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EPWN Epwin Group Plc

76.20
-0.80 (-1.04%)
28 Mar 2024 - Closed
Delayed by 15 minutes
Epwin Investors - EPWN

Epwin Investors - EPWN

Share Name Share Symbol Market Stock Type
Epwin Group Plc EPWN London Ordinary Share
  Price Change Price Change % Share Price Last Trade
-0.80 -1.04% 76.20 16:35:03
Open Price Low Price High Price Close Price Previous Close
76.00 76.00 76.00 76.20 77.00
more quote information »
Industry Sector
CONSTRUCTION & MATERIALS

Top Investor Posts

Top Posts
Posted at 28/7/2021 09:17 by davebowler
Zeus;
Further strong upgrades as demand more than offsets cost input pressures
Since Epwin reintroduced guidance back into the market in September 2020 demand has consistently exceeded expectations. This has continued in H1 FY21 with today’s statement indicating that profit before tax for the current will be materially ahead of current expectations. The strength of trading in the first seven months of the year lead to an 11% upgrade in revenue and a 17% increase in profitability to £12.9m (prev. £11.0m). Raw material and cost input pressures lead to more conservative increases to FY22 and FY23 profitability. However, this could prove conservative should cost inflation subside later this year and the price increases and surcharges implemented to mitigate cost input pressures come through. The shares trade on 14.8x current year earnings and yield 3.4%. The business has a strong balance sheet with less than 0.5x net debt to pre IFRS 16 EBITDA.

§ Third upgrade since guidance reintroduced in Q3 2020: In H1 21, revenue is 13% ahead of that achieved in H1 19 at £157.8m. Since ZC estimates were reintroduced in September last year FY21 forecasts have been increased three times. This has taken revenue expectations from £239.7m to today’s new estimate of £312.1m. This shows 30% growth yoy but, more importantly, a 10.6% uplift on the £282.1m achieved in FY19. Profit forecasts have increased 65% over the same time with the new ZC estimate for FY21 of £12.9m. Net debt also improves on higher assumed profitability, falling from £15.5m to £13.4m. Detail of the changes to forecasts can be seen on page 2.

§ Recovery in demand continues at pace: The strength of demand continues to come from private sector RMI as consumers increase spending on home improvements. The double-digit level of growth on FY19 experienced by Epwin in H1 is in line with peers across the UK building products space suggesting it is at least maintaining market share, we suspect that it is increasing share at the expense of smaller operators. Longer term, as the industry continues to consolidate and the major players have more control, this should improve the pricing dynamics of the extrusion industry.

§ Raw material costs and global shortages putting pressure on supply chains are proving a headwind: Despite the strong recovery in demand post Spring last year, there have been issues that have impacted and continue to impact the building product industry. Raw material prices have experienced material increases. Resin has been trading at all-time highs, materially above the prevailing price in FY19 and FY20, and the cost of items such as hardware has increased due to commodity and shipping costs increasing. These pressures could abate later in the year, but management has implemented price increases and surcharges to offset their impact. The extent of the impact can be seen from the fact that ZC FY21 revenue is now forecast to be materially higher than FY19 (+10%) but operating profit is c. 20% below as margin is 200bps lower.

§ Valuation: On FY21 earnings, Epwin is trading on sub 15.0x with the potential for further upgrades should demand remain strong and cost pressures abate. Recommencement of dividend payments also mean investors can look forward to a c. 3.4% yield in FY21 with the potential for it to grow as earnings continue to recover.
Posted at 15/4/2021 07:52 by davebowler
Zeus-
RMI demand patterns remain strong leading to further increases to FY21 estimates
Today’s FY20 results are better than the guidance provided in the pre-close trading update (Dec 16th, 2020). The strong trading alluded to in that statement continued through the year end into Q1 2021. The better than expected trading leads to an upgrade to estimates in FY21, pre tax increases c. 12%, and new forecasts are introduced for FY22 and FY23.

The announcement that a final dividend will be paid for FY20 is welcome and signifies management’s intentions. ZC estimates factor in a resumption of the 50% pay-out ratio utilised prior to the impact of COVID-19. Despite the double-digit upgrade, forecasts assume an element of conservatism due to movement in raw material costs. The majority should prove short term but if inflation persists current estimates are discounting the current environment. On upgraded forecasts, the shares are trading on c. 16x FY21 earnings falling to 10.3x in FY22.

