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.
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.
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.
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.
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.