|9:19 08/03/2013||Tempus comment|
| Worth a read
Martin Waller Tempus
Published at 12:01AM, March 8 2013
The business formerly known as Imperial Metal Industries has come a long way since it was founded more than 150 years ago to make percussion caps. Its latest evolution is a logical enough one.
IMI these days makes sophisticated engineering products such as valves, some the size of houses going into the petrochemical industry and other smaller ones into central heating.
One division makes equipment for beverage dispensing and another various merchandising equipment for the drinks industry, such as chilled racks in shops. The company plans to sell most of the latter, which has precious little to do with its other engineering products, while retaining the bits that supply drinks dispensers.
At the same time, the company is using its excess cashflow, more than £200 million a year, to fund a £175 million shares buyback. IMI reckons borrowings much below £150 million are inefficient and it should be geared up beyond this level. The company is also on the search for suitable acquisitions.
All of these will run in parallel. If the right acquisition comes along, the buyback will be reduced. The proceeds from the business being sold, in the £150 million to £200 million area, to judge from current revenues and profits, may be used for further buybacks if not needed elsewhere.
It is an attractive position to be in, being able to lay out cash for expansion and/or return it to shareholders, and IMI shares jumped 57p to £13.19 in response. The company was announcing results for 2012 broadly in line with expectations. It had already set targets of 20 per cent margins for its three main divisions, excluding beverages.
These have been met, or close enough to, at two. But there was some weakness, well signalled to the market, at its severe systems business, which supplies those valves to power stations and oil and gas. This had to do with some older, low margin products finally being shipped and a move to a new factory.
Though the current half will be subdued, the second half of the year will be stronger. The large truck manufacturers, which have been destocking, are expected to start ordering again, and there are new products in the pipeline.
IMI was reporting pre-tax profits up 5 per cent to £317 million and a final dividend of 20.7p which raises the total 2.5p to 32.5p. The shares are up 70 per cent since August; they sell on a chunky 15 times this years earnings but should have further to go long-term.
| A reasonable set of results:
Revenue grew by 3% to £2,190m
Adj EPS of 84.3p, was up 3% over last year.
Total dividend for the year increased by 8% to 32.5p.
Net debt at the year-end reduced from the half-year to £144m.
Although operating margins at 17.0% were down by 50bps
I'm a great fan of efficient balance sheets, but that can also be achieved by the use of special dividends at a time when the company is near to fully valued. So not too sure about the timing of the buy-back strategy:
"...The Board remains focused on maintaining an efficient balance sheet and given the uncertainty over the timing of acquisitions, there may be periods when net debt falls below current levels which becomes inefficient. Accordingly we intend to commence a share buyback programme over the next 12 months of up to £175m to ensure that gearing remains at or above the current level..."
Nevertheless this a superbly run business generating almost 41% ROCE nearly 4x their WACC. Their balance sheet management is amongst the most efficient of my holdings and, I believe that this is their 18th year of dividend increases.
For me the one negative (buy-backs aside) is that the prospective yield of 2.65% (likely to be covered 2.5x) is a little on the low side for my income portfolio, although I'm still holding at present.
|16:55 05/12/2012||Re: Jefferies|
| "Jefferies has raised its recommendation for engineering group IMI from hold to buy, saying that while the group isn't exactly geared for high growth, it does provide high returns."
I have only held IMI shares for 6 weeks but in that time, after dealing costs, value has increased 15.7%, equivalent to an AER of 245%! My fastest rising stock over last month or so. I do not expect rate of rise to continue but all the same I call this a growth company. SP doubled over the last 3 years. Wish I had bought more now and may well top up. By Rhigos
|9:43 30/10/2012||Chinese JV|
| This must be a good relationship they have with SAIC to sign a new JV and develop a new valve production facility on Chong Ming Island of Shanghai.
Struck by the pace of growth, at the time of their last announcement, just under two years ago, there were 13 nuclear plants in operation and 25 under construction and now there are 15 in operation and 27 under construction. IMI seem to be in an ideal position to benefit. By mutandis13
|19:25 24/08/2012||From Times|
| Summary from IC:
"The Tempus column in The Times took a look at controls and valves maker IMI on Friday morning, focusing on the group's margin target of 20 per cent in its three key divisions. 'Such forecast are all well and good until you fail to meet them', the paper said.
Shares in IMI dropped on Thursday after the firm announced that its Severe Service division saw margins fall from 16 per cent to 14 per cent after it took on lower-margin business in China and India in the hope of gaining more profitable work in due course. Meanwhile, there was disruption from the relocation of its manufacturing facilities. Tempus also highlighted the group's guidance for organic revenue growth to slow down in the second half.
"The shares change hands on ten times this year's earnings, but the continuing economic uncertainty suggests little reason to chase," the column's Martin Waller said (Last IC rating: Hold, 23 Aug)."
nk By nk1999
| From ADVFN:
"Jefferies has raised its recommendation for engineering group IMI from hold to buy, saying that while the group isn't exactly geared for high growth, it does provide high returns.
"IMI is a curate's egg of a stock in some respects. A conglomerate with five divisions, it seldom fires on all cylinders and is by no means a high growth business (in terms of sales or earnings), but RoS [return on sales] and ROCE [return on capital employed] are high and the shares are good value, we believe," said analyst Andy Douglas.
The target is hiked from 840p to 1,150p."
nk By nk1999
|0:34 23/03/2012||Re: Credit Suisse comment|
| Refer to Whitbread and you will see that negative comment from Credit Suisse a few weeks ago resulted in the share price flying upwards. People do not realise that comments from brokers and analysts can be taken with a pinch of salt. Sometimes they put out negative comments in the hope that novice investors will panic and sell and when they do they advise their private clients to buy. At 948p this share is significantly under-valued. Don't fall for it! By numberbiter
|15:02 16/03/2012||Weird volumes at 3 today|
| shares at single digits, loads of them too By Benny Shares
|23:41 15/03/2012||Credit Suisse comment|
| Credit Suisse, did seem to be out of step with the other analysts and have upgraded their forecasts later, but they still appear somewhat negative, it remains to be seen whether their more cautious view is warranted :
http://www.sharecast.com/cgi-bin/sharecast/story.cgi?story_id=19958730 By mutandis13
|6:32 06/03/2012||The Expert View.|
| Expert View: Panmure cuts IMI to 'hold'
Analyst views on IMI, Intertek and Foreign & Colonial investment http://bit.ly/wiwbDV Gavin Lumsden on Mar 06, 2012 at 05:01
http://bit.ly/yoc4pD By SpikeyDT
| Questor share tip: Engineer IMI benefits from its sweet spots
Engineering group IMI posted an excellent set of full-year numbers on Friday, as its strategy of focusing on "sweet spot" products with high margins bears fruit.
By Garry White7:00AM GMT 04 Mar 2012
Questor says HOLD
http://tgr.ph/AkWtN5 By SpikeyDT
| Friday's Stock Market Report from UK-Analyst
Today (2012-03-02 17:39:12)
http://bit.ly/xSeV7W By SpikeyDT
|13:18 02/03/2012||Friday's most followed.......................................|
| Friday, March 02, 2012
Friday's most followed:
http://bit.ly/zqlsIj By SpikeyDT
|7:53 02/03/2012||good numbers and dividend increase|
| Dividend up 15%
www.dividendmax.co.uk By performer
|22:29 26/02/2012||Weekend share tips........................|
| Weekend City Press
25-26 Feb 2012
Tip Bits: Keep buying Kentz, IMI, S&U, Kier and Development Securities
http://bit.ly/sPjaXE By SpikeyDT