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Bowler Metcalf (BCF) will be the stock in focus: (Price at time of writing: R8.70 as 27 September 2016)
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Background and overview of Bowler Metcalf (BCF)
So who and what is Bowler Metcalf? A lot of people do not actually know the stock or what it is involved in.
According the their website "Bowler Metcalf was formed in 1972, listed in 1987, and is now classified under Containers and Packaging, General Industrials sector of the JSE. The Bowler Metcalf Group consists of two main operating divisions, Plastics (Bowler Plastics) and Filling (Quality Beverages)."
Plastics Division:
The plastics division specializes in the manufacture of rigid plastic packaging for the toiletry, cosmetic, household, pharmaceutical and food markets, focusing on customized solutions rather than the large volumes, standards market. Manufacturing plants are situated in Cape Town, Johannesburg and Durban. Our Head Office is in Cape Town, as is tool design and manufacture.
Modes of manufacture comprise, injection and blow moulding (PVC, HDPE and PP), extrusion (tubes and laminated tubes) together with comprehensive printing and decorating capabilities, and injection stretch blow moulding (PET).
Filling:
The filling division manufactures and distributes carbonated soft drinks, under their own and proprietary brands, specializing in unique flavours. Manufacturing plants are situated in Cape Town and Johannesburg, distributing nationally into both the retail and informal markets.
Bowler Metcalf is the lesser known rival of Nampak (NPK), the largest listed packaging firm listed on the Johannesburge Stock Exchange (JSE).
According the their website "Bowler Metcalf was formed in 1972, listed in 1987, and is now classified under Containers and Packaging, General Industrials sector of the JSE. The Bowler Metcalf Group consists of two main operating divisions, Plastics (Bowler Plastics) and Filling (Quality Beverages)."
Plastics Division:
The plastics division specializes in the manufacture of rigid plastic packaging for the toiletry, cosmetic, household, pharmaceutical and food markets, focusing on customized solutions rather than the large volumes, standards market. Manufacturing plants are situated in Cape Town, Johannesburg and Durban. Our Head Office is in Cape Town, as is tool design and manufacture.
Modes of manufacture comprise, injection and blow moulding (PVC, HDPE and PP), extrusion (tubes and laminated tubes) together with comprehensive printing and decorating capabilities, and injection stretch blow moulding (PET).
Filling:
The filling division manufactures and distributes carbonated soft drinks, under their own and proprietary brands, specializing in unique flavours. Manufacturing plants are situated in Cape Town and Johannesburg, distributing nationally into both the retail and informal markets.
Bowler Metcalf is the lesser known rival of Nampak (NPK), the largest listed packaging firm listed on the Johannesburge Stock Exchange (JSE).
Scroll over or click on the funnel chart to get more details of BCF's latest financial results.
Financial review:
BCF is sitting on a net profit margin of just 14.74%. Net profit amounted to R73.6million on revenue of close to R500million. That is an extremely healthy profit margin achieved by BCF. Investors should be happy with that number.
Earnings per share for the full year came in at 79.2c, placing BCF on a pretty low PE ratio of 11. Full year dividends amounted to 18.4c, putting BCFon a dividend yield of just over 2%.
Due to massive restructuring at BCF we will not be looking at the pie charts (as we do with most of our valuatuons) showing the contributions of their various divisions as the majority of revenue and profits are now made up by a single division (being their packaging division).
Earnings per share for the full year came in at 79.2c, placing BCF on a pretty low PE ratio of 11. Full year dividends amounted to 18.4c, putting BCFon a dividend yield of just over 2%.
Due to massive restructuring at BCF we will not be looking at the pie charts (as we do with most of our valuatuons) showing the contributions of their various divisions as the majority of revenue and profits are now made up by a single division (being their packaging division).
Cash generated from operations amounted to R52.6million (or 63.5c per share). Total cash and equivalents on their books is sitting at R158.2million (or R1.90 odd a share). Essentially 21.8% of BCF's R8.70 share price is made up of cash.
BCF seems to have control off their trade and other receivables (money owed to them for goods and services rendered). Sitting at R106million vs R103million the previous year. Clearly this number is not ballooning out of control. Their assets far outstrip their liabilities. This will be highligted in our financial ratios we look at below. They have no borrowings and basically their only liabilities are deffered taxes and trade and other payables (accounts they need to settle for goods and services supplied to them). Their balance sheet is what most businesses aspire towards.
Debt is like a anchor to a ship. Stops it from going anywhere. To much debt for businesses acts in exactly the same way, as debt repayments stop companies from paying bigger dividends or acquiring other assets/firms. It is therefore essential that companies manage their debt properly.
BCF seems to have control off their trade and other receivables (money owed to them for goods and services rendered). Sitting at R106million vs R103million the previous year. Clearly this number is not ballooning out of control. Their assets far outstrip their liabilities. This will be highligted in our financial ratios we look at below. They have no borrowings and basically their only liabilities are deffered taxes and trade and other payables (accounts they need to settle for goods and services supplied to them). Their balance sheet is what most businesses aspire towards.
Debt is like a anchor to a ship. Stops it from going anywhere. To much debt for businesses acts in exactly the same way, as debt repayments stop companies from paying bigger dividends or acquiring other assets/firms. It is therefore essential that companies manage their debt properly.
A few financial ratios to mull over for BCF (calculated using our Financial Ratios Calculator):
- Debt to Equity Ratio: 0.18 (more than 2 shows high levels of financial leverage).
- Current Ratio: 6.29 (A measure of liquidity. Less than one signals possible trouble in paying off current liabilities).
- Quick Ratio: 5.21 (Another liquidity measure. Shows how much in liquid assets is available to cover current liabilities or short term debt).
- Return on Assets (ROA): 8.94%
- Return on Equity (ROE): 10.52%
- Net Profit Margin: 14.75%
- Dividend Yield: 2.07%
Valuation:
Based on BCF's current financial results we value them at between R11.61 and R11.80. We therefore feel that BCF offers good value for investors. Investors should note that the share is not the most liquid and irratic swings in the share price can take place due to the low volumes being traded in the share.
We use our Share Valuation Calculator as guide to valuing shares. We believe in value investing and our above mentioned share valuation is based on the underlying fundamentals and financial statements of the stock in question.
We use our Share Valuation Calculator as guide to valuing shares. We believe in value investing and our above mentioned share valuation is based on the underlying fundamentals and financial statements of the stock in question.