Gamesinvestor1
08 Jan 2020
Nichol and dimed I suspect this weeks burning of the US $ on the streets of Tehran could be accompanied by a boycott on US and UK products - is Vimto a victim of this also, given the tax will make the product much more expensive? With a 50% sweetner tax, Nichols must put up the price or pull the product from the middle east.
Gamesinvestor1
23 Dec 2019
Middle East Tax Looks like they are tackling it from the point of view of sweetners and artificial flavourings, not just sugar like here in the UK. This is one of their biggest buyers I suspect. 1500p seems still expensive for this company and maybe that will be recognised during this issue. P/E still 21 and the PEG is sky high for the slowing growth. Games
valeite
20 Jun 2018
First war ...now gas civil war in Yemen is bad enough but now we’re running out of gas (co2)….who foresaw that coming
valeite
01 Mar 2018
no surprises prelims are pretty good read to me...shame about middle east problems /otherwise healthy sales growth v the median .margins are suffering a bit with cost pressures , a problem in retailing now moving into other parts of the economy .I still think we have a good business here so will stay a holder
gamesinvestor
02 Feb 2018
Re: Stay sweet on Nichols "Shurely, Conrad, Games??"Indeed, slapped wrist, I stand corrected -- it's that long since I read it alongside a bunch of Huxley novels -- both sinister in their own way."" I wouldn't be Buying NICL here either, Games - but I have the (lucky, probably) advantage of having bought in at what is almost an embarrassing price some 15 years ago.""It's a good point, and the way the market is, sitting on one's hands seems like a good strategy. I recently let go of Devro, Lloyds, PZ Cussons, AZN, GSK, BATS, Burberry; some Britvic, Christie Group and all have been to a pretty hefty advantage -- I'm now over 32% cash and happy to wait and watch.The only things I've bought recently are some RB (I'm on the fence on this one); Next, so far so good; took a bigger position in IG Group; IDOX; small amount of AA (although not a short term smart move I do admit); Added to PayPal last night; WPP.That's it for now!Games
Bill1703
19 Jan 2018
Re: Stay sweet on Nichols "The Middle East connection is topical but I'm not sure it's a pulling factor for me, and Africa is the heart of darkness m8 -- I've read Huxley!"Shurely, Conrad, Games?? Mid-East and Africa has been a great "second act" for them - but like all Emerging Market angles, 'twill never be without risk... the Yemeni situation being a classic case in point. I don't doubt there could be a lot more to go for with this particular story, medium term, but it is unlikely to be plain sailing..."70+% of the business is Vimto and at the mo it doesn't appear to be growing... the Vimto dependency will probably keep me away... I don't know anyone who buys it now... unsure if the price of the stock (not cheap) reflects this dependency."There you go... I admit I only buy it occasionally, but Pie-Eater does! And many more like him, evidently... Vimto is still growing market share - in a tough, competitive sector - and then there is the International angle. But yes, it is now in a much more "mature" position, and progress from here can only really be incremental at best.And no, it's not cheap (still)... but in recent times I have taken to comparing it to the likes of ULVR, DGE, RB (different animals, sure, but much closer in investment profile), and having traded at a big premium to these for a while, it is now more in line with them, on most key metrics. A much fairer reflection - no more, but no less - of some clearly attractive investment attributes?There are no 'gimmes' in this market - you pay a full price (if not more) for 'quality', and while there are plenty of 'cheap' stocks, these all have their challenges and uncertainties - as we are currently seeing day in, day out, "stock-specific risk" abounds. I wouldn't be Buying NICL here either, Games - but I have the (lucky, probably) advantage of having bought in at what is almost an embarrassing price some 15 years ago. And I wouldn't be buying DGE, ULVR or even RB (albeit less so) here... but I can see why some would, and the same is probably true of NICL.
