"Â Â Â Â Â Take a look at this...Hmmm... Looks like a good business, high return on capital, stable profit margin. Profitability has fallen, though. Tell me a bit more about the company.It's LSE:VCT:Victrex. One of my favourite companies and something ..."
Strong core business* growth, fully offsetting lower Consumer Electronics
- Core business volumes up >15% reflecting broad based growth & new applications
- Total sales volumes up 1%
- Group revenue up 15%, constant currency revenue* up 3%
- Strong performances in Automotive, Electronics (ex-Consumer), Value Added Resellers, Energy
Further progress in new product pipeline
- PEEK Gears supply agreement to major European car manufacturer starting in 2018
- Meaningful revenue of £1m+ for PEEK-OPTIMATM HA-Enhanced Spine product
- Medium term aspiration for 10-20% of sales from new products* (2017: 4%)
Investment to underpin Polymer & Parts strategy
- £10m acquisition of Zyex PEEK fibres business to expand semi-finished products offering
- TxV Aero Composites joint-venture to develop differentiated Aerospace products
- £10m Polymer Innovation Centre now operational; support prototyping & new polymer grades
Record cash generation supports strong shareholder returns
- Cash up 88% to £120.1m and operating cash conversion* of 124%
- Regular dividend up 15% to 53.80p (dividend cover 2.2x*), special dividend of 68.00p/share
"It's a company that's already been a winner for some. Companies analyst Richard Beddard had seen LSE:VCT:Victrex return a tidy 34% for his Share Sleuth portfolio in just eight months up to 10 August. In his next update, that figure will be much ..."
"LSE:VCT:Victrex's chief executive chooses his words carefully, like a politician. At last year's AGM, David Hummel told me he doesn't like to talk of commoditisation. That doesn't mean rival manufacturers aren't making inroads into the market for ..."
"It may take nerves of high-tech composite material, but LSE:VCT:Victrex should deliver its ambitious goals.Victrex's long-standing chief executive once told me he doesn't like to talk of commoditisation, the process by which valuable, ..."
Excellent reaction to the update this morning; but a bit of a surprise to me, after my quick scan of the announcement. I read - full year sales will be 4% down on last year, volumes down 6% & the consumer electronics business next year will see a large decline. I expected a negative reaction to that sort of update.
"I hope I can find somewhere that gives me a better ROI."
It's a tough ask, VCT has a return of 30% -- up there with top I guess.
Operating margins are 40%
The divi is 3.2% -- that's pretty good considering it's almost twice covered.
Now the company will lower it's capital expenses going forward, because it's done all the spending on the new factories, the excess profits will be handed back as special dividends so you should see over 6% next year.
Not sure what you want from a divi -- OK you can bung it all in Shell and they can hand you a divi which is high, but they have to borrow and sell assets to pay it. That's the same as bribing you with your own money -- or if borrowed, with someone else's.
Games -- It all depends on sentiment I suppose, but I'm thinking now is not the time to leave the party now they have tooled up for growth.
Good luck with your modest purchase....I'm still waiting for great things - legal challenges and recent disputes haven't helped but hopefully Victrex can put all that behind them and surge onwards and upwards.
Interesting that Victrex have set a dividend policy that gives back a lot of it's cash in the form of special dividends. Assuming they will now lower capex after recent new manufacturing builds, this could hit as early as 2017 :-
"""""""""""""New capital allocation framework; opportunity for enhanced returns
Growth investment remains top priority
Approximately 50% of net cash returned in future as special dividend (subject to investment requirements):
 50p/share de minimis; retain medium-term net cash position
Progressive regular dividend; retain cover around 2x
FY15 total dividend growth of 4%, with final dividend of 35.09p (FY14: 33.76p) New capital allocation framework; opportunity for enhanced returns""""""""""
""Useful post from NK titled "Berenberg" below - about competition. """
HB - It's hard to draw any conclusion from Berenberg's points, because they predominantly lean toward the argument around electronic applications.
This surprised me a little, since I would have thought the real value of PEEK was in larger components that provide very durable wear and are easier to manufacture and more importantly much lighter than metals.
Aerospace is potentially huge, as more planes move to greater than 50% of their components non metal based. Fuel saving ---- less oil use !!!
It's also something to consider that Berenberg seems to view Victrex as a pure materials provider, and mentions nothing about the effort the company is putting into innovative co-developments.
I'm not sure yet how significant the latter is, but I think there is real value in having those trusted relationships and not to be seen as a bulk materials supplier.
Hi Games, seems like great minds think alike. I was looking at a few potential investments and had 3 shares I knew very little about to research - Ascential, Essentra & Victrex. I was working through them in alphabetical order and I end up here to find you doing the same thing. Turns out I had heard of previous incarnations of the other 2 - EMAP & Filtronic, but still had never looked at them - just starting to dig on VCT (should be a venture capital trust) so appreciate you doing some of the work for me!
Just started reading about this, to see if it's worth investing in Victrex. Read a few technical articles first to see what all the fuss is about.
One article is starting to put me off now and that's a GKN article - see below - that makes reference to the fact that aircraft manufacturers are now moving away from honeycomb composite structures (I believe the very basis of PEEK)
This is the extract from the first few paragraphs of the article link below :-
""Aerospace manufacturers are moving away
from using honeycomb composite structures
which are lightweight but which are prone to
having strength-reducing voids within the material
to solid, three-dimensional composite
structures. These are made using new production
processes which increase tension, compression,
impact and shear strength while making structures
much lighter than if they were made from
titanium or aluminium alloys as much as 50
per cent less. "
"The consent decree is clear that we have not admitted any violations of any law," said Victrex in a statement. "There are no penalties or fines and the consent decree will resolve all outstanding matters pending before the FTC ... We do not expect the FTC consent decree to have a material impact on our business."
All fine and dandy then - except us shareholders are left carrying the can for the anti-competitive actions of senior management. May not be illegal in its true definition, but is certainly immoral and is leaving a bad taste in my mouth and a hole in my investment.
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