Sunday, May 08, 2005
Mayborn and Ben Bailey: on course
Recently Mayborn and Ben Bailey reported on trading at their AGMs. I hold shares in both companies.
On April 29th, Ben Bailey reported confidence on prospects in the year ahead.
national monetary policy decisions have had the effect of dampening the level of price increases. In our area of operations we have not seen any significant impact on either demand or prices. However, in common with other housebuilders, the Company is offering limited incentives to potential buyers in order to complete the sale. On 2005 reservations, our average selling price per square foot is 4% higher than that achieved in 2004 with forward reservations 17% up on the same period as in 2004, which represents nearly 75% of our budgeted output for 2005.
Bailey's announcement confirms the end of the boom enjoyed for the last five years. As always investors must focus on the future. Bailey's management appear to be doing likewise and have taken on more corporate debt to finance land purchases:
the Company will significantly increase its land bank during 2005 with a number of planned and agreed acquisitions. To finance this expenditure the Company has recently re-negotiated an increase in its borrowing facilities to £71.5 million
Debt in itself is always bad news for a company. It leaves them more vulnerable to a downturn and restricted in it's financial planning. This isn't debt for debt's sake however. Bailey is planning to use the debt to purchase more land for building. Though the debt on the balance sheet is a negative, the increase in tangible assets that will result helps offset some concern.
Encouragingly, the board finishes with a closing line very similar to that made at 2004's AGM:
All of these factors give the Board confidence that we can deliver another set of good results in 2005.
Mayborn is a company that doesn't suffer from the same volume of negative sentiment Bailey is currently struggling against. At the Mayborn AGM last Thursday the company announced:
In the Preliminary Announcement of 15 March 2005, I stated that trading in 2005 had started strongly. This strong start has continued to date. The Baby and Child Division, the larger of the two, is benefiting from a mixture of good organic growth, as in 2004, and a pleasing initial contribution from the March 2005 acquisition of Tube Plastics, the UK market leader in high quality children's outdoor play equipment. Sales in the Household Products Division are flat apart from the February 2004 acquisition, Impex, a specialist in the distribution of art and craft accessories to the retail trade, which continues to experience growth
That's a bit of a mouthful. They are all very dry these company trading statements - it's vital an investor quickly gets to the pertinent information. For Mayborn, this is the strong implication that profits will advance further in 2005. For a start, 2005 will comprise a full year's contribution from the advancing Impex subsidiary. The Baby and Child division is progressing, Household Products is maintaining it's level of profitability and the new Tube Plastics acquisition is adding even more to the company's bottom line. Without going into a detailed analysis, Mayborn still remains cheap, a fact not missed by Friday's Independent newspaper:
Lavish spending on baby products makes Mayborn a worthwhile buy
..A trading update yesterday said the year had started well, indicating that results this year would beat the impressive 2004 figures...the company has record of growth in its baby products division, which makes bottles, cups etc under the Tommee Pippee[sic] brand. Mayborn says that while this market is growing at 5 per cent a year, it also benefits from product innovation here.
..At 382.5p, the shares trade on a modest multiple of 11, making Mayborn a buy.
The shares duly responded with a 1% rise to finish the week at 383p to buy.
Elsewhere, Fayrewood put in a near 3% rise to 117p, easily clear of my recent purchase at 112.5p. Chaucer saw a huge amount of it's stock traded at 57p as the bid-offer spread moved to 56-59p. I'm looking forward to Monday's trading in these two companies and expect rises.
The Artful Dodger
On April 29th, Ben Bailey reported confidence on prospects in the year ahead.
national monetary policy decisions have had the effect of dampening the level of price increases. In our area of operations we have not seen any significant impact on either demand or prices. However, in common with other housebuilders, the Company is offering limited incentives to potential buyers in order to complete the sale. On 2005 reservations, our average selling price per square foot is 4% higher than that achieved in 2004 with forward reservations 17% up on the same period as in 2004, which represents nearly 75% of our budgeted output for 2005.
Bailey's announcement confirms the end of the boom enjoyed for the last five years. As always investors must focus on the future. Bailey's management appear to be doing likewise and have taken on more corporate debt to finance land purchases:
the Company will significantly increase its land bank during 2005 with a number of planned and agreed acquisitions. To finance this expenditure the Company has recently re-negotiated an increase in its borrowing facilities to £71.5 million
Debt in itself is always bad news for a company. It leaves them more vulnerable to a downturn and restricted in it's financial planning. This isn't debt for debt's sake however. Bailey is planning to use the debt to purchase more land for building. Though the debt on the balance sheet is a negative, the increase in tangible assets that will result helps offset some concern.
Encouragingly, the board finishes with a closing line very similar to that made at 2004's AGM:
All of these factors give the Board confidence that we can deliver another set of good results in 2005.
Mayborn is a company that doesn't suffer from the same volume of negative sentiment Bailey is currently struggling against. At the Mayborn AGM last Thursday the company announced:
In the Preliminary Announcement of 15 March 2005, I stated that trading in 2005 had started strongly. This strong start has continued to date. The Baby and Child Division, the larger of the two, is benefiting from a mixture of good organic growth, as in 2004, and a pleasing initial contribution from the March 2005 acquisition of Tube Plastics, the UK market leader in high quality children's outdoor play equipment. Sales in the Household Products Division are flat apart from the February 2004 acquisition, Impex, a specialist in the distribution of art and craft accessories to the retail trade, which continues to experience growth
That's a bit of a mouthful. They are all very dry these company trading statements - it's vital an investor quickly gets to the pertinent information. For Mayborn, this is the strong implication that profits will advance further in 2005. For a start, 2005 will comprise a full year's contribution from the advancing Impex subsidiary. The Baby and Child division is progressing, Household Products is maintaining it's level of profitability and the new Tube Plastics acquisition is adding even more to the company's bottom line. Without going into a detailed analysis, Mayborn still remains cheap, a fact not missed by Friday's Independent newspaper:
Lavish spending on baby products makes Mayborn a worthwhile buy
..A trading update yesterday said the year had started well, indicating that results this year would beat the impressive 2004 figures...the company has record of growth in its baby products division, which makes bottles, cups etc under the Tommee Pippee[sic] brand. Mayborn says that while this market is growing at 5 per cent a year, it also benefits from product innovation here.
..At 382.5p, the shares trade on a modest multiple of 11, making Mayborn a buy.
The shares duly responded with a 1% rise to finish the week at 383p to buy.
Elsewhere, Fayrewood put in a near 3% rise to 117p, easily clear of my recent purchase at 112.5p. Chaucer saw a huge amount of it's stock traded at 57p as the bid-offer spread moved to 56-59p. I'm looking forward to Monday's trading in these two companies and expect rises.
The Artful Dodger
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