§ FY20 recovery picked up pace during H2: Back in September 2020 when ZC reintroduced FY20 estimates, H2 revenue was forecast to decline 5%. The actual performance was growth of 4% resulting in £241.0m for the year, a decline of c. 15% yoy. Adj. pre-tax profit of £5.0m was ahead of the £4.8m forecast, and materially better than the £2.6m number introduced in September. The change in consumer spending habits undoubtedly under pinned the strong performance. However, the speed of the recovery along with measures introduced to allow for safer working practices during the pandemic created cost headwinds. Without these the recovery in profitability would have been stronger.

§ Forecasts increase on the strength of demand: The strong demand seen in Q3 and Q4 last year has continued into Q1 of the current year with trading ahead of expectations. The c. 80% upgrade to profitability seen in December reflected operational gearing. Today’s increase is predicated on better trading with revenue increasing c. 9% to £282.0m (prev. £259.2m) and pre-tax profit up c. 12% to £11.0m. The only cloud on the horizon currently is raw material cost input pressures. Resin has been trading at all-time highs, materially above the prevailing price in FY19 and FY20, and the cost of things such as hardware has increased due to commodity and shipping costs increasing. These pressures are likely to abate during the year, without them today’s revenue increase would have resulted in an even larger impact to earnings.

§ Best in class execution during the pandemic: Epwin was early to formally reinstate guidance relative to peers in the building product sector, particularly with regards its intention to recommence dividend payments. This stemmed from the strong operational performance of the business during the first lockdown. It had low gearing going into lockdown, significant financing headroom and hasn’t needed a waiver on its covenants, let alone a rescue rights issue.

§ Valuation: On FY21 earnings, Epwin is trading on a recovery rating of c. 16.0x with the potential for further upgrades should the economic recovery continue in FY21. Recommencement of dividend payments also mean investors can look forward to a c. 3% yield in FY21 with the potential for it to grow as earnings continue to recover.
Posted at 28/1/2021 08:53 by davebowler
Zeus;
Positive trading continuing into FY21
Following on from the upgrades put through in mid-December, Epwin has confirmed that the FY20 outcome is in line with the increased forecasts. Revenue of c.£240m is 15% down yoy but importantly H2 experienced a positive performance of c.3% yoy. This is in stark contrast to the 33% decline in H1. Net debt is also in line at c. £18.0m, less than 0.7x EBITDA. The strong trading in the final months of FY20 has continued into the early weeks of FY21. ZC leave forecasts unchanged but welcome the fact that trading has continued to be strong into the New Year, despite further lockdowns in November, December, and January. The announcement of new supply arrangements offsetting raw material shortages is reassuring and further underpins confidence in the outlook.

The shares offer good value, trading on c. 9.0x normalised earnings, assuming no growth to profit achieved in FY19, and management has committed to recommencing the dividend at the time of the FY20 results in April.

In line with upgraded forecasts: The strong performance during the final months of the year lead to significant upgrades of c. 5% in revenue and 30% in operating profit for FY20. The previous revenue estimate assumed 5% decline in H2. The actual outcome was a positive 3%. The stronger finish to FY20 fed through into FY21 estimates with revenue increasing c.8% to £259.2m and operating profit up 17% to £13.9m. This remains substantially below the normalised level of £21.2m achieved in FY19.

Positive operational developments: The new Telford logistics and finishing facility was completed on time and budget in the year and was fully operational by the end of December. This will materially enhance operations moving forward. A small acquisition has also been announced this morning of a plastic distribution business. It has eight branches located in Cumbria and Southern Scotland. Total consideration is £3.8m and including synergies management estimate it has paid 4x EBITDA. Whilst small it is a positive step in expanding the distribution network.

Highly professional performance during FY20: Guidance was withdrawn during the early part of the pandemic but was reintroduced quickly relative to peers. This included the commitment to recommence dividend payments at the time of the FY20 results. Communication has been clear with regards the financial position of the business, it had conservative gearing going into lockdown meaning Epwin did not need to raise additional funds or ask lenders for covenant waivers.

Valuation: On FY21 earnings, Epwin is trading on a recovery rating of 16.0x with the potential for further upgrades should the economic recovery continue. Recommencement of dividend payments in FY20 also mean investors can look forward to it growing in line with earnings growth as we expect the 50% earnings pay-out ratio to be reintroduced from 2021.
Posted at 12/8/2018 05:36 by 57andrewjh
Does anybody know when the next trading update is due? The website is not particularly investor friendly - it does say August but beyond that there seems to have been little or no news since the annuals.
Posted at 21/8/2017 11:35 by speedsgh
Simon Thompson (Investors Chronicle) has provided an update on Epwin today. He has moved from a RECOVERY BUY to a HOLD recommendation ahead of the interims in Sept...

