Been a big follower of this company over the last few years they have excelent management and they have done very well but due to the nature of the recent markets they have fallen back to very cheap levels and now are worth a buy in my opinion. I know we have 3 historical threads on this one but they havent been used for many months. I like this report on the company today on the results its well worth a read.

Hemscott.

Hornby - Friday 3rd June 2005

It's all systems go at Hornby and another set of excellent results leaves us wondering why the shares have tailed off over the past six months. The UK market offers plenty of scope despite the consumer downturn and the model trains and racing sets maker is ready to cash in on great potential abroad, says Rodney Hobson.


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Hornby told investors at the end of January that Christmas trading, which is obviously a key time of year, had gone particularly well so it is no surprise that in the year to March turnover was up from 39m to 45m and pre-tax profits rose from 36.5m to 7.2m.

In line with the commendable policy of paying half of earnings per share out in dividends, the final divi of 5p takes the total to 7p, up from 6p (allowing for last year's five-for-one share split). Earnings per share rose from 12.2p to 14.78p excluding heavy amortisation of goodwill on the Lima acquisition in Italy, which took the figure down to 13.88p.

Chief executive Frank Martin stressed today that he remained confident despite the slowdown in consumer spending which, he claimed, was having less impact on the hobby market than on other sectors.

He pointed out that there had been solid growth at home and abroad before taking into account additional sales from acquisitions.


Martin said: 'Trading in our core UK market has remained robust during the year. Despite nervousness in the retail sector, our products have retained their popularity and sales have remained good. We are conscious that some retailers are reporting the impact of wider economic pressures but the hobby-based characteristics of our products lend resilience in such times and market feedback remains encouraging.'

During the year Hornby has pressed on with developing its network of concessions in other stores to 121 outlets. Sales in the concessions grew by 34% in the year and represented 15% of total UK sales. This does mean that Hornby is not heavily reliant on a few dominant retailers.

In any case, while Martin will not neglect the home market his eyes are on the acquisitions in Spain and Italy where enthusiasm for trains and racing cars is no less than here.

Hornby has exclusive rights to use images of Fernando Alonso, the Spanish Formula 1 star, and Sete Gibernau, well known to motorbike enthusiasts, on its Electrotren slot racing packaging in Spain, which apparently has more slot racing enthusiasts for size of population than any other country in the world.

In Italy, Hornby bought assets of model maker Lima from the liquidators and has shipped production out to China, where Hornby and Scalextric models are already produced. The first new Lima models will be in the shops in time for Christmas and more will be released in 2006.

It does mean that Lima will be incurring overheads before the sales revenue starts to flow. Although action has been taken to reduce costs by restructuring the Italian operation and holding down the headcount, interim profits will be depressed. Martin said, though, that profits for the year as a whole were unlikely to be affected.

The shares peaked at 280p late last year after a terrific run lasting nearly four years. We believed they were worth hanging on to at 241p after the January trading statement and we still think that was reasonable advice at the time, although they subsequently slipped further back to around 200p, where there seems to be solid support.

The recent weakness is an opportunity to buy in. The shares added 3.5p to 216p this morning.ENDS.

If you look at the figures you will see that the company is on a very low rating of P/E 14.6 which is very cheap for this company. At present I do not have a forward P/E but will try to get one.

Well worth a dabble.

Please DYOR.

cheers GF.

Is there anybody out there interested in using this BB ??

The HRN Chairman`s recent statement said that he expects Hornby not to be so dependent on the UK for profits in future years as the overseas and US businesses are developed...This is justified by claiming that the european businesses acquired over the past 2yrs or so are only now at the growth stage that Hornby was 4/5 yrs ago but have greater volume and profit potential
The key comment was

"This strategy of targeting stable, collector markets across Europe will have the effect of reducing permanently the Company's dependence on the UK market"

I take this statement as implying that

..........sales in european markets ought to return over 3 to 4 yrs to at least the best market share and volume levels achieved by the previous owners of Electrotren, Jouef, Rivarossi, Lima and Arnold in their respective markets
and
The P&L impact of this growth is forecast to reduce the share of
hrn future profits taken by the UK to a significant minority compared with the present time
Suggesting that if UK profits in 4 yrs time were say 9.3m
...................a compound growth of around 5%
Then with the greater growth in Europe
The Statement implies that the UK would no longer be the source of the bulk of the profits inferring a UK P&L share below 50%
Lets assume the Uk share of the P&L in 4 yrs time is 45%

........Suggesting profits in 4yrs time of around 21m
Possibly
8m , 10m, 13m, 17m and 21m

and hence
with a constant eps
An sp increase from 215p to around 560p should be attainable in 4 yrs

this would still be pretty impressive growth in anybody`s language.. even allowing for inflation
Any views ?

Still in and holding G.

560p in 4 years, thatl do me.

Always made money on this one.

Lost its way a little 10 month ago but seems to have recovered and the future looks very good. Watch out for analyst tips.

Cheers GF.

Also looking again at them myself Goosy, have made a bit from them in the past, hopefully now ready for takeoff again. No position as yet.

Thanks guys for responding...I thought I was the only HRN investor in the world

Lets keep it a secret that HRN is a red hot stock.....that way the sp can only fall and we can buy up the remaining 30% - 40% not held by Funds..........

GF , Seymour
Is`nt this great ..
.the sp has dropped to 207p
......... another few days of this and and we can top up again at 175p just in time for a bounce back to 230p in June......

Why didnt I buy at 207p....?
This share is heading for 250p before the divi is paid in August........

Goosy you still might be able to get it a little cheaper if the present overall market conditions prevail.

GF

The sp has been unaffected by the market slump of 10% over the past month
Just shows how tight the "free" market actually is
Some big trades today around 230p............Can`t believe they are buying from funds with the ex divi date in July...funds like the cash coming in
Could there be a new big buyer on the reservation ?

Hornby has smashed through previous resistence levels on heavy volume, time to buy.

Skreen
Looks like you are right and the sp is now motoring at a rate of knots....Any ideas on the next resistance level and if a bid may be looming...?

Looks like we are teetering on the brink of a breakout to 260p - 270p another bullish statement or even no xmas cautionery note in the next month or so and we could be there ...

Yup looks very interesting at the moment. Higher price could be well on the way especially leading up to xmas.

Re previous post 22....
Given the conservatism of the Chairman`s past announcements it is most unlikely that the recent german acquisition was in his calculation when he said that he saw the UK Market representing a minority proportion of the business in future years........and given the potential of the german market..this makes that statement even more credible.......
DYOR

Looking rather strong.



Forward P/E of 13.9 to 31st march 2008.

Holding its own on a bad day for small caps.

Looks like its breaking out.

Hornby profits slide
MoneyAM
Hornby said pretax profits for the first half were 1.4m, compared with 2.5m a year ago.

The international models and collectibles group said this was due to lower sales in UK.

It declared an interim dividend of 2.5p per share, up 9% from a year earlier.

Hornby confirmed press reports it has acquired certain assets of Humbrol Ltd, including the Airfix model kit business, out of administration for 2.6m in cash.

'We expect this acquisition to be broadly earnings neutral in the current financial year, but to be significantly earnings enhancing thereafter,' said Neil Johnson in his review as the company announced its results for the six months to September 30th.

The company expects 'significantly stronger' performance in the second half of the current financial year.

The acquisition of Airfix etc. should keep this down for a while. It may even see increased pressure on it.

A temporary kick in the teeth, no more than that.

Clairvoyant post GF...........as we target 280p