Fiberweb Share Discussion Threads

[xlairways] 08/8/2013 10:41

Tipped in the shares magazine today.

[hvs] 06/8/2013 14:17

Oh yes we must give them respect.

Thats what NO LABOUR taught us. Respect.

Opps I forgot HUMAN RIGHTS as its all very very "LEGAL" aids.

[jeffian] 06/8/2013 12:17

#2176,

Fair play to a drunk, non-English speaker who can include the word "oscillating" in a 2am post!

Respect.

[bearbully80] 06/8/2013 09:38

Paul,

I appreciate your extensive reply but it is only what you have said before and I understand this "gut feel" approach and agree with it.

My question was more about why my calculation, which is done exactly as I understand how companies should be valued (discounted cash flows) I get such a big PER (20) which gives a fair price of 134p assuming 6.7p EPS . I did not pluck that PER of 20 out of the air, I calculated it.

If you have knowledge in such calculations, please review the logic and calculation of my post and tell me where it went astray!

I repeat the logic below to save some time for anybody that has such knowledge and experience with this sort of calculation and has time to help me understand what I got wrong:

The board's medium-term target for margins is 8-10%.
The CEO reiterated management is confident of meeting the board's targets.
The company recently announced a "Long-Term Incentive Plan" (RNS 8162E) where 1 million shares will be shared between the CEO, FD and the Director of Business, at nil cost, in May 2016.
If we assume that one measure of performance for this award is this margin target being met, say 9% by 2016 interims, starting from today's 6% actual-margin, at least 15% earnings-growth per annum is required for 3 years.
If you consider 10% to be a good annual return, then the fair FWEB price-earnings-ratio (PER), assuming the above mentioned 15% earnings growth for 3 years followed by a benign 3% earnings growth per annum thereafter, would be 20. With an expected 2013 EPS of 6.7p, that would indicate a fair share price of 134p for FWEB.

[waspfactory] 06/8/2013 07:45

Excellent post as always Paul

[paulypilot] 06/8/2013 07:06

Hi bearbully80,

I think a PER of 20 is a bit of a stretch, starting as we are from a PER of about 10!

In my view we should be looking for a re-rating to a PER of about 13-15, on the back of solid interims just announced, and economic recovery in the USA & UK, which combined comprise 59% of FWEB's total sales.

Based on consensus forecasts of 6.3p this year, and 7.4p next year, that translates into a share price of 82-111p. So barring something unforeseen happening, I reckon there's a fairly easy 30-40% gain to be had here, from the current 77p share price, and moreover we receive an excellent dividend yield whilst we wait.

With an excellent Balance Sheet too, the downside looks well protected - i.e. if they did have a bad year, then they could continue paying the dividend, and restructure without having to worry about debt, because there isn't any!

It's not the most exciting thing I've ever seen, but looks a very nice low risk, reasonable reward type of thing that is overdue a re-rating.

DYOR as usual, just my opinion.

Regards, Paul.

[bearbully80] 06/8/2013 00:25

sharw, Paul and others who can help - I have been working on this every free moment I got since Sunday afternoon but I still make the fair value of FWEB 134p - can you please review my logic below?

The board's medium-term target for margins is 8-10%.
The CEO reiterated management is confident of meeting the board's targets.
The company recently announced a "Long-Term Incentive Plan" (RNS 8162E) where 1 million shares will be shared between the CEO, FD and the Director of Business, at nil cost, in May 2016.
If we assume that one measure of performance for this award is this margin target being met, say 9% by 2016 interims, starting from today's 6% actual-margin, at least 15% earnings-growth per annum is required for 3 years.
If you consider 10% to be a good annual return, then the fair FWEB price-earnings-ratio (PER), assuming the above mentioned 15% earnings growth for 3 years followed by a benign 3% earnings growth per annum thereafter, would be 20. With an expected 2013 EPS of 6.7p, that would indicate a fair share price of 134p for FWEB.

Search for "money chimp pe ratio calculator" for an easy to use PER calculator.
Add to the equation the cash (which when invested properly should improve earnings further) and the expected recovery in Fiberweb's main markets, the benefits of the big capex projects, on top of the optimism for their latest innovative products and new "talent" they have taken on, this seems like the place to be.
I am not much good with formulae so please do point out, and if you can, correct the errors in my logic. 134p and 76.5p are not very close.

[sharw] 05/8/2013 10:45

Thanks also to Golden Silence for pointing out the webcast. Unlike other companies FWEB make no mention of it in the RNS. You can see it here when you have 43 mins. to spare (perhaps best viewed with 'big whisky'):

www.axisto-live.com/investis/clients/fiberweb/presentations/51dbf1ec7614b00e4b007b89/half-year-results-2013

[hvs] 05/8/2013 10:26

It does "think" though.

U have to give credit where its due.

Hic !!!

[funkmasterp12] 05/8/2013 10:09

"I not English and drink big whisky before think to invest"

My favourite EVER ADVFN quote !

