Epwin Share Discussion Threads

[gaz12345] 16/9/2015 20:00

to sell. But I have bought expecting this to go higher.

[gaz12345] 16/9/2015 19:59

I know what you mean I find it difficult

[amencorner] 16/9/2015 19:01

After further dwelling on the narrative of the results this afternoon, I decided to sell and take away a reasonable profit which is never a bad thing.

After 25 years of investing I still find the buying bit so easy and the selling much harder!

[thorpematt] 16/9/2015 18:58

imranawan,
You're welcome.

SFE is of course similar to EPWN and certainly a tad cyclical. £2.79 is what I have.

ALY I know more about, their recent purchase of an office block instigated me to lower fair value to 33p, since the debt position worsened as a consequence. I do not know what savings may ofset the purchase in regards to rents etc. but as always I value cautiously. Should savings be reproted this would upgrade. ALY need to grow a bit and frankly they should get on with it. That said the recent UK figures were encouraging.

BOO is tricky to value since projected earnings involve plenty of forward conjecture which are hard to acurately deifne. I hold BOO because I believe in the growth potential NOT because it is undervalued. In all honesty if the growth profile insinuated is produced the valuation won't matter much!

[imranawan] 16/9/2015 18:14

Thanks for the really comprehensive response. How about either SFE, ALY or BOO which I all hold.

[thorpematt] 16/9/2015 17:15

imranawan,
I use a method which I apply to all stocks i buy or am thinking of buying.

Whilst I don't wish to sound pretentious or mysterious I don't share the precise detail of it with anyone, since to do so would rather compromise my targets and stops.

What I will say is that its based upon principles I learnt mostly from Ben Graham and revolves around the earnings that a company is likely to be able to produce consistently which actually appear in real terms as what is often known as owners earnings.

Essentially I work this out, make an adjustment for debt/cash, interest paid or eaned on loans etc. and (only) then apply a mutliple such as you have suggested to reach fair value.

That multple of course is quite key and I'm very cautious with it generaly. Again Graham would have advised that few companies warrant high multiples but he recognised the obvious fact that ones that are growing e.g BOO would warrant higher than ones that are not e.g ALY.

Essentially to summarise, my fair value is based on EV not MC and profits before tax. (EBITDA being something of a commmonly quoted pintless excercise in my opinion).

Incidentally when I perform my calculation on most stocks I nearly always come up with a valuation below or very close to the present market valuation.

Out of interest and just for fun, if you wish to pick a stock at random I'll value it using method and we'll see what we get.

regards

[lord gnome] 16/9/2015 15:53

Disappointing to see the shares down by quite this much today. IC still rates them a BUY online today and no doubt in this week's mag.

[imranawan] 16/9/2015 13:14

Thorpematt - How are you calculating fair value of £1.73? Is this based on a 15x multiple of EPS?

Just curious that's all.

[hawaly] 16/9/2015 11:18

If this is boring please don't give me excitement.

[sphere25] 16/9/2015 10:28

So the revenue looks about in line with EBITDA coming in slightly ahead of expectations at £10.6m vs £10.3m.

A few issues in the Fabrication and Distribution division offset with "The new build order book for H2 is significantly stronger than H1 and additionally the contract win rate has improved markedly."

The dividend will naturally support the stock, but it doesn't appear that the stock will go anywhere too fast just yet.

Slow and boring - nothing wrong with that.

Hope management start giving more regular updates now though.

[speedsgh] 16/9/2015 09:58

Yes, THORPEMATT. The broker's dividend forecast is based on EPWN's dividend policy as stated in their 2014 admission document:

"10. Dividend Policy
The Directors’ intention is to implement a progressive dividend policy, subject to the discretion of the Board and to the Company having sufficient distributable reserves. It is the Directors’ intention, based on their expectations of current and future trading and track record of the business, to pay total dividends in respect of the year ending 31 December 2014 that equate to a 4.24 per cent. dividend yield, calculated on the Placing Price, with an amount equating to 1.41 per cent. of the Placing Price being paid as an interim dividend in respect of the 6 months to 30 June 2014 and the remainder being paid as a final dividend in respect of the full year to 31 December 2014.

For the year ending 31 December 2015 (being the first complete financial period as an AIM quoted Company), subject to the discretion of the Board, having taken into account the current and expected future trading performance of the Company, and to the Company having sufficient distributable reserves, it is the Directors’ intention that the total annual dividend payable will equate to a 6.37 per cent. dividend yield, calculated on the Placing Price."

[thorpematt] 16/9/2015 09:53

Yes the brokers in fairness had already forecast the full year divi to rise at 50%
Giving guidance of 6.4p for full year which is indeed healthy.