Targeting a break out -
Posted at 18/8/2017 07:50 by my retirement fund
There will be some nasty right downs on the books having at least 10% of the business valued on just 2 customers.Question is does it need to have a board clear out and a proper kitchen sinking ?Theres likely to be a lot of pain ahead for investors imo.
Posted at 17/8/2017 18:56 by westcountryboy
Well, the issue now is really about holding periods. Of course if you are happy to take a short term loss and are confident that you can use the money (what remains of it) better, then you would follow IC and sell (for two-thirds of what they bought for). You would reinvest in something safer, whatever that might be.

If on the other hand you are diversified and think that this is a good business which will continue to produce decent cashflow in most conditions, then you would not sell at these prices which are scarcely more than 50% of the inexpensive level they traded it for some of last year. You would be willing to wait - unless you thought that it is not just the short term but the medium which is a problem. Difficult to see!

I don't actually agree that the market has been 'relatively benign' for this sort of stock. I think most stocks in these sectors have been pricing in a slowdown for some time, based on the assumption that Brexit will come soon and depress consumer demand. Most housebuilders (certainly INL and MCS which are the two I have the misfortune to hold), construction stocks even ones as good as VP., car retailers, CAMB etc., car insurers SUS etc etc.

Is your portfolio over or underexposed to this risk? I think we may have got to the point when a lot of bad news of this type has been priced in. At least compared to PE ratios in the mid 20s for growth/tech stocks. Should the investor have some exposure to this area, if it is 'relatively bombed out'?

Answers on a postcard, please...
Posted at 17/8/2017 17:38 by speedsgh
FWIW Investors Chronicle has released a Tip Update today moving from a BUY to a SELL recommendation. Will be interesting to see which way Simon Thompson sees it when he updates his previous tip.

Rising costs and customer problems hit Epwin -

IC VIEW: The big question now is whether the dividend is maintained. The group is confident of its ability to offer an attractive dividend, but it could do this even if the dividend were cut because on last year’s payout the yield is now 8.3 per cent. Ultimately, the loss of around 10 per cent of revenue will make it tough going in the short term, and we exit our buy tip (110p 23 Apr 2015). Sell
Posted at 18/7/2017 18:46 by thorpematt
Yes I made some comment prior to the election on how uncertainty is affecting the market for stocks such as this one.

The SFE TS has reminded investors of this principle and of the rather delicate balance we presently have for the UK economy and housing market.

Lets face it the election has not made people feel more certain about future directions, and big ticket items such as windows (rarely non-discretionary) are aways likely to suffer.

EPWN is more diverse than window makers / sellers but also in some regards, operating with less discretionary (and more maintenance related) products than SFE.

I think the (stock) market is pricing in an earnings miss here. In fact, looking at the ratios there's no other conclusion.

The last TS was a bit minimal and added commentary eluding to a need to cost-reduce to mitigate sterling weakness. The market is fickle and this stock is trading at a very large discount to what I'd consider fair value. It may well miss forecasts, but such blips are the very opportunities which mid-term could provide a fine return.

Either that or the company is not telling us something. An IMS may be useful at some stage.
Posted at 05/5/2017 19:23 by malcolmmm
Panmure Gordon restated their buy rating on shares of Epwin Group PLC (LON:EPWN) in a research note issued to investors on Thursday, April 6th. The firm currently has a GBX 185 ($2.39) price target on the stock.

Shares of Epwin Group PLC (LON:EPWN) opened at 125.90 on Thursday. Epwin Group PLC has a 12-month low of GBX 91.25 and a 12-month high of GBX 139.00. The firm’s market capitalization is GBX 179.35 million. The firm’s 50-day moving average is GBX 111.94 and its 200-day moving average is GBX 106.32.



The firm also recently disclosed a dividend, which will be paid on Monday, June 5th. Stockholders of record on Thursday, May 11th will be given a GBX 4.40 ($0.06) dividend. This represents a dividend yield of 4.22%. This is a boost from Epwin Group PLC’s previous dividend of $2.20. The ex-dividend date of this dividend is Thursday, May 11th

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