Excellent post Noel, does a great job of piquing interest and conveying the key details. One thing that comes to mind is the competitive situation - do they have any pricing power? Is there any threat of manufacturing from low-cost countries competing?
I replied to the note you originally put out on this saying I was sure there'd be a catch. I'll have a proper look in a couple weeks, but right now I can't see anything obvious - looks like a screamer. Good find.
Thanks a lot, Matt! Yes, I remember your note and I’m really curious to hear your thoughts once you’ve had a proper look at the stock. Great and important question too. I'll do my best to answer:
Braime’s core strength lies in niche markets with high technical requirements. While basic components (like standard elevator buckets) are exposed to low-cost manufacturing competition, especially from Asia, Braime has positioned itself well in several ways:
Their 4B Division offers products like hazard monitoring systems, custom belts, and safety-certified components that are not easily commoditized. Many of their customers (grain handlers, cement plants, ports) prioritize reliability and safety over the lowest price.
Another factor is their brand and reputation. The company has been around since 1888, and with a former CEO who led for 38 years, they’ve built a strong reputation in specialist industries. In many regions, they’re the go-to brand for certain product lines.
That said, price competition is definitely a factor, especially at the lower end of the product range. Management regularly notes that margin pressure comes from both rising costs and competitive dynamics.
Braime has two classes of listed shares: BMT (‘A’ Ordinary Shares) and BMTO (Ordinary Shares). BMT shares are the ones most investors buy, they have little to no voting rights but full economic rights (dividends etc.). BMTO shares carry full voting rights and are mostly held by insiders and the founding family. They rarely trade and are more about controlling the company than about financial return.
The voting shares trade at nearly a 100% premium to the non-voting shares. Because the market cap is just the sum of the price of each share class times the number of each, and because both classes are entitled the to same assets in liquidation, the non-voting shares are at an even bigger discount.
The shares trade an average of 400 shares a day! Today’s volume was 100 shares…how on earth do you establish a position and more importantly how on earth do you exit a position?
CapEx is slightly higher than annual depreciation, but for a manufacturing company with an expansion strategy, that’s pretty normal. The difference isn’t significant, so there’s no indication that they are trying to artificially boost profit or net income.
In their annual reports, they also state that they apply conservative depreciation methods, mostly on a straight-line basis. Their auditors have not identified any irregularities regarding asset valuation either.
The significant risk factor, that isn't mentioned in your article or comments, is the family control not only through their holding of Ordinaries, but also the special voting shares.
This illustrates an undesirable attitude to minority shareholders, who are unlikely to get a fair deal in any corporate action: i.e. taken private, MBO.
Therefore, in view of the ample range of deep value opportunities in the UK, I have no position here.
Interesting find! I have looked into the company the last few days.
Numbers add up, nothing to complain about actually, looks like a healthy growing company. CEO change is crucial the coming years indeed, let us see wether the two sons are as capable as the father.
What I do not like is the general numbers regarding AIM listings. Very few IPO’s on AIM in recent years and really quite a lot of Delistings.
What concerns me the most is that Delistings consist roughly 62% of the volume and Buyouts only 38%. Under Buyouts you are protected by a price guarantee scheme but under Delistings you may be stuck with your illiquid stock without the ability to sell.
Considering the top 20 shareholders of Braime have roughly 71% of the stock and only 75% agreeing is needed for a Delist, this concerns me. Shareholders are too concentrated.
Company looks great but a listing on AIM with concentrated shareholders in the current environment is less favorable…
Thanks for the write-up. You should look into the property they own also - it's not hard as there's only 8 of them as far as I can tell. The land and buildings alone are worth about 20m when you compare to similar properties.
the size of this company is interesting. there is some evidence that really small stocks may highly outperform the market: see "The Excessive History of Microcaps"
This is a great find. Potentially a tariff winner as well if there's less competition for its US products. I'm in the UK and it's worth pointing out energy bills will be down this year. There's more room to run as offshore wind continues to expand and zonal pricing may be introduced (they are based in the North which would have some of the cheapest energy costs).
Excellent post Noel, does a great job of piquing interest and conveying the key details. One thing that comes to mind is the competitive situation - do they have any pricing power? Is there any threat of manufacturing from low-cost countries competing?
I replied to the note you originally put out on this saying I was sure there'd be a catch. I'll have a proper look in a couple weeks, but right now I can't see anything obvious - looks like a screamer. Good find.
Thanks a lot, Matt! Yes, I remember your note and I’m really curious to hear your thoughts once you’ve had a proper look at the stock. Great and important question too. I'll do my best to answer:
Braime’s core strength lies in niche markets with high technical requirements. While basic components (like standard elevator buckets) are exposed to low-cost manufacturing competition, especially from Asia, Braime has positioned itself well in several ways:
Their 4B Division offers products like hazard monitoring systems, custom belts, and safety-certified components that are not easily commoditized. Many of their customers (grain handlers, cement plants, ports) prioritize reliability and safety over the lowest price.
