Artji
16 Nov 2015
Re: Sold You could well be right, especially as regards a possible takeover, which I think probably offers the best bet for more significant upside. But with the US facility running flat out they're going to need some investment, and the small margins they're making worry me a bit. It was a tight call but I'm also happy to have some money off the table, with the global economy struggling as it is.
Ytong
04 Nov 2015
Dividend Does anybody have an idea as to the timetable regarding the 'special' dividend?
noidea1960
23 Oct 2015
Re: Sold I should be clear I included Simon Thompson (IC) article
noidea1960
23 Oct 2015
Re: Sold I think you sold a tad too soon (You did not factor in Cash Pile properly for a starter):-My faith in Aim-traded Pure Wafer (PUR: 175p), a leading global provider of high-quality silicon wafer reclaim services to some of the world's largest semiconductor makers and foundries, continues to pay-off after the shares hit a seven-year high on news of a massive cash return to shareholders and an upbeat trading update.Following a major fire at its Swansea facility at the end of last year, the company made the strategic decision not to rebuild the plant, but instead return surplus cash from the $90.6m (£58.6m) insurance payout to shareholders after settling all liabilities and focus solely on its operations in Prescott, Arizona. All liabilities have now been settled and the 99-year lease on Swansea site has been reassigned which left Pure Wafer with net funds of $85.3m at the end of June, a sum worth 292 cents a share. At current exchange rates the cash pile is worth 188.5p a share, or 8 per cent more than the company share price. Of this sum, the board believe that between 140p to 145p should be returned to shareholders. Expect a further announcement concerning the timing of the capital distribution in the coming weeks.What remains is a business in the U.S.A. which maintained record levels of production and posted cash profits of $3.3m on revenue of $15.4m in the latest 12-month trading period. The operation was responsible for 44 per cent of group turnover in the period before the fire, and has since benefited from the transfer of some of the Swansea contracts. Analyst Eric Burns at brokerage W.H. Ireland values the US business at five times cash profits, or $16.5m (£10.7m). At current exchange rates that valuation equates to 36p a share. But with the company’s share price already trading below its cash pile, then in effect the Prescott operation is in the price for free. Furthermore, to a strategic buyer, the valuation could be substantially higher than this base case. Clearly, that’s an anomalous valuation even after factoring in further investment in the US facility and Pure Wafer’s working capital requirements. New target price So having initiated coverage on Pure Wafer’s shares at 72.5p in the autumn of 2013 ('Time to chip in', 10 October 2013), and seen the price hit my 175p target price post last week’s financial results, I can still see further share price upside. In fact, my new target price is 200p to give Pure Wafer a market capitalisation of £58.4m pre-cash return, or 4 per cent less than its net asset value of £61.2m. And remember included in the net asset value figure is a cash pile worth £55m and property, plant and equipment worth £6.1m.Frankly, there looks little downside risk here because if Pure Wafer’s share price continues to trade below its cash pile post the forthcoming capital return then I can see predators being attracted by the prospect of getting their hands on the leading wafer reclaim company in the US for a bargain basement price. Trading has been strong post the June fiscal year-end and the board expects this trend to be maintained throughout the current financial year and beyond.Please note that I last advised running profits at 162p (‘Bumper cash returns,’ 13 August 2015) after the share price hit my previous target price of 150p, having quadrupled in the six-month period after I highlighted the glaring valuation anomaly on offer (‘Engineering growth’, 5 February 2015). But in light of the better than expected insurance payout, higher net funds figure, and positive trading update, a recommendation upgrade is in order.Trading on a bid-offer spread of 171p to 175p, giving Pure Wafer a market capitalisation of £51m, I rate the shares a buy and have a new target price of 200p.
