||EPS - Basic
||Market Cap (m)
Flowtech Share Discussion Threads
Showing 2151 to 2173 of 2175 messages
|I try and fail to see any demons in the Zeus connection, Adam. Compared to some of the rubbish that finds buyers on flotation, they seem to make decent offerings. FLO and EPWN have been reasonable performers, making steady progress and I am happy to hold both and collect the dividends. I have also traded both very successfully. ENTU is the one problem that Zeus have had (unless you know different) and that was due to something out of left field with a major tax change and a government policy change on feed in tariffs. Management seems to be taking the necessary action but the share price has suffered accordingly. I keep them on watch for signs of life. One day they could be a good recovery buy.|
|Interesting to hear the bear side of the story, thanks for that.
The company seems happy it can pass on price increases as it says customers understand pricing is geared to exchange rates. As for margins, many products are needed urgently, so a small uplift in price is not a deterrant for parts whic are probably not a major component of the price of a job anyway.
I think in a fragmented market, Flowtech needs to be a useful consolidator and have good customer service to earn those margins. So far they seem to be delivering. Fairly early days, though.|
|I had a look at these today on the back of Paul Scott's daily review. At a first glance, this looks far too cheap however after digging a little these are my main concerns:
- firstly, I believe that if you check recent IPOs, Zeus has taken a number of companies public in the last couple years on high yields and apparently low PEs but which they show very poor performance once public. The share price of FLO is a classic example - price has gone sideways despite turnover likely increasing 40% - 50% over 2014-2016. Entu is another good example - yield was unsustainable and look at their share price performance since IPO!!
- EBIT margins which FLO make have declined from 16.6% in 2013 to perhaps 14% this year, yet most distribution businesses make single digit margins, and often mid-single digit at that. Would be great to hear if anyone knows why FLO should make sustainably higher margins than peers
- on the plus side, the multiple is low....but I need to check where peers trade
Need to now look at cashflow, though the Zeus + recent IPO combination creates a horrible smell factor for me....
Any views on the margin appreciated.
|Fair summary, lordship. I respectfully concur.|
|Decent set of numbers today. Everything seems to be moving in the right direction. I put these on a forward PE of about 10 with a 4.5% yield. Room to go further. 150 is my target - for now. These could be a good buy and hold for the next couple of years at least and should continue to grow nicely.|
|Thanks for the ST article paleje.
Reckon a few of us agree with him and formed that conlusion at £1.
Still a good buy with that yeild.
"twirl 11 Jul '16 - 14:27 - 106 of 119 0 0 Edit
Yes sterling will affect profits. However drop is an over reaction IMHO.
Bought back in today."|
|This was ST's view on the profit warning aspect, no guarantee of course:-
Major profit warnings failed to materialise
Firstly, the sharp share price derating since early June largely reflects investors’ expectations that Flowtech’s financial performance would mirror the 6 per cent revenue decline across the industry in the first five months of this year based on industry data from The British Fluid Power Distributors Association. In other words, investors were expecting a major profit warning. In the event, Flowtech’s underlying revenues were actually flat in the six month period if you strip out the impact of earnings accretive acquisitions which lifted revenues by 28 per cent to £27.4m. That’s not to say that the business has been entirely insulated from the softer general market backdrop. It clearly hasn’t and increasing market weakness in the last few weeks has led Flowtech’s board to guide analysts down in their profit forecast, but only modestly so.
In fact, Andy Hanson at brokerage Zeus Capital trimmed his full-year revenue forecast by only £800,000 to £53.9m, implying that Flowtech will still post top-line growth in the order of 20 per cent in 2016. Admittedly, a 0.6 percentage point reduction in trading margins to 14.9 per cent means that pre-tax profits estimates have been reduced from £8.1m to £7.6m, but that still represents 13 per cent year-on-year growth and that’s enough to drive EPS up by around almost 15 per cent to 14.2p. It also supports a 5 per cent hike in the dividend per share to 5.5p as analysts predict. On this basis, Flowtech’s shares are being rated on 7.2 times earnings estimates and offer a prospective dividend yield of 5.3 per cent. Zeus Capital is the house broker, but its EPS and dividend estimates also mirror those of analyst David Buxton at broking house finnCap.
