slater Growth fund - normally a pretty good sign.
Bouden54 - I saw that discussion but didn't buy, One of this year's biggest mistakes. Congratulations to you and rjh777777 .
planetx also replied in that thread and mentioned Gresham but didn't make it clear whether he was commenting on Gresham House (LON:GHE) or Gresham House Energy Storage Fund (LON:GRID) - so far the latter has performed better.
Edited because rjh7777777 repied while I was typing.
I am a holder of K3 Capital (LON:K3C) which represents 7% of my portfolio.I first bought at 343p in July 2021 and added at 373p in Sept 2021. Fortunately I added twice last Sept at 226p and 241p giving me an average of 296p.
The price of 350p to take over the Company does seem really disappointing but all I can think is that the Board know something which we Private Shareholders do not.
The market is weak this morning as the Company opened at 330p and a recent buy went through at 327.7p.
The Market suggests that this deal may not go through? What do others far wiser than me think?
K3 Capital (LON:K3C)
The price of 350p to take over the Company does seem really disappointing but all I can think is that the Board know something which we Private Shareholders do not.
I have come close to buying K3C a couple of times (plumped for SThree instead - also a people business) - at the end of the day this is a people business - rightly or wrongly i suspect the market is less likely to place the same multiple on this business type busineses as a similar business that is not a people business. Perhaps K3C are big enough to have a moat - but all it takes is tough times board room disagreement at the wrong time and the peps that matter can walk and setup in direct competition and poach the best staff. Or well funded competitor comes along sees the easy profits being made and competes and price squeezing the profits away. Obviously i may be trarring this company with brush that is not relevant - thats just the way i say it though from the outside looking in.
Morning all,
Are the recent bids a positive indication of sentiment turning? Or quality companies being stolen at ridiculous prices?!
"Or quality companies being stolen at ridiculous prices?!"
Looking at K3 Capital (LON:K3C) - the shareprice has has been below 300p for the last 6 months - significantly below 300p most of that time. If someone is happy to buy shares at 350p when everyone else has not been happy to pay 300p i would say thats the opposite of stealing - they are paying over the odds compared to anyone else stumping up cash at present to own shares. Facts are over the last 6 months this share has only been worth on average 260p thats the market for you. Anyone owning K3 Capital (LON:K3C) is being paid decent premium whether they think its worth more or not.
rmillaree, I have to agree. I bought a chunk at £2.50 and was so close to being stop lost out for weeks a few months back, just could not wrap my head around it....anyway chased it back up to even buying yesterday morning as it broke the 300. I sold out just as the News broke which now appears to have been a premium (perhaps short term knowing my luck) and have moved on to the next one, as IMHO if this deal falls through it will be back to the 2.50's....where I will happily snap some up.
£3.50 was my target and for a number of months a bloody pipe dream it appeared!
I feel for people who paid at the COVID heights and held on.....Buy and Hold does not always work I guess.
Just because some people want to sell for £3 doesn’t mean the rest of us should be happy to sell for £3.5. I saw significantly higher potential long term so it is a disappointment.
£K3C I bought some 4/18 @ 259p and more 7/20 at 150 p. They have cash in hand, good dividends, which are covered, and probably rising profits and EPS.PEG 0.6 . I am not excited about the proposed take over.
K3 Capital (LON:K3C) - can buy around 330p now. So market doesn't think bid will succeed?
K3 Capital (LON:K3C) eParo, I think the relatively small discount to offer compared to the much higher price compared to 3 months ago means that the market thinks the bid will most likely succeed, but it is still possible it won't. (If it fails, other than because there's a higher bid, expect the price to plummet.) Personally I shoudn't complain because I only paid 155 and 165 some years ago and had reasonable divs as well, but I still think this is being sold too early, at the wrong time.
Can I just ask a question, and apologies in advance if any of this is stating the obvious but I'm trying to learn.
A few days ago I bought some shares in DS Smith on the back of an upgrade from Credit Suisse. They then had an excellent trading update yesterday and initially the sp went up but by the end of the day was actually down, which perplexed me.
Then I noted the comment re Porvair below. This time, positive update and sp explodes.
So my question is:
Is the discrepancy largely explained by DS Smith being a large cap (more institutional investors, slower to react) as opposed to Porvair being a small cap (more active small investors)? If I hang on to DS Smith will it eventually drift up?
