Sunday, March 14, 2004
At last.
I've discovered a share I am happy to buy at the price it is trading currently.
Mayborn is a babycare and household products supplier with a market capitalisation of £61m. Mayborn reported a storming year last week, with earnings per share of 23.7p against Friday's closing price of 277.5p. That's a P/E of approximately twelve. At first glance that's a little rich for me, but there are plenty of reasons to believe Mayborn can improve on this figure in 2004.
The sharp increase in earnings reported last Wednesday was driven by:
the outlook statement contained more positives:
"Gearing was substantially reduced following excellent cash generation. The current year has started satisfactorily. Your Board is confident that 2004 will be another year of progress."
If debt can be wiped out entirely in 2004 (it will be if the current redemption rate can be maintained) earnings should rise approximately ten percent, all other factors remaining equal. However, there is reason to expect increased savings as more production is moved to China and a further rise in revenue from Steribottle, a pre-sterilised baby bottle.
This considered, along with an analysis of the full year results:
http://moneyam.uk-wire.com/cgi-bin/articles/200403100700113420W.html
I make fair value for Mayborn 338p. This is less than my usual thirty percent discount to fair value but 338p is a conservative estimate, based on the growth achieved thus far and the falling debts. More positive earnings news or a further decline in the value of the US dollar will see me advance this target figure.
Providing I'm out of my cot in time I will be spending £4000 on Mayborn shares tomorrow morning. As of tomorrow, for the first time since I began investing I will be working with a four share portfolio, incorporating oil exploration, housebuilding, insurance underwriting and baby products.
The Artful Dodger
I've discovered a share I am happy to buy at the price it is trading currently.
Mayborn is a babycare and household products supplier with a market capitalisation of £61m. Mayborn reported a storming year last week, with earnings per share of 23.7p against Friday's closing price of 277.5p. That's a P/E of approximately twelve. At first glance that's a little rich for me, but there are plenty of reasons to believe Mayborn can improve on this figure in 2004.
The sharp increase in earnings reported last Wednesday was driven by:
- a 10% increase in turnover
- no reorganisation costs versus last year's £1.3m
- a halving in debt
- £2.3m being spent on share buy-backs, thus accelarating earnings attributable to shareholders for a lesser increase at the bottom line
- Babycare Products division experiencing a surging profit
- Cost savings thanks to transferring production to China
the outlook statement contained more positives:
"Gearing was substantially reduced following excellent cash generation. The current year has started satisfactorily. Your Board is confident that 2004 will be another year of progress."
If debt can be wiped out entirely in 2004 (it will be if the current redemption rate can be maintained) earnings should rise approximately ten percent, all other factors remaining equal. However, there is reason to expect increased savings as more production is moved to China and a further rise in revenue from Steribottle, a pre-sterilised baby bottle.
This considered, along with an analysis of the full year results:
http://moneyam.uk-wire.com/cgi-bin/articles/200403100700113420W.html
I make fair value for Mayborn 338p. This is less than my usual thirty percent discount to fair value but 338p is a conservative estimate, based on the growth achieved thus far and the falling debts. More positive earnings news or a further decline in the value of the US dollar will see me advance this target figure.
Providing I'm out of my cot in time I will be spending £4000 on Mayborn shares tomorrow morning. As of tomorrow, for the first time since I began investing I will be working with a four share portfolio, incorporating oil exploration, housebuilding, insurance underwriting and baby products.
The Artful Dodger
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