PIE-EATER
19 Jan 2018
Re: Stay sweet on Nichols - Games Games, we buy it! Both cans and cordial.Used to be Ribera fans (for the non alcofrolic drinks) but the price shot up and Vimto re-appeared on the supermarket shelves. Haven't looked back.PE
gamesinvestor
18 Jan 2018
Re: Stay sweet on Nichols ""It's in their "Great Ideas" category.""Bill - it's becoming topical isn't it?70+% of the business is Vimto and at the mo it doesn't appear to be growing.Nichols is buying businesses and is cash rich -- all +ve, but the Vimto dependency will probably keep me away.I drank it when I was a kid, but I don't know anyone who buys it now.Obviously they do but I'm unsure if the price of the stock (not cheap) reflects this dependency.The Middle East connection is topical but I'm not sure it's a pulling factor for me, and Africa is the heart of darkness m8 -- I've read Huxley!Games
Bill1703
18 Jan 2018
Stay sweet on Nichols Shares magazine says "Stick with Vimto maker for its brands, balance sheet and geographical diversity" - full text from today's edition below.It's in their "Great Ideas" category... a case of "great minds", Games?! "A souring of sentiment towards soft drinks star turn Nichols (NICL:AIM) presents an opportunity to buy into one of the AIM market’s most dependable consumerfacing companies. Earnings estimates have come down following a December profit warning and investors are worried that delivery issues in the Middle East could continue. In our view the sell-off is overdone given Nichols’ strong brand portfolio, rock-solid balance sheet and long-term overseas growth potential. Newton-le-willows headquartered Nichols is the company behind the iconic Vimto brand, popular in the UK and around the world. The product enjoys strong demand during the Ramadan religious festival. Nichols also owns Feel Good, a range of natural soft drinks with zero added sugar, Levi Roots, Sunkist and Starslush. Boasting brand strength, pricing power and an assetlight outsourced global production model, Nichols is highly profitable and strongly cash generative, which supports ongoing investment in organic growth initiatives and acquisitions, as well as a progressive dividend. DOWNGRADES DISAPPOINT Late last year (19 Dec), Nichols warned the worsening of strife in Yemen had resulted in the supply route to its Yemeni customer being blockaded, preventing it from sending any further Vimto concentrate shipments planned for December 2017. Consequently, Nichols’ management guided towards a flat adjusted pre-tax profit haul for 2017. Disappointingly, Nichols also warned 2018’s percentage profit growth is likely to be constrained to the low single digits, since the Yemen conflict ‘coupled with some reported slowing in the Saudi economy indicates that sales to the Middle East region in the year ahead are likely to be less than previously anticipated.’ STILL FULL OF VIM Shares believes the Yemen issue shouldn’t overshadow Nichols’ strong growth in Africa and Vimto’s ongoing outperformance of the wider UK soft drinks market, which is helping Nichols to mitigate input cost inflation. Nichols’ diversified product portfolio means it should be able to comply with and mitigate the effect of the government’s soft drinks levy, effective from April 2018. As Nichols assures: ‘We are well prepared for the introduction of the Sugar Levy with 100% of the Vimto and Feel Good brands portfolio already below the levy threshold.’ For the year to December 2017, N+1 Singer forecasts flat adjusted pre-tax profit of £30.5m ahead of £31.1m in 2018 for earnings of 69.1p and a 35.5p dividend. For calendar 2019, the broker looks for pre-tax profit of £32.2m, earnings of 72.1p and further dividend growth to 39p. Significantly, Nichols’ net cash is forecast to build from £36.1m to £47.6m, acquisitions notwithstanding, in 2018, ahead of £60.1m in 2019."
gamesinvestor
17 Jan 2018
Re: Sharescope article ""Wouldn't be surprised if Carillion looked fine on ROCE, right to the end! Or maybe not... I haven't checked... ""Nah m8, it was dire, alongside it's management and the whole construction sector in my view -- not to be touched if you don't want massive disappointment along the way.The wafer thin margins on these contracts always bite them in the axs - outsourcers are the same, Capita, Interserve, Serco -- you name them they all get stuffed over eventually.They are all off my radar screen alongside banks (with exception of a small residual Lloyds holding soon to be dumped) and insurance companies, oil/commodities.My job is getting easier, the returns could be getting harder Games
Bill1703
17 Jan 2018
Re: Sharescope article "... summary points I took straight from the article ... useful to see it up against it's 3 peers ... I'm interested (loosely at the moment) in this, as I offloaded a chunk of Britvic at a 50% gain + divis - and partly due to the debt load being rather hefty at Britvic."Yes, merely a good excuse for me to reprise my usual ROCE rant... Oakley being one of many who are rather too easily impressed by high headline "reported" ROCE. As I always say, there's a long list indeed of stocks coming to significant grief even when showing superficially-impressive ROCE.Wouldn't be surprised if Carillion looked fine on ROCE, right to the end! Or maybe not... I haven't checked... "... keeping an eye in Whitbread, who Phil is also a fan of and a shareholder of alongside yourself... Crozier isn't the business wrecker or splitter that is being considered... however he has something, as most of the companies do well for a good period during his tenure..."Yes, we had Oakley in 'Moneyweek' last week, highlighting WTB as his single best investment idea for 2018! Strong stuff indeed, and lovely to see, I thought... and then I remembered he was a m u p p e t. Okay maybe not... but his view did seem predicated on the break-up of WTB, and the separate parts being worth more like £50 than £40, and while I think that is indeed the end-game, I am really not sure it's a story for this year, or even next. I do like Crozier and I agree, there is definitely "something" about him... but you have to be careful about putting too much on any one guy - anywhere. And with Crozier, this is his first Chairman (and non-exec, not to forget) gig - a somewhat different ball-game from his CEO roles thus far. It might depend what other "portfolio" roles he takes on in due course...
