PIPWHAWK UPDATE

Where are the results?

So one of the "buy" reasons back in sept/oct was the fact that the results were going to be earlier than usual, in October, rather than November. This was seen by myself as a very good sign, you dont rush out bad results. Its now 24th November and no results so does that mean bad news coming? I think not.

Communications with The Chairman

Ive had quite a few emails with Gordon Watt the Pipehawk chairman. Pipehawk themselves were good to go with the results in October but the rate determining step is their joint venture in which they have a 28% stake, SUMO. 
SUMO have/had a different reporting cycle to PIP but with a new accounting rule, they need to have data no longer than 3 months in the past so they are having to compile data up to June that they were not prepared to do. Added to this, the man in charge of it went off sick and the replacement left so they have been struggling to get their results to PIP for PIP to include in their results. 

Gordon Watt is as annoyed about this as I/shareholders are, perhaps more so! He hasnt told me anything price sensitive but you really get the impression they want these results out for people to see what progress they have made. 

The second half of the year was better than the first half which was better than last year. They really are accelerating now with the promise of more Hadley deals as this first 600k one finishes in Dec and there are x2 more to come.

What do i expect the results to show?

Clearly a difficult one but headline figures should be a profit after tax of at least £200k. Possibly a lot lot more. I expect to see a nice trend from last year and even half on half. I expect a bullish trading update with higher profits preddicted for the next year.
I expect the SP to react accordingly with an SP of 15p and an mcap of £5mill for starters.

Current Charts

The RSI has cooled off to under 30 now, having been 90+. As seen before, PIP moves very fast on any volume. I think the perfect storm of massively oversold and superb results could spike this quite high indeed. With all of AIM crying out for a bagger could everyone jump on this and have one of those AIM meg risers? I still hold and look forward to the results that PIP wanted out weeks ago. 

Creightons #CRL

Creightons
#CRL

Buys -
Average -  
Currently -
Target –15p
Timeframe - within 1-2 months

Current Mcap -

What do they do?
“The Creightons Plc group is made up of a select group of brands and companies specialising in the creation of high quality personal care and beauty products for the consumer and trade market.” From their website http://www.creightons.com/about-us


Past performance

	£ Millions	£ Millions	£ Millions	£ Millions	£ Millions
Income Statement	31 Mar '15	31 Mar '14	31 Mar '13	31 Mar '12	31 Mar '11
Revenue	21.09	19.35	17.33	16.33	14.13
Operating Profit / Loss	0.50	0.50	0.33	0.26	0.17
Net Interest	(0.02)	(0.03)	(0.03)	(0.03)	(0.03)
Pre tax Profit	0.85	0.47	0.30	0.22	0.14
Post tax Profit	0.85	0.47	0.30	0.22	0.14
Profit for the Period	0.85	0.47	0.30	0.22	0.14

	31 Mar '15	31 Mar '14	31 Mar '13	31 Mar '12	31 Mar '11
Operating Margin	2.36%	2.60%	1.92%	1.57%	1.18%
Return on Capital Employed	16.48%	10.08%	7.14%	5.88%	4.26%
Dividend Cover	n/a	n/a	n/a	n/a	n/a
Dividend Yield	n/a	n/a	n/a	n/a	n/a
PE Ratio	7.80	5.20	6.10	5.20	10.00
PEG	n/a	0.10	0.20	0.10	n/a
Dividend per Share Growth	n/a	n/a	n/a	n/a	n/a
Net Asset Value per Share	8.71p	7.27p	6.22p	5.79p	5.55p

Investment case 
Half yearly report is due out in November. Net borrowings (bank overdraft and loans less cash at bank and in hand) at the year-end have reduced by £527,000 to £75,000 (2014: £602,000). Always nice to see an AIM company be prudent with their debt management and get rid of it. Diluted earnings per share for 2015 was 1.27p so they are only on a PE of 5-6.
One of the big reasons to buy for this particular update is the headline profit figure is likely to be highly impressive, perhaps over the £1mill mark! On 28 May 2015 the Group completed the disposal of "The Real Shaving Company'' business for £1,000,000 which is expected to generate an exceptional profit of £844,000. That profit will be in these figures. Now I know this isn’t exactly actual profit growth in the traditional sense as its an exceptional item, but CRL buy, develop and sell these brands as seen with the sale of TS Ventures Ltd previously so further brand sales is a real possibility. The largest shareholder has also been adding recently in decent chunks. Should bode well.
 

Bear case
Operating margin of 2.36% isnt eactly earth shattering. The 2015 profit figure includes the exceptional item of a brand sale so like for like profit was static.

Must read resource

Have you came across a website called simplywall.st? Its superb! A must read is the CRL page on it... (info correct at 7/11/15)
https://simplywall.st/LSE:CRL/creightons
They calculate the future cash flow value at 15p a share at 8p SP and 13p a share at 7p SP

Industry average PE is 16.3! and they are massively undervalued compared to the industry on price based on value of assets.




A note on the PEs. If based solely from the recurrent core business profit then they are still sitting on a PE of around 9 with about 80% upside to the industry average of 16. When you factor in the exceptional items that are now recurring it gets very interesting indeed.





                                                                                                                                              
         





They rank CRL and one of the best (5/6 criteria met) and full marks for financial health (6/6 criteria met). With a strong balance sheet and at deep discount, the downside is minimised.
Their exact words are "potentially undervalued and in a flawless financial position" - fairly reassuring

It is also worth noting that the above graphs and valuations are based off the last results and as explained i think these results will be materially better due to the sale of The Real Shaving Company

Although its not all sunshine and roses...





Comms with the company
So far theyve not replied to me, bit of a black mark but ive been busy myself so not chased up on it.


Summary 

With the upcoming headline half yearly profit figure of around £1mill having them on a PE of 2-3, youd like to think there is some upside to come considering the industry average is 16. Boosted by a large exceptional item but this type of brand developement and sale is in their business plan so perhaps exceptional but may recur with other brands. Speculative buy with 100% upside target. Difficult to see a large negative bar them unexpectedly dropping a bollock with a profit warning however this 6 months profit will be £1mill+ i think. 100% upside on future cash flow position and in a "flawless" financial position.

Disclaimer
Clearly dont just buy based on my recommendation or anyone elses. Do your own reseach. Pick an entry you are happy with, pick a target exit you think is achiveable. This share may go up and down quite a bit before the target catalyst. The target catalyst may not be as good as hope resulting in an AIM sell off with decent losses if your entry is wrong - that said CRL is on the main market!

Decison
I think this is a buy, certainly at current levels. Ive shared this with a few smarter investors than me whom agree. Lets see what happens!