Blackfriar: Carclo aims to pass the screen test with new technology

At the time the technology, which lays fine lines of copper directly onto plastic, was heralded as the latest thing in bar codes. Back then the main use Carclo could see for CIT was Radio Frequency Identification (or RFID to give it its snappy title).

In its 2004 results the group claimed RFID had an exciting future and would replace bar codes in the retail industry.

Skip forward eight years and retail is not at the forefront of Carclo’s thinking.

The Ossett-based group is now gearing up for a major increase in touchscreen production in 2012 with volume shipments to a number of customers expected “shortly”.

Carclo believes CIT can transform the $10bn market for mobile phone and tablet computer touch screens.

It has signed a deal with US-based Atmel, the semiconductor manufacturer, to launch XSense – touch screen sensors made from Carclo’s technology.

Carclo’s CIT can lay fine lines of copper to create considerably cheaper and thinner touch screens than those made using the conventional indium tin oxide.

Over the past six weeks, production samples have been supplied to eight major device manufacturers covering seven smartphone models and three tablets.

Carclo’s chief executive Ian Williamson declined to be drawn on which smartphone and tablet manufacturers are involved, but he told Blackfriar that he’s hoping to get one of each device incorporating Carclo’s CIT technology for Christmas.

“Some are big names and some are names you’ve never heard of,” was all he would give away.

Carclo estimates that it will produce 100,000 screens a week once it starts shipping.

Analyst Janardan Menon at Liberum Capital summed it up when he said: “While CIT’s ramp has taken longer to materialise than earlier expected, the outlook for this business is becoming even brighter than earlier believed.

“We remain excited by both the medium term and longer term outlook for the company and maintain our buy recommendation.”

Jon Lienard at N+1 Brewin added: “The immediate future is exciting for the group. XSense is about to be commercialised.”

Ten years on from its inception, CIT is finally set to achieve its potential. Its technology is in demand and Carclo’s future looks rosy.

At the moment its biggest shareholders, which include Ruffer Investment, Henderson Global, Schroder Investment, JPMorgan Asset management and Blackrock, are supportive

But the one sticking point going forward is that Carclo has its fingers in so many pies. At the moment it relies on technical plastics and precision products for its current sales. The group is a leader in high power LED lighting for supercars such as Aston Martin, Bugatti Veyron, Lamborghini and Rolls Royce.

While Mr Williamson says the various operations are well managed and there’s no compelling need to sell anything, if CIT really takes off investors could well demand that the management focuses on the golden goose rather than bread and butter operations.

These traditional businesses are well run and Carclo should have little problem offloading them when the time comes.

Anyone watching Fenner’s share price in recent weeks could be forgiven for being a little confused.

It’s barely weeks since the Hull-based conveyor belting and engineering group published record results, prompting a raft of upgrades from brokers.

Fenner’s results in late April revealed the engineer is taking market share and promised strong cash generation and more acquisitions, while its expansion in the growth markets of China and India continues apace.

But since reaching a high of 505p in March, its share price has tumbled by almost a third.

Yesterday they fell another 3.5p to 339p after brokerage FinnCap cut its target price.

A similarly steep fall has been seen by pumps and valves specialist Weir Group.

Analysts point to weak demand for conveyor belts across the pond as the main reason for Fenner’s fall, plus weak peer performance.

“Since the winter, US coal production has been weak, with excess inventory taking time to work through – this has had an impact on conveyor maintenance,” said FinnCap analyst David Buxton.

Last month, Credit Suisse also cut Fenner’s target price citing falling spending among US coal firms and weak coal prices.

Fenner earned roughly half its sales from the Americas in its last financial year, so the US is crucial to its fortunes.

But its US exposure is falling, while its sales to the booming Asia Pacific region are growing.

The share price fall may be an over-reaction, but Fenner is increasingly looking like an attractive takeover target.