Interesting point Jacko;the engineering businesses have a turnover of £11m or so,long established with a niche product range and may have a decent value.
I have looked at this business on and off for years but it has always seemed to have had too many problems.
Yes very tight finances;the £3.8 net pension shortfall is a deferred liability and it is not in their interests to close the business & there is little advantage for bankers to call in their loan as it is unlikely the company can presently repay.
However I would have thought at least additional equity funding of around £2m plus is required if the company is going to continue in its present form which could be very dilutive otherwise a sale of the business could happen which is likely to give little or no return to shareholders.
""The Company has made a good start to the new financial year with sales in the first three months slightly ahead of management expectations. We have made additional investment at our new machining facility to support the increasing volumes and, accordingly, first half costs will reflect this.
"I am also pleased to highlight a major new contract signed by our foundry operation in the period with an existing customer, a leading European supplier of components and parts to the automotive industry. Worth 3.7 million over its seven year term, the contract commences towards the end of 2019 and will replace an existing programme at Walsall for the same customer, which is coming to the end of its life cycle. The award underlines our technical expertise and high service standards as well as our strong customer relationships.
"The Board looks forward to providing a further update on trading in due course."
Chamberlin & Hill Castings Ltd is installing three high specification Chiron Scherer Feinbau automated mill/turn centres
A £1.8m investment in a custom-built finish machining facility will enable a West Midlands company to become a fully integrated supplier of grey iron bearing housings for engine turbochargers.
The investment at Chamberlin & Hill Castings Ltd will see the installation of three high specification Chiron Scherer Feinbau automated mill/turn centres supplied by the Wellesbourne based Engineering Technology Group (ETG).
Without investing in machining capacity, the customer made it clear that it would have to review Chamberlin & Hills position as a supplier, said Kevin Nolan, chief executive, Chamberlin & Hill Castings Ltd.
In contrast, if we did make the investment, we were probably going to become the most significant supplier of turbo bearing housings in Europe.
Chamberlin & Hill has many years experience as a specialist supplier of light and medium castings to the automotive industry, but in recent times has embarked on repositioning itself to become an assembly ready Tier 1 component supplier to the automotive turbocharger sector.
A major, long standing customer is Borg Warner who had earlier advised Chamberlin & Hill they were seeking an integrated supply in order to streamline its supply chain.
Three Chiron machining cells were ordered, two of which were commissioned in February 2017, with a third scheduled to arrive in November this year. The capacity provided by these three machines has already been sold, bringing about additional revenue worth several million pounds per year.
The company is currently machining one turbo bearing housing every 81 seconds per cell floor-to-floor time.
Ultimately, the investment in Chiron technology is set to facilitate growth from the foundry of 30% in 2017/18, and, when the three machining cells are fully utilised, an additional £3 million of business from the machining facility."
Shares in Chamberlin have more than trebled since last year's lows of 50.5p and at the current price of 152.5p per share the company is valued at £12.14 million. That values the business on a multiple of just 7.8 times earnings forecasts
for the year to March 2018 from analysts at Hardman. The multiple falls to 6.5 times for 2019, although there is no dividend expected in either year.
While the valuation remains relatively low here the balance sheet is not as strong as some investors might like. The net debt position as at end March 2017 was £6.8 million, up from £3.2 million 12 months earlier, mainly as a result of investing in the new machining facility. In addition, there is a pension deficit of £5.2 million to contend with, with the company making an annual deficit reduction contribution of c.£0.3 million. Nevertheless, these contributions are easily funded out of operating income and interest payments on borrowings were covered a comfortable 4.6 times by operating profits in the last financial year.
As a good value recovery play, Chamberlin shares look like a longterm
buy and hold."
"Mr Thomas William George Charlton, also known as Tom, MA served as Managing Director of Merrill Lynch Investment Managers from 1998 to August 2002. Mr. Charlton has in-depth investment knowledge together with broad experience and interest in the smaller companies sector.
"However, talking to management, they emphasised the noted investment is underpinned by orders and that there is thus strong confidence in the profitable growth and debt support going forward. This is also with now Walsall one of only four specialist foundries in Europe with the technical capability of supplying castings for turbochargers and, with our new machining capability, the foundry is now the only fully integrated supplier of grey iron bearing housings in Europe.
Although there will be continued elevated capex at Walsall this year, the impact of the new facility is also visible in profit forecasts with a pre-tax circa £2 million still anticipated."
I started buying a few weeks ago. If they execute the growth they are hinting at then the shares are laughably cheap with a one year PER of 5-6x. Plenty of risk here but if they get this right there is a multiple return of capital possible for anyone buying now. Who doesn't love a good turnaround story?!!
Hardman have now increased their forecast to 20.1p EPS this year. They're not normally ones to over-egg things (though there's always the exception!).
Above all, CMH is obviously a company on the up. Good to see the other two subsidiaries doing well too, but the core turbocharging division is only going to get better and better, especially given the favourable regulatory environment supporting its growth.
And the pound's weakness will also help drive sales and further enquiries in making CMH's products that much cheaper to its prospective customers.
These have been on my radar for a while. The recent announcement that 2017 is set to be a much better year and the new facility and the recent contract win makes me wonder whether these aren't now worth a small punt.
The balance sheet is not bad, although a bit light on current assets and a bit heavy on fixed assets and debt is a bit high.
Could be an interesting recovery play.
Saying this is a quiet board doesn't do justice to the word quiet!
Important message from the Financial Conduct Authority:
Posting inside information that is not public knowledge, or information that is false or misleading, may constitute market abuse.
This could lead to an unlimited fine and up to seven years in prison.
If you have any information, concerns or queries about market abuse, click here.
The content of the messages posted represents the opinions of the author, and does not represent the opinions of Interactive Investor Trading Limited or its affiliates and has not been approved or issued by Interactive Investor Trading Limited.
You should be aware that the other participants of the above discussion group are strangers to you and may make statements which may be misleading, deceptive or wrong.
Please remember that the value of investments or income from them may go down as well as up and that the past performance of an investment is not a guide to its performance in the future.
The discussion boards on this site are intended to be an information sharing forum and is not intended to address your particular requirements.
Whilst information provided on them can help with your investment research you need to consider carefully whether you should make (or refraining from making) investment or other decisions based on what you see without doing further research on investments you are interested in.
Participating in this forum cannot be a substitute for obtaining advice from an appropriate expert independent adviser who takes into account your circumstances and specific investment needs in selected investments that are appropriate for you.