Robinson – a neatly packaged bargain

There is a little £8m quoted company, based in Chesterfield, Derbyshire, that has actually seen its business boom due to the coronavirus, writes Mark Watson-Mitchell. 

This company can trace its roots way back to 1839 when John Bradbury Robinson bought a busted round box business, used for pills and ointments.

Today Robinson (LON:RBN), which employs some 320 people, is a leading provider of innovative custom moulded plastic and rigid paperboard packaging.

It has two main operating divisions, together with what could be a very undervalued and unnoticed property subsidiary.

The plastic division focusses upon global brands, national brands and own-label producers in the food and drink, the personal care and the homecare sectors. Its four production facilities, two near Nottingham and two in Poland, offer its customers a range of injection moulded, blow moulded or injection stretch blow moulded options, often in combination, such as bottles and caps.

The Chesterfield-located paperbox division specialises in luxury rigid paperboard packaging. It services a wide sphere of clients from blue chip companies down to the smaller niche retailers. With a growing emphasis on gifting, its premium boxes are used in the mobile phones, confectionery and the toiletries and cosmetics sectors.

Due to the pandemic, these two divisions in the last few months have seen an upturn in demand for some of the products they manufacture, including hand wash containers and other personal care, household and food packaging.

Just like the possibility of staff illness creating production shortages, the group’s customers may experience a fall-back in the goods currently being demanded.

However, this is a very tight little business, there are 16.6m issued shares and no institutional holders.

Yesterday the company announced its finals for the year to end December 2019. They showed sales up 7% at £35.08m, while pre-tax profits leapt 120% from £0.69m to £1.51m, with earnings jumping from 4.2p to 7.3p per share.

Net debt fell £1.9m to just £6.9m by the end of the year. In the sensible conservation of cash, it is not declaring a final dividend.

Despite the Covid-19 crisis, finnCap, the company’s brokers, are looking for just over £37m of sales this year, with profits in line. That would be a fine performance, but we will get a better picture come the end-June AGM. Then again come mid-August when it announces its interims.

It does have a certain protection with some 70% plus of its business coming from strong major and multi-national groups.

It also has a major back-up in its property-side. In yesterday’s statement there were just two lines describing these activities: “progress has been made towards selling some of the surplus property in Chesterfield and we hope that, subject to receiving the necessary planning approvals, sales will be achieved in 2021.” That was all.

However, it is worth some £10m – it has planning permission for 425 residential units and 3,800 sqm of retail space across its three sites – 8 acres for its Walton Works, 15 acres for its Boythorpe Works, and another 8 acres at Wheatbridge.

That £10m value compares to the group’s total market capitalisation of a mere £8m currently. And that throws in for free the whole balance of the company, turning over £37m and making £1.51m profits – that alone has to be worth another £10m net of debt.

The group’s shares are now trading at just 55.5p, on less than 8 times historic earnings.

Taking an 18 month view I see these shares hitting 100p, even so I now set an end 2020 target price of 80p.