Sorry if this is a 'duh, obviously!' question.
DS Smith (LON:SMDS) is not in my portfolio but looking in my crystal ball I can see the SP reaching at least 400p some-when in the New Year and if I held it I would buy some more of it by next Wednesday to catch the interim dividend. But then, I never take any notice of my own advice,
Badgersbrook, to add more to your question you could use the Stocko comparison tool pitting £SMDS against Smurfit Kappa (LON:SKG) which is in the same line of business, sort of. I do hold Smurfit Kappa (LON:SKG) and have seen it perform in better times and take note that DS Smith (LON:SMDS) wins on points.
Silver
Hi Badgersbrook, yes a FTSE 100 company so will trade with less volatility (well normally). Shares can also suffer if market sentiment is down (which it has been for the last few days)
Remember its when something unexpected happens that share prices often 'explode' up or down, so try not to beat yourself up on so called missed opportunities.
I bought DS Smith (LON:SMDS) myself this morning, I like the RNS and the broker upgrades, and if you check the chart you will notice that its been 'range bound' this month, but it looks as though it could break resistance 318, which could see it break out.
Remember research is one part of the puzzle, but trade timing and execution is key also (lets find out how good I am :-D ) These last few months I have tended to buy in tranches of three as the market volatility makes it very difficult to time, and it's rare results are instant. Remember even the best get about 50% wrong so its worth considering an exit plan. If we all 'knew' that Smith's was going to drift up then we would all be in it....even good companies with great outlooks go the wrong way!
Good luck with DS Smith (LON:SMDS) ! Perhaps a good time to get out is now I'm in it ;-D
Paul
Thanks Paul!
Hi Badgersbrook
DS Smith (LON:SMDS)
I think the big thing is to look at the rise in the last two months, from a low of ~241p on 7 October to ~318p today (call that 32% in two months) many will be selling out at a profit as it is good update but as it has not gone wow and the SP jumped again many may have walked away to find the next thing. Both small and big investors.
Others may also have taken the opportunity to exit a larger position, as Paul has noted over the last few weeks many orders are worked through the day (say someone selling 1,000,000 shares, but in smaller bites to the likes of us who want say 1,000 each) but then this is only listed at the end of the day as a single trade at the average price not as individual trades through the day, and often these larger sales are at a slightly lower value to get them through. Noted it is also coming to year end so some people and companies want to bank some of the profits, is this a turning point or a dead cat bounce?
So yes you are still down from highs of ~400p back in January (call that -20% in the year, or -15% with dividends).
But then it all depends on what your entry point is and what you are wanting and expecting out of the share.
So have you bought on a momentum trade with the value having crossed the 50 and 90 day moving average?
Have you bought on you think that it is undervalued and say a Price to Earnings should be more like 10 not 8, so thinking that fair value at say 380p and would exit at that point depending on price movement.
Or have you bought as an income share and just looking to bank the dividend?
Sorry lots of questions but part of the fundamental is why did you think that this is a good share to buy, what was your exit plan before you bought it?
I am still learning but one of the main things is trying to avoid general emotion, I think that this is good and Mx Market goes the other way is a quick way to high stress!
What are you reasons for buy, so earnings upgrade from broker is one of my check list points.
But then is it a buy and hold on the basis you expect further upgrades in future years, or is this looking at a shorter term holding to take the profit and repair a damaged portfolio and mental state?
For example I have sold Crestchic (LON:LOAD) this morning, like others in the discussion here I think a really good company, and really really appreciated the feedback on the factory visit, but I am not going to fight Harwood, who obviously had a lot lot lower entry point than myself and are taking profits. So still on a loss for the year, but nice to have one sale showing in the black.
Not an answer in precise terms but an observation on what might be happening in the background, though today seems to be up.
Good luck
Tommy
I do not hold DS Smith (LON:SMDS)
I wish I could say my thought processes were as intelligent as this, but unfortunately my analysis is based on things like 'DS Smith? I remember I picked them randomly for my Telegraph Fantasy Fund Manager portfolio and they did ok then' and 'it's to do with cardboard, cardboard is boring, I read that boring stocks are where it's at'.
Every day's a school day. Thanks Tommy!
hi Badgersbrook
I agree that DS Smith (LON:SMDS) results were very good so the market response did appear a little underwhelming.
However, the improved performance was wholly down to speedy implementation of increased prices to combat cost inflation (and more!). This was very positive and timely management action.
