Low & Bonar Share Discussion Threads

[ed 123] 03/2/2017 14:22

Quiet yesterday but a buyer has now appeared. Wonder what they plan? The two year high is about 75p. Was that update with the preliminaries good enough to take us back there? I am a holder, so maybe biased, but I do think the current year will be a good bit better than 2016 (coated textiles should have improved, probable resolution to the Saudi jv, and the other divisions are trading well.)

If the interims confirm things are on plan, I'd guess we go even higher.

Dividend of 2.0p per share available till 17 March 2017.

(No advice intended.)

[puffintickler] 01/2/2017 09:00

Seems to have settled +2.5p (7%) on the results RNS, looks about right given positive TS back in November that had already lifted the price.

[ed 123] 01/2/2017 07:39

Results look good for the most part. Coated textiles was a big negative but 'largely resolved'.

For the current year, if they have resolved the Coated Textiles and win back unhappy customers, then eps for whole group could rise by 20%? Sound bouyant about their prospects.

Pension risk has been laid off for UK final salary scheme = good.

Nice lift in the dividend.

Share price prediction? I think the market will look forward, so up 5p?

[keyno] 08/1/2017 11:02

I hope so as I made my first purchase here recently.

[muffinhead] 08/1/2017 02:09

Chinese factory... great move


Currency translation back into sterling very very favourable

[nigelmoat] 23/12/2016 11:38

Nice buy of a 1,000,000 shares. Someone is confident.

[rathkum] 24/10/2016 08:09

Interview: Brett Simpson, chief executive of Low & Bonar

[muffinhead] 21/10/2016 12:58

attracting some volume

[rathkum] 21/10/2016 10:32

Strong buy recommendation in the current IC edition.

[rathkum] 12/10/2016 00:14

Low & Bonar: Growth stock with a decent divi
14:01 11 Oct 2016

Law & Bonar can trace its roots back to the turn of the last century when it first started weaving jute, a vegetable fibre that was used in rope.
Low & Bonar: Growth stock with a decent divi
The company's fabrics are used in civil engineering, building and construction.

Shares in Low & Bonar (LON:LWB) have traded in a very narrow range in the year to date and are barely changed in that period.

The valuation of the business, at 11 times 2016 earnings per share, dropping to 9.3 times 2017 EPS, suggests the company is stagnating.

However, as we will see, nothing could be further from the truth.

Before we make the investment case, it is probably worth looking a little closer at what the business does and how it makes its money.

Law & Bonar (L&B) can trace its roots back to the turn of the last century and first started weaving jute, a vegetable fibre that was used in rope and matting, in 1912.

Today it is a market leader in sophisticated performance materials that makes yarns, fabrics and fibres used in civil engineering, building, construction, transportation and other industrial applications.

It is divided into four business units that are international.

Colback, one of its best-selling products, is all around as it provides the backing for floor tiles and is used inside cars.

WATCH: L&B boss on the potential of the business

In fact, the company has invested heavily (£26mln) in a state-of-the-art factory in Changzhou, China, that manufactures the product.

It is within 200 miles of 80% of the country’s textile flooring industry giving it a ready market. The plan is to double the footprint of the plant over the next few years.

The investment in China was part of L&B’s strategy to broaden its geographic footprint outside the UK and Europe, which accounts for 65% of revenues.

The company has evolved under chief executive Brett Simpson. It is more market-focused, rather than being product driven.

What this means in practical terms is it listens to customers and creates products they want or need rather than developing a new fabric or fibre and then trying to find a market for it.

It might make create innovative material in-house, but equally it could buy in the expertise.

It is always looking to move sideways into what Simpson calls “adjacent markets” – though only where the return is attractive.

And L&B is driven by returns (particular return on sales and capital employed) and takes what he calls a “portfolio approach” to the businesses it operates.

In other words, if an L&B operation doesn’t pass muster, it is disposed of.

In fact the artificial grass yarns unit is being sold for £24mln for that very reason.

“We worked hard and made big improvements to the relative performance; however, the absolute returns are just not high enough and we are divesting it,” said Simpson.

“We are also working on issues with our Saudi JV [joint venture] so it doesn’t make further losses.”

That hard-nosed approach appears to be working – just look at the forecasts made by the company’s broker Peel Hunt.

It sees pre-tax profits growing by 12% this year to £28.5mln and then to £33.5mln the year after and to £36mln by 2018.

L&B is forecast to pay a total dividend of 2.9p this year, which equates to a very decent 4.4% yield.

Net debt, which was just under £140mln when L&B last updated, is forecast to fall to around £95mln by the end of the year.

Simpson says that level of borrowings is manageable and well within its target range.

According to Peel Hunt the current share price of 64p “does not reflect strategic progress to date towards improved quality of earnings and higher returns, nor the positive earnings momentum established over the last 12 months”.

It says L&B shares are worth 90p each.

“After a period of heavy investment, we now expect earnings growth to accelerate and the balance sheet to deleverage,” said analyst Dominic Convey.

He expects the stock to receive a “deserved re-rating”.

Boss Simpson won’t be drawn on the share price, but is satisfied L&B is moving in the right direction.

“We know where we are making money,” he said.

“We know where our strengths are and we are building on them and pushing into new geographies as well as sorting out the legacy issues.”

[rathkum] 23/9/2016 19:10

You mean Mr. Vaseline

[rathkum] 23/9/2016 19:10

You mean Mr. Vaseline

[ed 123] 22/9/2016 11:15

There's some buying interest this morning. Probably responding to Peel Hunt raising their price target from 85p to 90p.

I have some hope we'll see an encouraging trading update around the end of October.

[meijiman] 06/9/2016 10:41

Hope Keith Vaz not involved here........

[meijiman] 05/9/2016 19:13

Bart's brother?

[rathkum] 05/9/2016 16:57

Brett Simpson purchased 100,000 shares today. Time to follow his lead.

[puffintickler] 05/9/2016 16:51

Just doubled my holding here, looks undervalued and not much risk re Brexit. I've got some losses to recover though.

[muffinhead] 26/8/2016 19:14

Thanks Ed 123.... just trying to understand the company

[muffinhead] 26/8/2016 15:00

Is the 50% equity stake likely to be appealing to the Saudi JV partner, Alujain Corporation? Must be worth something to have a local monopoly


Bonar Natpet JV equity stake has already been writen down as a non-recurring impairment charge of £8.2m in last years accounts


JV setup 2011

[ed 123] 18/8/2016 10:17

Yes, rathkum, I think it will go higher from here. Atm, it's at the top of a channel, paused for direction.

Btw, Kingfisher today reported Q2 France sales up 10%, Poland sales up 15% and Spain sales up 19%. A pickup in Eurozone will be good for LWB, and so will a conversion back to a weaker Sterling.

Brett Simpson is raising the quality of the Group. We are due an announcement of a solution to Bonar Natpet soon.

Goes ex a 1p dividend next week.

While things are so quiet, I've played with some numbers ...

330m shares issued. At say 65p, market cap is £214m. Add deferred share value of £31m. Add in net debt of £140m and pension deficit of £15m gives enterprise value of £400m.

EBITDA for the current year £35m(?).

Return on notional investment would therefore be 8.75% pa.

LWB replaced its debt recently at an interest rate of only 2.57% pa. (It is considered to be a safe business to lend to.)

There is scope for someone who wants Colback, etc. to bid say 100p for the ordinaries.

Then enterprise value would jump to £516m. Funded at say 4%pa, would cost £21m - easily covered by the ebitda of £35m.

LWB is quiet (not a single share traded so far today), but has value at the current share price, imo. (NAI)