Epwin Share Discussion Threads

[mfhmfh] 18/8/2017 09:21

Chief executive mentioned '... selective acquisitions to broaden our product portfolio...'

Is this a good idea based on the way the business is going?

[ed 123] 18/8/2017 09:14

Bought some more this morning. (No advice intended.)

Fwiw, I like the management and think the company is well run.

If you take off bad debt (though this hypothetical loss may not happen if the strategic review of the customer goes well) at say 180 days supply of 5%, it is around £15 million or £12 million post tax. That's less than one year's profit.

Additionally, there's the potential loss of 10% of revenue and (if it happens) that would hit the bottom line disproportionately harder due to operational gearing. The company won't stand still, though. They are cutting costs and will be looking for new customers. In time this episode will be behind them.

I've taken this as a buying opportunity. No guarantees as to the outcome, of course.

[my retirement fund] 18/8/2017 08:50

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.

[57andrewjh] 18/8/2017 03:11

Simple maths. If they lose only 5% of revenue and GM shrinks as costs rise then it's hard to see how they can cut costs aggressively enough to support OP at close to last year. Take a bad debt hit through the P&L and it looks horrible. They can only pay a dividend out of reserves. Frankly I think the trading statement is inadequate and that points to management weakness.

[elmfield] 17/8/2017 21:11

Question for me though:
Is this well managed?
Not as sure about that now as I was when I bought in!
One profit warning is enough for me.

[westcountryboy] 17/8/2017 21:09

I agree that there are currently company specific issues at EPWN which raise particular short term concerns and which have been amply discounted by the share price fall. I value the attempts on this board to assess how serious they are.

But I don't think you are comparing like with like. PLP (which I hold) is a specialist outfit with a R/D/innovation angle. SHI was doing badly until mainland Europe perked up, and that sets it apart. ECEL illustrates my point exactly - the share price has not done well, it is very modestly priced and by most criteria is very good value, I would say for the reasons I set out above.

If I were to sell EPWN I would probably reinvest in something like ECEL (though it is a bit too highly geared for my liking) or more likely VP. My bigger point was that there is a place for stocks like this in the portfolio at these prices assuming one thinks that the company is well managed over the longer term.

ECEL and VP. have better records at increasing turnover than EPWN and that is my main concern about it TBH.

[elmfield] 17/8/2017 21:03

To many questions,
Must remember stay clear of Zeus capital offerings.

[steviebaby] 17/8/2017 20:13

Sector benign? Bombed out?

Compare ECEL, SHI, PLP over the last 12 months.
They're all up massively while EPWN has fallen.

Looks simply that Epwin hasn't performed well whilst others have.

Big questions..
Is that all now priced in and can they recover the situation?

[westcountryboy] 17/8/2017 19:56

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...

[speedsgh] 17/8/2017 18:38

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

[speedsgh] 17/8/2017 17:32

Significant sector headwinds compounded by company specific issues with potential loss of revenues means the company is likely to struggle for the foreseeable future imo. Even if the dividend is currently well covered, sentiment is very much against them & that is while wider markets are relatively benign; what happens if/when markets turn? Risk weighted very much to the downside imo with potential for further downgrades as they trade through H2 & into 2018. I note that this is also a Simon Thompson recommendation; his last update on 25/7/17 was a RECOVERY BUY when it was trading at 97p. If he reverses that recommendation when he next updates in the next few days, I suspect there may be a further rush of PIs for the exit. This last point is not a major consideration for me but worth noting.

So, in spite of the attractive dividend, have sold remaining holding at a 15% loss which has fortunately been offset by previously taken profits & dividends received. GLTA who remain.

[wllmherk] 17/8/2017 16:36

I decided to buy a few today, possibly a bit risky as there may be more bad news but, worth a punt at these levels especially if they maintain the dividend.

wllm

[57andrewjh] 17/8/2017 11:28

Just saw this: hxxp://www.doubleglazingblogger.com/2017/08/epwin-group-share-price-plummets-on-half-year-trading-update/

[steviebaby] 17/8/2017 10:40

I suppose it will just be a matter of waiting to find out what happens with the potential loss of £30m revenue.

Best case would be that the one Customer sorts its finances and continues to trade, and that GAP can't take all of the SIG business way.

I would expect the share price to stay around this level until those 2 outcomes are more clear. Perhaps at results.

elmfield makes a fair point that the RMI market is also flat at best and pay continues to lag inflation, making people worse off. If a homeowner only has a few spare thousand is he likely to improve his soffits and guttering or buy a holiday, car, kitchen ???

[arf dysg] 17/8/2017 10:18

I would have thought that the price now is assuming a large cut in earnings and dividends. Surely that assumption is at the low end of the range of what could happen, and it's very unlikely that the results (in a month's time) will reveal something even worse.

[skyship] 17/8/2017 07:40

elmfield - agreed - looks like too many known unknowns to chance my arm here; though will be interesting to read ST's Online update...

[elmfield] 16/8/2017 21:59

All well sliding the rule over it but,
It is all about what is going to happen to the wider economy in
18 months.
This won't do well in any set back.

[stentorian] 16/8/2017 21:37

THORPEMATT,

Thanks for the link. I bought in today...Shares Magazine aren't the only investment mag running their slide rule over EPWN...over at IC, Simon Thompson (who has tipped it before) has posted in a response to a poster about EPWN that he "...on the case and will be updating shortly".

[thorpematt] 16/8/2017 20:09

stentorian,

Thanks for the link (I have re-posted it with a tweak to allow it to hyperlink).

It's interesting because the brokers have settled on a circa £23m EBIT. Since there's not much "I" then this is not too bad BUT it does not extrapolate to no risk to divi as the article says (IMO).

The reason I say this is that those forecast will no doubt be driven in part via discussions with the company and whilst they are likely to be fairly close for this year, next year is a very differnet matter. Brokers often are fairly accurate within a 6-12month forecasting period but notoriously bad further forward. It's all about visibility...and I refer back to what I posted earlier regarding the principle that there really is no clarity here. The article suuggests that we can expect a fairly flat profit level for the next 12 months. Let's be honest do we really think that that is likely given today's statement?

Good track record here, no question but those are my thoughs FWIW. This stock is on my monitor list because it is of interest due to its previous performance. I presently hold no position. I hope my commentry is of some use, GL to all.

[stentorian] 16/8/2017 17:25

hxxps://www.sharesmagazine.co.uk/news/shares/why-epwins-warning-wont-put-the-dividend-at-risk

[lord gnome] 16/8/2017 17:09

Yes, lewsey. I think Baron Rothschild would not have been a buyer of EPWN today no matter how loudly the trumpets had been blaring.

[lewseyfarm] 16/8/2017 16:56

I think he was talking of stocks in general not individual

[arf dysg] 16/8/2017 16:44

Buy when there's blood on the streets, sell when the violins are playing. - Nathan Mayer Rothschild (might be the financier 1777-1836 or his grandson the banker and politician 1840-1915)