From the perspecitve of margin improvemnt that was very healty but as with the economic outlook for the UK it's hard to look too far forward. Some of that margin will be effected by a rise i oil price (which I don't anticipated in any strength for now). On that basis I think accurate assesment for 6 months forward projection seems sensible and thus I would value the company on guidance for this full year (which the comapany states as "confident that full year profits will be in line with expectations").

I have atrributed a modest valuation on this to reflect a neutral outlook and calculated £1.73 as fair value. The strong balance sheet ensures stability and lack of interests cost etc. so no concerns there.

In reality I have a cautiuosly positive view on outlook but a margin of safety booked in is never a bad thing. At the present price I rather like it. Few stocks trade under my fair valuation calc so a discount of 22% is not to be sniffed at as is that forward yield.

[steviebaby] 16/9/2015 09:53

Agree about the lack of excitement in the statement, but good to see they are improving earnings when sales are flat. (lots of consolidation and cost-savings happening).
I think a big issue for sales was uncertainty about the election which seemed to affect the whole sector.
Things definitely more busy now and the second half is always much stronger than the first.
And let's not forget they raised a lot of money in the flotation for potential acquisitions.
I think the share price is fair for now based on dividend alone, but I expect more over the next few months.

[speedsgh] 16/9/2015 09:14

Well, those invested for the rapidly growing income will be more than happy with the 2.12p interim dividend (2014: 1.41p) which puts them on target to pay out 6.37p for the full year (2014: 4.24p).

Ex-dividend date - 24 September 2015
Dividend record date - 25 September 2015
Dividend payment date - 23 October 2015

amencorner - completely agree with your comment.

[amencorner] 16/9/2015 09:09

I would say that the narrative is not overly positive. Overall the results are as expected but there is not that much in the forward looking discussion to excite me to add more at the moment.

[hawaly] 16/9/2015 08:15

Everyone to their own but here are some other extracts....


- Despite challenging market conditions,

In what we believe has been an overall flat market for our products in the first half of the year,

in anticipation of improving market conditions to come.

in a sector that has seen little if any growth,

by certain measures suffered some decline in Q2.

I cannot see this setting the world on fire.

All imo

Good Luck.

[steviebaby] 16/9/2015 07:55

Reads pretty well ......

Highlights for the period include:

-- Underlying operating profit* increased by 31.1% to GBP8.0 million and underlying operating profit margin* to 6.4% from 4.9% for the same period in 2014.
-- Earnings per share of 4.59 pence, an increase from 2.86 pence in the same period in 2014.
-- Interim dividend of 2.12 pence per ordinary share (2014: 1.41 pence).
-- Operating cash inflow up GBP2.6 million to GBP4.9 million.
-- Revenue from continuing operations broadly in line with H1 2014 at GBP124.1 million.

[jl9] 05/9/2015 10:32

I like the business model, market positioning, valuation and yield. I also like the demographics supporting its end market. Like you I'm concerned about the estimated growth. Small position presently.

[wilk1] 04/9/2015 22:07

Digital look aren't showing much year on year earnings growth, this year to next, That's a problem for me if the figures are correct, also we've had the best environment for building. Interest rate rises early next year may stem growth ?

[gaz12345] 04/9/2015 16:29

Cheers prite. They do have a broad range of products, so don't just rely on one product. Ill have to do some thorough research at the weekend. Because I havnt found many reasons not to buy so far and those are the ones I need to find haha

[priteshpatel9] 03/9/2015 23:00

I don't think ENTU's problems impact EPWN at all. Solar doesn't even come into what EPWN do or focus on. If you read ENTU's half yearly report they say the home improvement market is doing well. Which is more likely to be where EPWN come into play....In fact, look at Alumasc results today - supply similar products (albeit different material) and they've had a super year so far.And then Safestyle, Marshalls and Topps Tiles. The home improvement/building product sector is doing very well and will continue to do well for a few years yet.

[lord gnome] 03/9/2015 22:54

Gaz - the problems at ENTU are in the Solar division, which is being shut down.There is no effect on their business with EPWIN. ENTU's other operations, including the take-off from EPWIN are untouched by the problems with solar and in fact, are going well at present. I see this little pull back as a good buying opportunity - just as you have done.

[gaz12345] 03/9/2015 22:05

Thanks for the information imran. I get nervous when I don't get the whole story on a company and there are always some negatives. Still couldn't resist getting in at 127 earlier. Support looks to be 125, so I'll put my stop just below. It looks like they have some great brands but In your opinion would ENTU have a great effect on the revenues of EPWN? I will look into it further but never turn down an informed opinion. G