Low & Bonar Share Discussion Threads

[ed 123] 07/9/2014 22:22

hvs.

Care to set out any facts in support of your opinion?

[hvs] 07/9/2014 21:08

Stay well clear.

The Board has messed up big time.

Rudderless.

[pugugly] 07/9/2014 16:58

€ ECB target depreciation (according to the Sunday Times 10% against the $ - If achieved potentially (imo) a 4-6% depreciation against sterling- This will make it even harder for the coy to recover profits -

If ECB succeeds then potentailly naother profit warning - Dragit is pushing on a string (imo) will be unable to drag the €zone out of stagnation.

[grahamg8] 07/9/2014 16:16

Ed I agree this is probably a hold, but for me not yet a buy. New blood at the top is generally a good sign and any bad news is got out of the way at the beginning. Thus the next update could well surprise on the upside. I wouldn't be posting here if I wasn't interested. It is just a question of price and timing.

[ed 123] 07/9/2014 11:52

grahamg8.

Those who took the trouble to read the 2014 interim report would have noted the following,

The Group successfully completed the re-financing of
its revolving credit facility. The new facility, signed on
2 July, is for a term of five years with an increased
availability of up to €165m with an accordion for a
further €30m if required. Pricing for the new facility is
40bps lower than the old facility. In total, the Group
now has committed debt funding of €210m (2013:
€175m).

The banks are happy to lend a larger amount and at a lower interest rate. This says they have confidence in Low and Bonar's ability to repay. Plainly it is wrong to use the adjective "dodgy" in connection with Low and Bonar's financing.

Aside from the issues of European civil engineering markets and the Saudi Arabian joint venture, there is a corporate dimension to Friday's trading update. Brett Simpson joined the company on 26 August and been working alongside Steve Good. The formal succession takes place tomorrow. So the new guy has had two weeks to get a handle on Low and Bonar. He will have viewed expectations as being a stretch and didn't want to start his term as CEO with finals that fell below market predictions. So, the solution was to get out a profit warning while the old guy was still in office. Friday was the last day possible for this.

Looking at the detail of the warning, although Europe has been struggling for some time, eventually its civil engineering markets should improve. As for the product certification, if it is only a delay, that too should right itself in time. This may be just a stutter - only time will tell.

For now I'm giving Low and Bonar the benefit of the doubt. At 66p and paying a 4% yield I'll hold till the next update. (no advice intended)

[grahamg8] 07/9/2014 09:26

I wanted to point out to rimmy that just looking at the cash didn't show the whole story. I am not so worried now, other than that I am thinking of buying shares, but wasn't in the past. So the debt to cash ratio is interesting rather than worrying. Moving the debt from >1 year to <1 year is perhaps more pressing because LWB clearly doesn't have the cash to repay the loan although there is unused credit available. The PE is pretty much at the centre of the range when looking at the price immediately after announcing annual results over the past 5 years. So not particularly overpriced historically but also not a compelling buy yet. Hence my comment.

[jimcar] 06/9/2014 19:24

graham8 you say net debt was £103.4m against £21.0m cash and equivalents, i.e. 5x. From the notes (where you got the figures from) it was the same amount, 5x, at year end - why are you so worried now?

Also your comment implies the loan of £87.8 (under 1 year) is new but the notes show clearly that some of the loans have moved from being over 1 year to under 1 year. Is this a huge problem? Genuinely interested to know your reasoning.

[grahamg8] 06/9/2014 10:13

rimmy I wish you good luck. At the H1 stage net debt was £103.4m against £21.0m cash and equivalents. Even worse there is a loan of £87.6m compared to nil last year. Financial position looks a lot more dodgy than at first might appear. Considering no growth this year the PE still looks too high even at 66p. More falls to come? Cash stays in my pocket for now.

[hvs] 05/9/2014 15:09

Driven by Hedge funds]

and now reality strikes.

Second warning on the cards. They come in threes like the busses. Simples.

[exel] 05/9/2014 10:49

thanks L, very much take that point. ex

[lateralam] 05/9/2014 10:36

I'm involved in construction and whilst demand may have slowed recently in Europe, there will be big opportunities in Iraq, Gaza, etc for the quality of materials LWB make. Don't forget they are partnered with Sinopec in China also.

[exel] 05/9/2014 10:18

...either that, or it points to the fairly sudden and sharp contraction now taking place in West & Eastern Europe. ex

[meijiman] 05/9/2014 09:46

looks amateurish to me. Shows limited visibility on order outlook and therefore low quality earnings.
Not a disaster but can you trust them again? They were decidedly optimistic earlier in the year.

[rimmy2000] 05/9/2014 09:36

bought in this morning. great little holding. dividend is well covered 1.8 times and has cash @ 5.5p/s to boot.

[ialwayswinatmonopoly] 05/9/2014 09:11

Profit warning means errrrm, less profit and therefore lower dividend. Lower dividend means lower yield. The share price drops then the PE Ratio should flatline.

[nigelmoat] 05/9/2014 08:50

Ovesold - great buying opportunity imo.

[wjccghcc] 05/9/2014 08:27

Consensus was 29.2mm so actually a drop of 3-4mm.

[lateralam] 05/9/2014 08:22

Totally oversold on a drop of less than £1m in the current EC climate. Still a solid business and other divisions unaffected. Hold for me.

[masurenguy] 05/9/2014 08:18

Down nearly 20% to circa 68p on the news. Rather an overreaction in my view but it takes the price back to roughly where I bought in last year. I only have a small position here but am happy to hold and this should recover some upward momentum once the virtually inevitable Eurozone QE is subsequently introduced and implemented. If the dividend is held then at this level the yield is circa 3.7%

[suetballs] 05/9/2014 08:17

Slammed by the market!!
Suet

[felix99] 05/9/2014 08:16

now we know why schroders were selling I guess

[lateralam] 05/9/2014 07:52

All other divisions doing well and only a million quid or so down over the year.

[suetballs] 05/9/2014 07:27

Trading update - weaker Europe has to be expected really - will Mario have come in to save the day? The share price reaction will be interesting.

Suet

[felix99] 29/8/2014 14:27

been here a while in and out and now stocked up again. Patience and a weaker pound should help push up now

[bigdazzler] 29/8/2014 13:23

I'm fully 'cheered up' in the knowledge that there are other holders out there and I'm not on this lonely road on my own.