Another factor is their brand and reputation. The company has been around since 1888, and with a former CEO who led for 38 years, they’ve built a strong reputation in specialist industries. In many regions, they’re the go-to brand for certain product lines.
That said, price competition is definitely a factor, especially at the lower end of the product range. Management regularly notes that margin pressure comes from both rising costs and competitive dynamics.
What's the situation with the BMT/BMTO double listing?
It’s a bit confusing at first glance.
Braime has two classes of listed shares: BMT (‘A’ Ordinary Shares) and BMTO (Ordinary Shares). BMT shares are the ones most investors buy, they have little to no voting rights but full economic rights (dividends etc.). BMTO shares carry full voting rights and are mostly held by insiders and the founding family. They rarely trade and are more about controlling the company than about financial return.
So the market cap cited is a combination of the price of all BMT and all BMTO shares in circulation?
I do wonder how the BMT price is affected by this and whether this results in a discounting.
The voting shares trade at nearly a 100% premium to the non-voting shares. Because the market cap is just the sum of the price of each share class times the number of each, and because both classes are entitled the to same assets in liquidation, the non-voting shares are at an even bigger discount.
This is the kind of deep, bottom-up work that most investors won’t take the time to do—but that’s exactly where opportunity lies.
Thank you so much for your kind words. That recognition really gives me confidence in my analysis.
The shares trade an average of 400 shares a day! Today’s volume was 100 shares…how on earth do you establish a position and more importantly how on earth do you exit a position?
For such illiquid microcaps, limit orders are probably the best way to go. With market orders, the spreads can be huge.
Very interesting write up! Congratulations on the find, this must have been hard work!
Thank you! Yeah, it was quite a bit of work, but the stock is really interesting, so I actually enjoyed digging into it a lot.
Interesting find, thanks for sharing.
No Problem! I'm glad you liked it.
Good write up.
Generally, is their depreciation in line with their capex charges, or are there any understatements there?
CapEx is slightly higher than annual depreciation, but for a manufacturing company with an expansion strategy, that’s pretty normal. The difference isn’t significant, so there’s no indication that they are trying to artificially boost profit or net income.
In their annual reports, they also state that they apply conservative depreciation methods, mostly on a straight-line basis. Their auditors have not identified any irregularities regarding asset valuation either.
I hope that answers your question.
Very helpful thanks.
When I see high capex I tend to get concerned over the accounting for that and how much it eats into earnings. This situation seems reasonable.
I agree with you, those are fair concerns. But yes, it seems to make sense in this case.
Hello Noel,
Very good article.
A company whose shares I've held in the past.
The significant risk factor, that isn't mentioned in your article or comments, is the family control not only through their holding of Ordinaries, but also the special voting shares.
This illustrates an undesirable attitude to minority shareholders, who are unlikely to get a fair deal in any corporate action: i.e. taken private, MBO.
Therefore, in view of the ample range of deep value opportunities in the UK, I have no position here.
Interesting find! I have looked into the company the last few days.
Numbers add up, nothing to complain about actually, looks like a healthy growing company. CEO change is crucial the coming years indeed, let us see wether the two sons are as capable as the father.
What I do not like is the general numbers regarding AIM listings. Very few IPO’s on AIM in recent years and really quite a lot of Delistings.
What concerns me the most is that Delistings consist roughly 62% of the volume and Buyouts only 38%. Under Buyouts you are protected by a price guarantee scheme but under Delistings you may be stuck with your illiquid stock without the ability to sell.
Considering the top 20 shareholders of Braime have roughly 71% of the stock and only 75% agreeing is needed for a Delist, this concerns me. Shareholders are too concentrated.
Company looks great but a listing on AIM with concentrated shareholders in the current environment is less favorable…
What are your thoughts about this?
Thanks for the write-up. You should look into the property they own also - it's not hard as there's only 8 of them as far as I can tell. The land and buildings alone are worth about 20m when you compare to similar properties.
Noel, i keep meaning to look into this. one final question in the meantime.
at a 4 p/e and low div yield what are they doing with earnings? piling cash?
the size of this company is interesting. there is some evidence that really small stocks may highly outperform the market: see "The Excessive History of Microcaps"
https://microcapclub.com/excessive-history-microcaps/
This is a great find. Potentially a tariff winner as well if there's less competition for its US products. I'm in the UK and it's worth pointing out energy bills will be down this year. There's more room to run as offshore wind continues to expand and zonal pricing may be introduced (they are based in the North which would have some of the cheapest energy costs).
I have a problem with your calculation of market cap. With which number of shares do you work?
What do you think the operating margins are at the lower end of the cycle?
Thank you for the excellent write up. Love the format.
Any idea how one can buy stocks on the AIM as a non UK person? I checked with IBKR US and they don't. Also Charles Shcwab does not allow.
Thank again
Suppa.