Renold (RNO) is the second-largest industrial chain business in the world, according to chief executive Robert Purcell. But it has only 7-10 per cent in global share of a highly-fragmented market, he adds, and is under-represented in China, where it has less than 1 per cent market share in what is “probably the largest in the world”. “Unless you’re manufacturing in China you’re not really going to be able to penetrate that market”, Mr Purcell says.
The Chinese market is moving in Renold’s direction, however, as it adopts higher quality “solution chains”. The group, meanwhile, has completed its move to its new facility in Jintan. Production there is “not quite where it needs to be” yet, the chief executive recognises. He expects further operational challenges over the next six months, although progress is being made. Renold’s £2.3m rise in its level of working capital is partly related to the factory relocation. The business also carries higher inventory levels to cover weaker Jintan production output. Inventories were up 9 per cent to £44.8m over the full year. Labour cost inflation has also weighed on margins, particularly in Germany.
House broker Peel Hunt forecasts full-year pre-tax profits and EPS of £14.8m and 5p, respectively, for the March 2020 year-end, rising to £15.9m and 5.4p in 2021.
| RENOLD (RNO) | ||||
| ORD PRICE: | 32p | MARKET VALUE: | £72m | |
| TOUCH: | 31.1-33p | 12-MONTH HIGH: | 40.8p | LOW: 21p |
| DIVIDEND YIELD: | nil | PE RATIO: | 10 | |
| NET ASSET VALUE: | * | NET DEBT: | £30m | |
| Year to 31 Mar | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
| 2015 | 181 | 7.7 | 2.5 | nil |
| 2016 | 165 | 7.4 | 2.4 | nil |
| 2017 | 183 | 6.7 | 2.1 | nil |
| 2018 | 192 | 1.4 | -1.0 | nil |
| 2019 | 202 | 11.2 | 3.3 | nil |
| % change | +6 | +700 | - | - |
| Ex-div: | na | |||
| Payment: | na | |||
| *Negative shareholders' funds, includes intangible assets of £29.7m, or 13p a share | ||||
