Latchways Share Discussion Threads

[wjccghcc] 06/11/2008 11:54

Solid company with very competent management but still quite expensive on a PE of 11 IMHO. I'd be interested if it got below 9.

[jeffian] 06/11/2008 11:40

Good interims today and a pretty bullish outlook statement given the state of the economy and the markets. All the key drivers - turnover, profits, eps, cash generation, divis - going in the right direction (up!) and net cash on the balance sheet. Looks almost too good to be true! Is nobody else interested besides Liarspoker?

Regards, Ian

[liarspoker] 06/2/2008 07:50

And a T/S as a nice surprise:

Latchways says business remains strong in final quarter; sees FY results in line




LONDON (Thomson Financial) - Latchways PLC said its fourth quarter business
remains strong in all its principal products and services, and that it is
confident its full-year performance will be in line with market expectations.
The maker of fall protection systems for working at height said levels of
enquiries, requests for specification and quotations have never been higher and
that the conversion rate is also at a new high which it says is "very positive".
It said it is also seeing additional benefit from the increased focus on
wind generation.
The company said initial sales of its new self retracting Lifeline range
have been encouraging, adding that it is confident that the range will make a
significant contribution next year.
Latchways said its newly acquired walkway product is performing a "little
ahead" of its expectations, and that it will continue to add to its growth next
year.

[liarspoker] 04/2/2008 08:24

Ex-divi this Wednesday.

[liarspoker] 28/1/2008 14:19

Bouncing nicely off support.

[liarspoker] 23/1/2008 11:01

New up to date thread:

[liarspoker] 23/1/2008 10:59

Notice that I said 'invest' and not 'speculate'. ;o)

Latchways PLC ( LTC )

The Business:

Latchways is a world leading designer, producer, provider and installer of fall protection solutions. It sells these items through its own offices as well as through a network of independent distributors/installers.

It's main markets are:

UK 63%
Europe 26%
North America 7%
Other 4%

All significant assets are located in the UK and this is also where all orders are received and where all Capex occurs.

The companies operations are as follows:

Safety Products ( 62% of T/O ): Main business, operates out of HQ in Devizes

Safety Services ( 25% of T/O ): Principal activity is installation and servicing of safety products

Specialist Fixing ( 13% of T/O ): Structural building refurbishment and specialist fixing solutions.

You can see from the operations that most deals consist of a two way revenue split – one immediate and one on-going. The company initially sells and fits its products and then provides maintenance solutions as well bringing in extra cashflow over time.

Opportunities exist:

There are a few good opportunities which should allow for further growth. These includes entry into new markets where working at height legislation is coming into force through the regulators. LTC has also developed a large pipeline of new products which in their own words 'should add significant revenues in the coming years'.

LTC continues to seek niche acquisition opportunities which can easily be acquired through its own cash.

There's more:

During 2007 LTC achieved its ISO 14001 environmental accreditation so now they have a system of control in place addressing their waste management processes and energy efficiency measures.

HQ in Devizes consist of a 2,000 square metre warehouse and head office with 2 acres of land adjacent. The group has detailed planning permission for a second unit on this land, providing ample scope for future expansion either for its own purposes or to built & rent out space etc.

CASH COW

LTC is a true cash cow – Cash generated from operations has averages over 110% of operating profit for the last 5 years. Indeed cash generation has been so strong that LTC paid out an extra divi worth Stg 3.3m to shareholders last year. Net cash at year end, despite the extra divi payment, was broadly unchanged at Stg 4.1m from 2006.

Risks

Doesn't every company have them. ;o)

In LTC's case the major risks include:

• Adverse Forex movements being exposed to the US$ and Euro – alternatively in a year or two Forex movements could work to its advantage. The bests thing to do with these companies is to compare the underlying business as predicting Forex movements is just gambling and not investing.
• Stainless Steel Commodity prices – the price of Stainless Steel has risen remarkably since 2002. It has eased of since the end of 2007 though and judging by LTC's past margins they don't seem to be too affected atm.
• Legislation – like Forex movements this could be a help to the company too. At the moment LTC are entering new markets where new legislation is providing opportunities for them. However legistlation could be removed in the markets which LTC already participates in although I do not think that this scenario is likely.

The Financials:

From 2000 turnover has increased by just under 270%.

The following are average figures over the last 8 years:

Gross Margin – 55.18%

Operating Margin – 21.75%

PBT – 21.13%

PAT – 14.88%

Don't forget that these figures include the dismal Tech Bubble years !!