[paulypilot] 05/8/2013 10:07

Hi Golden Silence,

Epic post, I'm going to print that out & frame it!!! ;-)

Cheers, Paul.

[hvs] 05/8/2013 07:43

lol !!!!!!

Its all gone on the whiskey , nothing left to invest.

They is born every minute.

[golden silence] 05/8/2013 02:04

Dear Pauly Pilot,

You'r writing reflect general good mood. I don't see falling some more iether.

But before to put some more of money for FWEB review lastest 20 director deals of millions selled.

Balance sheet is not so much strong as seem on quick look iether. 3.8M US tax payment just they have find out (we all discover unexpecteds sometime) and 4.5M cost of Terram India and they will to pay more if they want remainder, if make a success from it, add "change working capital" so cash can be zero on 2013 end, no problam. So subtract next acquisistion, "10-15M", they wish: find 10-15M in debts. Money back to shareholder carrot is rotted under such circumstancing, with 1* gearing target.

No body apart of DuPont have possibility buy them in post-disposal shape, thereof takeover too much even for pray on, and like slides show during CEO "Outlook" speach, not possible Fiberweb dispose of more bits without adversle affect tiny margins else-where.

This slides is of interims presentation, on Fiberweb website, and very nice. Intention good, strategy clever.

Like you sayed, sensible investment for yield, and managers might avoid accident for jeopardese share price, but before directors buys shares, I do not wait too much gains over so-so yield.

If directors to start again to buying significant volume, anybody with cash to follow, quickly, probably and maybe will have nice time! Only thing other I do imagine helping recover is find unique innovation up their sleeve. DefenCell could be the one they sayed, but they never milk cow. If there wered such product on pipelines, you should expect directors re-mortgage of home for to buy shares (not just waiting waiting waiting new shares bonus every 2,3 years, and sell half for pay tax, all on expense of their share holders).

For this share today, just one key indicator exist which is directors buying. If non, "good" yield could drowned by oscillating in 85p to 72p share price.

I pray for dip again tomorrow so you buy with good price. Good luck fine gentleman, the fund you are advice to invest and to your follower.

Excuse my accent of English. I not English and drink big whisky before think to invest.

Golden

[birdsedgeuk] 04/8/2013 15:01

Good wriye up paul

[paulypilot] 04/8/2013 13:52

Hi Connor,

I agree. Fiberweb looks a good solid, safe investment, due to the Bal Sheet and the divi yield. The low PER means it should be re-rated, especially as its markets should now be beginning to recover (not so much Italy perhaps, but certainly the largest market of USA, and some recovery from the UK now too possibly, as housebuilding is picking up).

I will be buying on Monday too. I'm providing research to a small caps Fund now, and their dealing rules mean I'm not able to buy for 48 hours before or after the fund. So as we put them into the stock late last week, that means I'll be free to buy on Monday. It's just a nice long term thing, where you can be fairly confident that you'll make money in the long term, and collect a generous & growing dividend in the mean time.

100p looks a sensible target to me, maybe more once it is showing growth again. I cannot really understand why this share is not having any recovery potential priced into it, whereas most other cyclical stocks do.

Cheers, Paul.

[connor23] 03/8/2013 09:50

To be honest I feel the same. The more research I do the more I like the look of it. So much so I will be looking to add some more as soon as I can. I can def see 25% upside, possibly more, but the divi is the kicker really. Rock solid bal sheet and a decent chart seems to limit any downside here. If mgmt can continue progress towards their KPIs, then all investors should do v well.Only neg I could find was P&G constituting 9% of revenue, so an element of reliance on that contract, but at under 10% I won't be losing sleep!

[paulypilot] 02/8/2013 21:38

Cheers Funkmaster, glad you liked it. Let me know if I've missed anything important.

connor23 - you're welcome. I really like it too. Bought some for my Fund today, having got more & more comfortable with it as I wrote my report on Stocko. It strikes me that in this market, the PER should be 13-15, not 10. So should be 30-50% upside I would say. Hopefully!

Cheers, Paul.

[connor23] 02/8/2013 20:51

Thanks for bringing this one to my attention Paul. Bought in for the first time today. Looks like a little gem. Hopefully management will continue to deliver and improvements in end mkts will feed through going forward.

[funkmasterp12] 02/8/2013 11:01

Great write up Paul.

[paulypilot] 02/8/2013 10:31

Hi,

For anyone interested, I did a write-up on FWEB interims in my morning small caps report, here:

Regards, Paul.

[hvs] 02/8/2013 08:40

Lovelly Jubbly

[funkmasterp12] 02/8/2013 08:24

Lovely stuff.

[hvs] 02/8/2013 08:20

Its started to happen.

[hvs] 02/8/2013 08:05

This will cross a £

[birdsedgeuk] 02/8/2013 07:37

Decent results. Operating profit mot brilliant but we knew that. I bought aft tweet from traderdiarycouk.Think itll tick up of next 2 weeks