More importantly, volume sales were down 3% so if volumes continue to fall then this set of results would likely be a one off. Hence the tepid market response.
The SP is unlikely to progress too much from here without a turnaround in volume sales. Let's see what H2 brings.
I hold.
Snazzy
Interesting Snazzy, if H2 is consistent with H1 which was the outlook, then that's a significant beat on Revenue and Profit according to Stocko figures...I was surprised by the market reaction later in the day, as you say maybe its the fear of further sales reductions.
Good morning Paul. Not sure why you have Loungers (LON:LGRS) on your list for review. They reported on 30th November. Is there anything else more recently?
Morning ridavies,
Good morning Paul. Not sure why you have Loungers (LON:LGRS) on your list for review. They reported on 30th November. Is there anything else more recently?
No, I was just doing some catch-up items last night. Sorry for not making that clearer.
Regards, Paul.
Volvere (LON:VLE) (I own) share repurchase yesterday @ 1130.
10,000 shares ... but since the interims this adds to 140,000. This is nearly 6%. Firstly this improves the NAV so 1330 moves north of 1400 which is nice. Secondly I don't think the company would be continuing to buy back stock in December if Shire trading was under pressure. There may also be good news re property sales from Indulgence. Id be surprised (pleasantly), if they have done another deal. Anyway, reassuring for holders I guess.
What is everyone going to do with their Crestchic (LON:LOAD) holding ? Sell for 400p in the market ? Or wait for a better offer ? Normally I would sell half and keep half but I'm not going to sell any this time. Its a poor premium and I would hope a better offer comes in...
I'm not selling, I want a higher offer or no takeover. Surprised Harwood has agreed to it.
re Crestchic (LON:LOAD) takeover bid. It does look cheekily low. But the largest 2 shareholders, and management, have agreed it. There must be a good reason for that. Maybe the upside isn't as good as PIs think?
I think £4 is a very good outcome for shareholders given it was listed closer to £1. Harwood seems to have helped the transformation and recovery.
I will hold too I meant to buy more
I will hold, 401p seems to low a bid not to attract at least some other interested parties, then it may get interesting.
I think the Aggreko statement is quite telling. A 44% premium to the price on Nov 15 when we first approached Crestchic directors. They obviously think it s a leaky ship and I doubt they're keen to pay more. That doesn't mean they won't have to
I have sold Crestchic (LON:LOAD) this morning, and taken the profit and will watch from the sidelines.
Happy to buy back if it all falls through and drops.
Tommy
Crestchic (LON:LOAD) A slightly disappointing number I agree. To be fair I only bought a week or so back at around the 320p level so I'm not complaining about a 30% return personally but I understand why others are. My own calculations estimated fair value at somewhere between 450-500p and this is somewhat light of that. Also, they are only just scratching the US opportunity and there is nothing built into the bid price for that.
Listening to Christopher Mills speak when 500p was put to him, his response was that's a bit optimistic but then he would have already known the bid.
Market has this priced as very close to done at 396-398p but isn't factoring in any counter bid. The one thing I remember from Harwood was on a waste company called Augean. They accepted what appeared to be a lowball bid, then found a competing buyer and pushed the price quite a bit higher. Not sure what the chances of that are here but opens the door to others to have a look at with a firm floor to the price. If no-one else bids higher then you'd have to assume it is seen in the industry as being fair.
All these bids for good quality companies at relatively cheap prices is concerning though. Unless the UK market can start to attract and retain good companies growing profits again we investors will be in trouble.
David,
I too listened to Christopher Mills talk about Crestchic (LON:LOAD) and was very surprised that he told Paul Hill he was being optimistic @500p , now we know why. :-))
Crestchic (LON:LOAD) and K3Capital (LON:K3C) comprise 30% of my portfolio.
While it is incredible to learn of 2 take-overs in one day, the offer price for both seems pretty low taking the prospects into account, even after the recent share price rises of both.
I have been invested in both for years and hoping for higher bids.
Large challenge to find new homes for the proceeds where I feel comfortable.
Naked Trader (Robbie) commented on his website re K3C earlier this month.... K3C looks very cheap, and be no surprise if there was a bid out of the blue for it. I think a bid north of 450p would be needed. Have to agree that 450p would be fair value.
Good TU report from Porvair (LON:PRV) this morning. Good solid company in solid markets, as stated in the TU. Shares already rose yesterday - in anticipation?
