Wednesday, 25 September 2013

Nichols - New Purchase

I did a write-up on this one back in March following the final results (here’s the link). I really had intended to purchase at the time but for one reason or another I was distracted and the share price advanced quite rapidly.

I have been patiently waiting for a pull back but to no avail. I have therefore taken the plunge with my customary ‘half’ now at 1230p and will top up at a later date.

Since the first post, Nichols have issued interim results in July for the 6 months to end June 2013.

Here’s the highlights:

  • Profit before tax up 9% to £9.0m
  • Basic earnings per share up 11% to 18.76p
  • Strong net cash position of £31.2m (H1 2012: £23.6m)
  • Exclusive licence to add Extreme Sports and Energy to brand portfolio
  • Interim dividend up 13% to 6.32p

I am looking for around 20p dividend for the full year which would put it on a forward yield of 1.6%.

The company are currently planning further growth for 2014 and beyond including the introduction of further new products, entering new international markets as well as continuing to invest in existing core brands.

Nichols is listed on AIM and has a market cap of around £450m. As the rules have recently changed, I have been able to purchase this in my ISA.

More on this in the new year.

2 comments:

  1. Hmm, I agree it's a cracking company and it certainly hasn't given us many chances to buy it in the past few years. But I couldn't buy it here. It's not just the price, it's the valuation -- P/E, price-to-book, enterprise value to revenues -- all the ratios are off the charts.

    I think you need a reason to see something transformational happening here to justify a purchase at these levels. Personally I think it's just elevated through the drive for defensive stocks.

    Just my opinion though, and meant constructively. I wish I owned it, but from lower levels! ;)

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    Replies
    1. Hello TI,

      I agree the current valuation is high - I really wish I had purchased back in March at around 860p. Having missed that opportunity, I suppose the question I'm asking myself this week is - do I wait a further 6 months hoping the price will drop or do I jump in now on a high valuation/price and purchase more should the price retreat.

      Always a tricky decision, particularly in a rising trend and fast moving sp. I will console myself with the thought that in the longer term, the current price/value may turn out to be not so bad!

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