Artji
21 Oct 2015
Sold Sold today at £1.8025 for a nice 113% profit. The US results weren't overly impressive, margins appear very tight, $530k profit on $15.4m turnover. That would be a loss when unallocated corporate costs are included. Operating cash flow was very good at $7.4m but inflated by inventory, receivables and payables movements of $9.5m that aren't likely to be repeated. So it looks fully valued to me.All IMHO. Best of luck to all holders.Artji
noidea1960
13 Aug 2015
Re: Remaining business From ST in IC today although I still think my valuation is more realistic:-"Pure Wafer’s board also points out that the company’s facility in Prescott, Arizona continues to operate successfully and trading there has been unaffected by the closure of the Swansea facility. The U.S. facility is currently running at "record levels of productivity and high utilisation, providing confidence in the strength and profitability of this business going forward." Analyst Eric Burns at brokerage W.H. Ireland believes the U.S. business is worth a minimum of 38p per share, or £11m, based on a conservative multiple of 4 times historic cash profits whilst acknowledging that, to a strategic buyer, the valuation could be "substantially higher than our base case."So with the forthcoming cash return accounting for at least 140p, and possibly 145p of Pure Wafer’s current share price, I feel that it’s not time yet to bank profits with the shares priced on a bid-offer spread of 160p to 162p. Offering scope for a further 10 per cent upside and perhaps far more if a strategic buyer emerges for the U.S. business, I would run profits ahead of the full-year results on 5 October."
noidea1960
12 Aug 2015
Re: Remaining business From IC in May"Broker WH Ireland has suspended forecasts, but highlights the Arizona facility, which posted $4m (£2.6m) cash profits in 2014."So I would rate on 7xCash EBITDA = £18m = 62p a share + 145p = 207p TP
noidea1960
12 Aug 2015
Re: Remaining business The US business is worth at least 30p......maybe more. I recall reading an estimate of 40p somewhere . So TP upto 180p incl SD.
Artji
12 Aug 2015
Re: Remaining business U.S. operation from 2014 results:Turnover: $15.5mOperating profit: $3.1mNet assets: $6.5mIf we assume a £1.425 special divi, this leaves the US business priced around a mid-point of 17p per share. Corporate expenses & finance costs will probably mean tax before profit $0.5-1.0m less than operating profit, but even so, to my mind this makes the US business look cheap.PUR say it's been going flat out so expect better this year too. I guess we'll have to accept quite a few exceptional & restructuring costs going forward, but this should lead to a slimmed down, US based management & lower costs (or, as mooted in an earlier post, a sale of the business). Either way, there looks to me, FWIW, more value to be had yet. I'm looking forward to the results being released.Artji
II Editor
12 Aug 2015
NEW ARTICLE: Pure Wafer confirms shareholder windfall "LSE
URure Wafer's main factory in Swansea went up in smoke just before Christmas. Instead of rebuilding it, the firm, whose special processes help computer chip manufacturers recycle material and cut costs, settled with its insurers and ..."[link]
Ytong
12 Aug 2015
Re: Remaining business I can't understand the market experts. The shares 'were on fire' last year and with just two factories and bulging order books : how can it be difficult to analyze?The business interruption insurance was a given.The insurers basically valued half the business doing leg work for everybody.The devil is in the detail, but honestly I could never see that much...disposal of a lease, really is that such a big deal?I suspect Pure Wafer will soon put up the for sale sign. If not already. Management over here, managing over there is cumbersome and so the same as you, my belief is the share has further to go.
AndyRB
12 Aug 2015
Re: Remaining business Just taken my own advice and put another 3000 in the pot , the remaining business must be worth more than 20p . As usual time will tell but not much downside.
AndyRB
12 Aug 2015
Remaining business With a minimum of 140p payout and a share price of 158p the remaining business is only valued at £4m or less , does anyone have any figures for the American business which according to the RNS is working flat out. I think this could be a great buy even at the current price.
BigSwede
06 Aug 2015
Would anyone like to make a guess at the likely price after the special dividend is paid?
Ytong
30 Jul 2015
Dividend Does anyone know when the special dividend might be paid?I still think this is a worthwhile investment and reluctantly consider a sale as a consequence utilizing capital gains as opposed paying more income tax.