Another issue that is likely to have concerned investors is the sharp fall in sterling post the EU Referendum. That’s because between 30 to 40 per cent of Flowtech’s UK purchasing is denominated in foreign currency, so the 15 per cent plus decline in sterling against the euro and US dollar in the past 12 month is expected to have an impact. Bearing this in mind, I understand that Flowtech’s board took the shrewd decision to make significant inventory purchases in China ahead of the EU Referendum, thus gaining better pricing from Chinese suppliers before sterling started to weaken. This pre-emptive move has insulated the business from margin pressure near term.
I would also flag up that in previous periods of sterling weakness, most notably in 2009 to 2010, Flowtech was able to maintain margins by passing on price increases to customers, reflecting the strength of its business model. For instance, a plumber who needs a part urgently to complete a job is unlikely to baulk at paying a few extra pounds for it if delivery is guaranteed the next day as the extra cost is relatively insignificant to the daily labour cost being billed to the client. I strongly feel that investors have overreacted to the impact of sterling’s weakness on Flowtech’s business, and underestimated the ability of management to pass on higher wholesale costs to end users|
|Happy to watch. Too much of a bounce of late given they have already warned on results for this year.|
|Aug 2 2016, finnCap 170p tp.
|I bought some of these on Friday as the risk reward looks very favourable.|
Back into these today. Risk / reward balance looks favourable. Low PE and a high yield - which I like.|
|This still shows a very healthy yeild at todays price. That will support share price growth as income funds search for yeild for all that cash.
The brexit mark down was overdone and the trading statement confirmed this yet the ridiculous sell on news short termer docrine presented further bargains yesterday.|
Tempted at a quid, but already invested here, so to go overweight I wanted a price in the nineties. Bloody Simon Thompson! :-( ... :-)|
|IC tipped them today, buy ahead of trading update in ~6 weeks, target 157 which would still leave them at a 25% PE discount to peers.
|Buyers appreciating the present lowly bargain price - being well bought today.
|Been looking at this one today. Paul Scott has drawn attention to it. Looks a solid company to me and its core business has not made a loss as far back as 2000 (Flowtech Limited) which is as far as I could be bothered to go. Think there will be an opportunity to get in below a £1 so will not buy today, but have now put on my watchlist. Short-term there has to be more downside risk in a post brexit environment, but looks a good long term buy at some point. Looks like they lost about 20% of their sales (2008-09) in the worst recession for several generations, so revenue shouldn't be hit too badly.|
|update from finnCap:
"Results were satisfactory, with low organic growth but plenty of acquisition opportunities efficiency gains to be had. Mgt have a clear strategy. The shares remain on a significant discount to TRI and ACL, which should narrow over time."
|trade payables 2015 are 4.3m. Assuming all bought with $ which would cost an extra 12% (1.763/1.682)this will cost FLO an extra £500k pa. I have not included the cost of the benelux operation ie property and staff costs.
Alternative calculations/info welcome|
|Yes sterling will aaffect profits. However drop is an over reaction IMHO.
Bought back in today.|
|They buy a lot of goods in dollars from the Far East so Sterling weakness will make purchases more expensive. I still think it's great value at these levels and sterling will bounce back, this is temporary.|
|It 92 and not many buyers, is this company being effected by the drop in sterling. I hope not.|
|A solid growth company with a PE in single digits. This has got to be a buying opportunity at these levels. I have been topping up on the way down the last one will be if it gets to ~96p. Hargreave Hale and Miton Group are both top holders in this company which reassures.|
|droppin again. ex div yes but it's a huge drop.