gamesinvestor
17 Jan 2018
Re: Sharescope article Bill - summary points I took straight from the article - reasonably fair assessment as you pointed out and useful to see it up against it's 3 peers, irrespective of the different business models of Britvic and Barr.I'm interested (loosely at the moment) in this, as I offloaded a chunk of Britvic at a 50% gain + divis - and partly due to the debt load being rather hefty at Britvic.I'm also keeping an eye in Whitbread, who Phil is also a fan of and a shareholder of alongside yourself.Crozier isn't the business wrecker or splitter that is being considered as you mentioned on the WTB board, having been quite sedentry at ITV, however he has something, as most of the companies do well for a good period during his tenure.Games
Bill1703
17 Jan 2018
Re: Sharescope article Interesting article... notwithstanding my long-standing reservations about old Oakley (a bit of a wood-from-the-trees man, and he relies far too much on financial screens of third-party data, rather than digging into the real numbers directly), this is by and large a reasonable and balanced assessment. "... ROCE in slight decline due to 2015,16 acuisitions... High ROCE, like Fevertree is largely due to outsourcing manufacturing..."You would expect any company making acquisitions to see ROCE fall - you are adding new, current cost assets to the often very-historic, heavily written down balance sheet values of existing assets. Do you think RB will show ROCE on the Mead Johnson deal matching their historic ROCE rates - or anything like it?! Maybe in 10-15 years time...It is one reason why ROCE - as opposed to true return on incremental investment - is such a potentially misleading, backward-looking and hence dangerous metric. Another reason being this issue of outsourcing - it means that "ROCE" on reported balance sheet values is simply not a meaningful measure of true economic returns on capital.I also note that his "debt to EV" data looks odd - and doesn't seem to acknowledge that NICL has substantial net cash on the balance sheet, and has had for a while (as per later table of forecasts). "Saudi economic weakness has slowed growth - also blockage in Middle EastDespite share price decline the P/E is still up at 20 and seems still too high given the expectation os little or no growth, and perhaps too high for a trade buyer.Hopefully Oil back up around $70 means the Saudis will be drinking more Vimto again! Not sure if that correlation works, but I like to think so... And I did see some talk, in recent weeks, that the Yemen blockade had now been lifted? Could mean that the constraint on international growth is relatively short-lived...But I wouldn't disagree too much on the conclusion... I see it as no worse than 'fair value' now, though it has been trading at a premium to this for much of the recent past. I see it as steady-but-moderate growth, rather than "no growth" - notwithstanding the near-term Middle East issues - with the brand equity, balance sheet and cash flow qualities justifying a P/E somewhat higher than otherwise would be the case - but not necessarily the near-30x it's been up at before.And we'll have to wait and see on the "trade buyer" front - he could still be right, but there has to be more chance of interest down below £15 than there was up near £20! In the meantime, I am holding what I have - I have sold down my holding here progressively over the years (the latter two tranches well above the current SP, so not too unhappy there), but retain a reasonably big position.
gamesinvestor
17 Jan 2018
Sharescope article [link] article comparing to Fevertree, Britvic, Barr.Some observations:-1. ROCE in slight decline due to 2015,16 acuisitions2. Vimto not growing and still represents 77% of the business3. UK represents 3/4 of business4. Growth of late has largely been due to the 2 aquisitions5. Saudi economic weakness has slowed growth - also blockage in Middle East6. Despite share price decline the P/E is still up at 20 and seems still too high given the expectation os little or no growth, and perhaps too high for a trade buyer.7. High ROCE, like Fevertree is largely due to outsourcing manufacturing8. Quality control of manufacturers is a constant focus but so far has been good.Games -- Love to see this lower still and I might pour myself a nice Vimto !!
Bill1703
21 Dec 2017
Re: the curate's egg "... trading is very good to be fair/well outpacing the median ... but yemen/Saudi arabia is a blow certainly next year with Ramadan .....this could go on a bit as well . input costs on the rise too .the market is merciless at the moment to the slightest bit of bad news..."Yes, we have had an unusually good run with this - stretching to several years of consistently solid reporting - so we were probably over-due some kind of setback. And even though the SP had already come back quite a way from the recent highs, I feared the worst from a market in its current mood - as per valeite... so not a surprise to see the initial mark-down. But heartening to see the rapid recovery - perhaps the market is indeed fairer minded than it sometimes seems?The fact that underlying trading is mostly still pretty strong - actually, a bit stronger than the generally moderating (though still good enough) trend of recent times - has clearly not gone unnoticed. But I did see something on the news about the port into Yemen being opened up again, so perhaps this is also behind the continuing bounce-back?As we stand, we are all the way back to where we were pre-update, and looking to push higher... it's hard to make a strong case for much more, the metrics were looking very stretched up around £19, even given the formidable track record. As of now, prospective P/E around 23x, c.17x EV/EBITDA, a FCF yield around 3% - hardly cheap, but no longer excessive IMHO, given the prospect of further growth as and when the specific headwinds either unwind or at least stabilise, added to the super-strong balance sheet and "quality" of the strategic story and track record.I have gradually sold down my holding to a still-significant but no longer dominant chunk of my portfolio... no plans to add to this, but equally I am not feeling compelled to take any further profits at these levels. A solid HOLD for now.
