Is Molins a value play?

This is a discussion on Is Molins a value play? within the Stocks forums, part of the Markets category; Maturing business Molins is struggling to grow. Revenue is 33% smaller today, then 2004. Market valuation decline by 80% since ...

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Old Mar 16, 2017, 3:19pm   #1
 
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Is Molins a value play?

Maturing business Molins is struggling to grow.

Revenue is 33% smaller today, then 2004. Market valuation decline by 80% since 2003. Are Molins shares still value for money?

Molins management made a recent trading update suggesting the poor results is for last year. Because customers were delaying orders till 2017.

The second good news is their pension situation. With the UK Bond Rates (known as the 10-year Gilts) rising. Their assets pay more in cash flow to Molins retirees.

The downside to Molins is capital expenditure. Because they havenít spent big for a long time. Molins asset age in 14 years (is a record), and 60% of their assets meet that age.
Their last big spend was in 2003 at £13.6m. Since 2009, Molins average £4m in CAPEX. Donít be surprised if they spend £10m.

On share price, Molins could average 80 pence per share in 18 months. But, donít be surprised if it falls back to 40 pence because of the markets at all-time highs.
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Old Jun 8, 2017, 11:41am   #2
 
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Walbrock Research started this thread Didn’t expect Molins to pull off this disposal, but what did we expect when the shares have been undervalued for so long!

The last time I posted, I said the company needed to invest in their ageing assets. Now, they won’t need to invest as much. Instead, they have a lot more cash at hand.

Before the disposal, Molin's enterprise value was £18m, now it is 25% higher!
Let’s say they invest £8m, that would leave them with £28m-£30m in the bank.

Regarding, their pension schemes, shouldn’t the deficit come down if interest rate or UK Gilts and US Bonds start to rise? Well, that depends on what’s in the composition of Molin's pension assets.

Oh, BTW, with this disposal, I expect the shares to trade around £1.20 per share or higher, giving a market value of £25m. Think about it, if their Tobacco division has similar fundamentals to their packaging division, shouldn’t that be worth at least £20m in a liquidation!
But, I need to do further research, before coming to a full conclusion.
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