Equity has increased by 250% during that time too.

Owner Earnings figures are only available for the last 2 years but in both cases these figures have been above the PAT figures and that includes extra expenditure on tooling etc in 2007 !!
Return on Equity ( from Operating Profit ) has averaged 49.55% over the last 8 years !!! If you can find a company with the same margins and debt levels on the same ROE or better then PLEASE let me know ASAP. However I don't think that you could find one.

Dividend payouts ( not including the special divi ) has tripled in the last 8 years.

Net Debt is down to Stg 1.6m and Gearing ( Gross ) is sitting at a comfortable 31% mark.

Excellent link showing LTC products:




I'll add more later. :O)

[liarspoker] 14/1/2008 06:47

Nothing special but LTC got a mention in AMT:

[liarspoker] 08/1/2008 14:27

The share price only just recovering to the level that Hearson added at:

Latchways Director/PDMR Shareholding




RNS Number:3040I
Latchways PLC
22 November 2007


LATCHWAYS PLC ("the Company")


Director's Dealing


The Company was today informed that Paul Hearson, Chairman, purchased 2,100
ordinary Shares of 5 pence each in the Company.

The shares were acquired at a price of #9.35.

Mr. Hearson now holds 56,580 shares in the Company which represents 0.5% of the
voting rights of the Company.

This notification is given in accordance with DTR 3.1.2R

Enquiries:

Rex Orton, Finance Director
Latchways plc 01380 732700

[liarspoker] 04/1/2008 16:23

I agree Geovest - a nice rise too since the low 800's.

LTC goes ex-divi on 8th Feb and divi gets paid out on 7th March. It ain't much but it covers the purchase costs. :O)

With a cash generator like this I am sure that we'll get a bonus payment once in a while anyway.

[geovest] 28/12/2007 15:47

Remains a great business and very cheap at these prices.

[liarspoker] 28/12/2007 11:58

Few small buys going through today.

Nice to see. :O)

[liarspoker] 20/12/2007 16:34

Interesting day - up 7.6%

Still plenty of time left to catch the ex-divi date too.

[liarspoker] 11/12/2007 16:39

That 12,900 buy could well be a directors buy - We'll find out tomorrow or Friday if it was or not.

[liarspoker] 11/12/2007 15:06

Too cheap now though so I picked up a few. :O)

[wjccghcc] 12/11/2007 22:31

Likewise, a PE of 18.5 seems fair value, particularly given the lumpiness of the fixings business.

[jonnylite] 12/11/2007 17:06

I agree these look ok. I sold a while back but stil have them on the short list. I sold because they looked a little toppy when their markets are likely to slow down at some point. Nice increase in Div for the holders though.

I see no reason to get back in at this stage so i will continue to watch from the side.

JL

[huttonr] 12/11/2007 07:41

Interims look quite satisfactory - not exciting but we should be OK for the full year.

[toriel] 16/8/2007 10:57

Hooray for Latchways - the only company I hold that's actually up today (at the moment...).

But then with only a few hundred traded one can't read too much into that. Nevertheless, it's nice to see a flash of green among the red.

[toriel] 20/7/2007 09:24

Height solutions looks a good acquisition, but I'd be more impressed if they could get the grammar and spelling on their web site tidied up.

But then I'm an old fogey who thinks such things are important...

[geovest] 29/6/2007 07:47

LTC announced today that they acquired Height Solutions Limited, a provider of safety walkway systems for £749,000. Looks like a clever acquisition at a good price.

Details of the company can be found here:

[jonnylite] 17/5/2007 14:59

Interesting rise today... Is this just the start of the usual ramp up to results? Or is there anything more. Tempted to lock in some profits because the market is looking a little toppy. And the last time they got this high they fell quite quickly.

Of course volume is a bit low to really mean anything. I will probably sit on my hands as usual and await the results in a few weeks time. More progress anticipated, although I was a little concerned by the change in tone in the recent announcement. So if they rise much further I will top-slice.

Can't complain, started buying at 285!

HTH

JL

[toriel] 24/4/2007 08:54

Yes, Geovest's comment that LTC like to underpromise and overdeliver was one of the attractions to me of this company and made me keen to buy a position. It was the suspicion that the underpromising might be a little less significant this time that made me sell out after holding the shares for a couple of years. (The most important factor for the original purchase was that it has a leading position in a niche market, giving tremendous pricing power and strong margins - this is still the case.)

There's no doubt that this is a sound company which will continue to grow, but it looks to me as though the share price will pause for breath for a little while yet.