Australian (ASX) Stock Market Forum

ANN - Ansell Limited

Ansell is one beneficiary of the current crisis. Turned production around to supply Chinese market rather than export; and authorities fast track a restart.
Ansell has ramped up production of protective body suits at its Chinese factory and fast-tracked the importation to China of rubber gloves and masks in response to a surge in demand due to the coronavirus.
Ansell boss Magnus Nicolin said its factory in the Chinese province of Xiamen is considered a "priority" facility by local authorities, and the company had received help from Chinese authorities to get staff back to the factory after Chinese New Year. The Ansell factory has about 600 staff.
"We're now producing at full speed, or even actually higher than normal production rates. So we're quite pleased about that, especially in view of the fact that most plants in China are not even operating at the moment," he said.

"We were identified as one of five priority facilities in China, and that's why the Chinese government was quite helpful. In return we have focussed a lot of production here, to provide these suits to various government authorities to be used in Wuhan and other places to protect people," he told The Age and The Sydney Morning Herald.
But despite the jump in demand for the ASX-listed manufacturer's equipment, Mr Nicolin said overall the coronavirus would have a mixed impact on the company and "a minimal net impact" on its annual results.
This was because the virus was affecting other companies being hit by reduced Chinese consumer activity, such as German car makers, which ultimately affected demand for the products they use in manufacturing, including Ansell products.
"We currently expect the coronavirus crisis to have both positive and negative impacts on Ansell's business," Mr Nicolin said. " We are actively supporting the Chinese authorities to provide a significant amount of personal protective equipment (PPE) which has increased demand for these products. We also expect negative effects due to broader external plant shutdowns in the manufacturing sector, decreased manufacturing production, lower stock levels and potential supply chain disruption which may also have some adverse implications for our customers," he said.
Ansell reported a first half profit on Tuesday of $US65.8 million ($98 million), up 3.5 per cent on the prior corresponding period, but below consensus forecasts of $US71.95 million. Total revenue rose 3.9 per cent to $US753.3 million.

It lifted its interim dividend, which is unfranked, 4.8 per cent to US21.75 cents per share. It will be paid on March 12.
- this probably belongs, as much, in the Economic impact of Covid-19 thread

Ansell warns there are ''dangerous trends'' emerging which are preventing urgent supplies reaching intended destinations, as borders shut and desperate nations seize shipments without regard for neighbouring countries.

Magnus Nicolin said on Friday morning that a consequence of countries shutting down borders in the coronavirus pandemic and stopping the free flow of exports and shipments was that creaks are now appearing in supply chains of producers of vital equipment, just as demand for products soars.

"There are some dangerous trends here,'' he said.

Mr Nicolin said there had been instances where authorities had started ''ignoring'' the rules across the industry, and had simply commandeered shipments of masks made by other companies. A shipment of masks from China intended for Italy had been seized in Prague in the Czech Republic while trucks re-fuelled, while a similar instance had occurred in France.

Ansell, which has 13 manufacturing plants around the world, itself had just had a situation where a shipment of supplies from its own operations in Belgium – which had been paid for by a hospital in Italy and was on its way there – had been seized by a different regional authority in that country and the original customer was left short....
This chart could go either way.

Will it continue to retrace back to pre COVID levels or will it spike up again with people anticipating a surge on the use of Ansell's products.

One to watch and I will bet on the SP to rise ( that is a good signal to go short ;) )

ANN's market capitalisation has almost doubled in the pandemic to above $5 billion, with the company announcing another profit upgrade today driven by robust demand for its products. Earnings per share for 2020-21 was set to be between 19 per cent and 20 per cent higher than previously foreshadowed at its first half results, 2 months ago.

Ansell has been implementing price rises to customers in response to increases in costs for raw materials such as chemicals which are used in the manufacture of single-use gloves. Earlier, it had reported holding prices and not 'profiteering'
Wowsers. That's a heck of a downgrade. From $1.75-$1.95 to $1.25-$1.45 And weren't they rebuying shares in the $30s? Buybacks are often a warning sign. I have not followed too closely, but if they stopped buying back in mid-December - is that when they knew there were going to be issues? Can't claim covid snuck up on anyone these days.

Not sure where this will end up, but I'll grab some popcorn and watch over the next few months. Was not a cheap stock to begin with.
It was a shocker today for Ansell that delivered a profit downgrade of up to 28 per cent, and a stock plunge of more than 20 per cent in early trade to nearly two year lows, getting to $23.76 early on but closing at $26.76 eventually

Demand for single use gloves has fallen back towards pre-COVID19 levels, which Ansell expected. But it is the speed with which demand has dropped that is the problem; Ansell is being forced to sell gloves that it bought during the height of the pandemic at elevated prices into a weakening market, where selling prices have suddenly plunged. This will correct, as the manufacturers accept lower prices, eventually.

Manufacturing shutdowns imposed on the business earlier in the year have been followed by labour shortages (partly due to staff and worker isolation requirements) and shipping disruptions. Not only has this hit revenue by leaving customer orders unfulfilled, but higher wage and freight costs have further crimped margins.
a perennial laggard.
all fundamentals lined up and still going wrong;
When Covid started in China and while most of the West was blissfully unaware, i reasoned ANN would be a big winnee as would funeral services.all went down the drain..And i sold off at a loss if I remember well
I stick to my systems now..
Just as I was putting in an order to have a small dabble it is starting to tank.

Has a falling knife feel.
WOW. 10%. Down to $25.

Not that great at analyzing this Result.
Might be a pick up after the (over) reaction.
Doesn't seem an obvious over reaction on the face of it when you look at their FY24 guidance. Several costs aspects up: expensive incentives to resume (to employees?), tax rate up, interest and lease costs up, capital investment up, advantageous fx hedging expires.
If I take mid range FY24 eps guidance at 0.67 us (0.57 - 0.77 us), that would be 0.98 au.
Comparing that to $1.81au actual eps in FY22 which produced return on equity of 10.4% I get a rough as guts estimated ROE of only 5.6% predicted for FY24:
[(0.98 ÷ 1.81) x 10.4% = 5.6%]
But anyway, that's probably only worth 1 x book value unless you have confidence that higher historical profitabilty will return (which admittedly seems a fair bet). Book value in FY22 was only 18 bucks - tack on another dollar or so, maybe $19 - 20 by FY24.

Not Held

Just ran my slide rule over ANN.....

I reckon this is a case of ANN comming in just under their original guidance.... which means the pullback today is overcooked.....
ANN's IV 12 mths ago was $24.68 to $25.92

But the Analysts Guestimates were way too high...... So the Sheep pushed the SP up too high..... Hence the current pullback.....
Todays Analysts have a SELL on ANN.... But that's because they all got last years guestimates wrong....

However a quick look at their current TA & FA suggests $26/$27.... And, a Buffett Style Analysis comes in @ abt $39.....

Will eagerly wait for ANN's EOFY figures......
As I mentioned this was just a "quick look"......
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Mirrabooka commented in its Report, today .... but they would have exited before end FY.

"Our most material sales saw the disposal in full of long-standing holdings IRESS, InvoCare (including into a takeover offer), NEXTDC and Ansell. In these instances, we observed a maturing business profile making future growth and return on capital look less compelling."
Watching my ANN.
Waiting for the bottom so I can take advantage of my expected Christmas run.