Pre-close trading update 9.12.22
Revenue for the year ended 30 November 2022 is expected to be 18% higher than 2021 on a reported basis (13% at constant currency) with all three divisions ahead and margins sustained.
Adjusted earnings per share are expected to be ahead of market forecasts, with sound underlying profitability being supplemented by favorable foreign exchange translation.
Net cash at the year-end is expected to be £18.1 million (2021: £10.2 million) after capital investment, dividend payments and acquisition costs in the year of approximately £8.0 million.
Fundamental drivers of demand remain in place: tightening environmental regulation; the growth in analytical science; clean water regulation; the use of aluminium in electric vehicles and recyclable packaging; and the drive to reduce waste in manufacturing. Order books going into 2023 are healthy and lead times seem to be returning to more normal levels.
So angry today, I hold both Crestchic (LON:LOAD) and £K3C. Now I have to reinvest in companies with worst prospects
Crestchic (LON:LOAD)
As a holder, not happy to see upside being lost after all the preparatory hard work has been done .
Crestchic
Harwood backing it which is disappointing .
Says Aggreko needs 75% and they have 38% supposedly committed .
It definitely feels a bit cheap given the expectation that Crestchic was really starting to deliver especially as the new facility kicks in .
When I visited last month they did say their biggest USA competitor had been acquired by a large very big PE with deep pockets .
Personally I think this will flush out rival bids and also note Aggreko have timed the bid to cover Christmas period when presumably any competitors might half asleep on Christmas sherry and mince pies .
Certainly I’m voting against it .
How disappointing Harwood and Rockwood supporting through maybe they expect others to be drawn in, I’m sure they will sell to the highest bidder.
Should at least make the next couple months interesting and at least one of my key shares is now underpinned with a bid situation .
Disappointed in Peter Harris should have pushed for a higher price for shareholders and I’m going to be telling him to his face that he is quite literally “a sellout” .
Good for you planetx. I also hold #K3C going for a song as well. Both bids fairly derisory. If they go through, the cash will be welcome for reinvestment, but as said more hours of research to find a home for the proceeds. Can't imagine that Crestchic (LON:LOAD) won't attract a counter bid.
Jonny
Agree on counter bid , and at least Crestchic is “in play”
I’m sure Christopher Mills knows this is on the cheap side and they only have one allegiance and that is to the highest bidder .
If others get drawn in then great it will serve Aggreko right for lowballing, It is not always the best tactic to try to pick up an acquisition on the cheap as it will encourage competitors to join the fray .
The Crestchic directors need a serious kick up the arse so suggest any holders on here join in.
Interestingly as Crestchic is pretty popular on here I reckon “we” may be holding a good couple of % ??
Who holds ??
this is exactly what I was thinking, we must hold 5% maybe? I like others I presume hold through a platform, how do you vote on this? (Clearly I have never voted before!)
What platform you on ? I’m on ii and there’s a section where all these documents get uploaded and you can either vote or elect to attend .
Be very interesting to know what “our” cumulative holding is. ?
I'd note that the last time the collective will of posters on the SCVR was to reject what was regarded as a low ball bid in the expectation of a bidding war it was for Revolution Bars (LON:RBG) at 203p back in 2017. As it turned out the RBG board had a better idea of future prospects than private investors.
Just sayin' ...
timarr
Good point, there is no right or wrong but having got to know the company very well and taken the time to visit on several occasions I would like to continue to own the company and not sell it to an American buyer .
I was thinking exactly the same thing!
While I can see the disappointment, if the company thinks the offer should be taken, then based on my experience (of 1!), I’ll probably take it.
Obviously, if a higher bid comes in from someone else, then that’s great.
Dave
Planetx
Crestchic
Thank you for your 2 postings following visits to the company.
I bought after each posting and would never have heard of the company otherwise.
Your generosity of spirit is much appreciated as as are similar type postings by others here.
Must not seem greedy but I do think the offer is poor and I intend to hold on and see what happens.
Tom
The bid appears to be at a c40% premium versus the price a month ago when the offer was received so it makes you wonder whether the price had already partly factored this bid in?
Either way 401p is only 16 times this years earnings, which are already in the bank given the year end is in 3 weeks. With a new factory coming into play, 4 upgrades already, and tailwinds in the industry for a vital product, it’s hardly a generous offer.