Low & Bonar Share Discussion Threads

[bookbroker] 20/12/2017 08:55

They are seeing slowing growth in their main markets, too much emphasis now on China, if that goes where I’m thinking, then this company is going to have a major covenant issue, debt is way too high relative to slowing end markets, more bad news to come!

[cc2014] 20/12/2017 08:38

See half year presentation.

£213 of available facilities.

Debt at half year £149m so coming down sort of in-line with profit of £30 a year.

Debt of £138m not really concerning if making a profit before tax and amortisation of £30m


I've added at 53.5. Not a great day but think this fall is overdone. Not expecting to get back to 65 immediately but reckon this is stops getting taken out and will see 60 by the end of the day.

[pugugly] 20/12/2017 08:24

Debt (imo) could now be a serious problem
"net debt, as at 30 November 2017, of approximately GBP138m" Market cap only £173M (advfn figure not checked) so EV £320M - Not pretty against restated expected profit of £30-£31M. Anyone any knowledge of debt covenants -
Declaration used to hold and was looking for a re-entry point but possibly not yet

[ed 123] 20/12/2017 08:21

Last year there was about £9 million cash inflow from operating activities after tax and after dividends, so I'd guess the dividend is safe for now.

Debt will have gone up in part due to the additional investment in China. When the new Colback line comes on stream, that should boost cash inflow further.

Obviously, they need to get some realism into what they tell the market. The FD is new, without baggage. Today's guidance will be his. It's likely to be accurate, imo.

With the results at the end of January the outlook for next year will be more important than usual.

The shares are fairly steady at down about 20%.

Fwiw, I'm not selling or buying. Will hold at least until the full year results and probably beyond that. I continue to see good potential but, if LWB is to retain its independence it needs a Chief Executive who can get a grip on all its divisions.

[ed 123] 20/12/2017 08:10

Down about 20% on opening.

My hope now is that, without a Chief Executive, Sterling Strategic contact the other major investors and they push for a sale of the whole group.

[ed 123] 20/12/2017 08:07

Well, needless to say, I'm not happy. It seems to me that the previous update was just not realistic and Brett Simpson was looking for new job ahead of the inevitable.

[ed 123] 16/12/2017 12:03

Hi CC2014 and Rathkum.

Ta. A good summary of the situation from three i's. Well, I would think that, being a holder.

Looking for the negatives ............... We still don't know who the institutional seller was and maybe they've not finished - hence no rns yet? Also, we don't know the scale of any possible write downs. Maybe a goodwill writedown coming on the Texiplast purchase and maybe some writedown in the value of civils' materials stocks? Also, I just don't like underperformances .... misjudgement by someone? I can see why some might sell.

Additionally, with the results only six weeks away, some may be reducing as a safety precaution?

None of us can see into the future and yes, there may even be another bump in the road next year, who knows? ..... Though obviously I hope not. Having taken account of the negatives and looked at it in the round, I'd say the pieces are in place for LWB to advance over a few years. Just as the three i's writer says, I think this could be a good long termer. Fwiw, I'm holding on. (No advice intended.)

[cc2014] 13/12/2017 09:38

I agree about the buyer Ed. The bid seems to be slowly rising at the rate of about half a penny a day on average although it hops around during the day.

Sellers can now got 68 with ease rather than 65.

I sense if they buyer wants any more in any decent size he's going to have to pay 70.


Edit: sellers getting 68.5 and buyers paying 69. All looking good

[ed 123] 12/12/2017 17:32

Yes, creeping back up on low volume. The big trades were in the 65p trough. There was a gap down, approx 80 to 70. With satisfactory news (ie. full year report) we could reverse that update provoked fall ..... back up to 80p?

Feels like there is a buyer gradually upping the bid in the hope of finding some volume.

[cc2014] 11/12/2017 09:33

The buyers are nibbling away at 69 this morning which is nice.

[cc2014] 07/12/2017 15:39

Thank you for your thoughts Ed. It's much appreciated.

I'll write my thoughts up over the coming days but in the meantime I see the bid has ticked up to 66.5 after 35k sells so either we are going to see a delayed buy or someone wants alot of stock and the sells aren't coming fast enough

Fingers crossed

[ed 123] 07/12/2017 12:58

Ta, CC2014. :-)

Your thoughts on the share trades here match my own.

I have longer term hopes for this one. Brett Simpson has a vision for the Group, avoiding commodity products, aiming for higher margin products in growing sectors of the economy. The old FD is gone and Simpson now has his own choice of FD.

I wasn't convinced about the old CEO. Texiplast is one of Steve Good's buys. Four years on, it doesn't look to have been money well spent.

Some have said Low and Bonar is a serial disappointer. I wouldn't argue against that. I've been in and out of this share over a period of decades. I remember it when it was a packaging company, providing the boxes for Kelloggs cereals at Trafford Park, Manchester. The share price was higher then than it is today. That says something.

As for the here and now, I view Low and Bonar as a development project. If the new management can get it moving forward with no more bad news, and an outlook of increasing eps, then a re-rating looks very likely, imho. If performance improves and it doesn't re-rate, then it could be a bolt-on for someone? Meanwhile there's a dividend yield close to 5% at the current price.

Sterling Strategic are an interesting major shareholder. They will be in dialogue with management. Will SS be supportive and patient or want a quick turn on their investment? I hope for the former but, if the latter, I'll take it.

[ed 123] 07/12/2017 08:34

5000 Shares have been on offer at 66p since the opening and are still there. First trade is recorded as a buy at c. 68p.

I may be wrong but have the feeling that the big trades are finished and a bottom is in.

Waiting for a holdings rns, showing someone reduced?

Finals, y/e 30/11/17, are due on 31/01/18.

[ed 123] 06/12/2017 23:00

Looking good for you at this early stage, CC2014. :-)

Can't see your 65.875p trades. Which exchange?

[cc2014] 06/12/2017 14:36

I'm in. Those are my two buys at 65.875 which I hope will be the turning point.

GLA

[time_traveller] 01/12/2017 16:10

Sterling strategic - now at 11%.

Hope they can shake up the management a bit - they seem a bit flat footed at times, too keen to blame external factors.

[...]

[cascudi] 29/11/2017 15:18

who bought/sold 1.8million pounds today?

[ed 123] 03/11/2017 12:37

Sell side has weakened. Possibly our recent seller has finished?

A bit of buying now could take these up a few pence? That's my hope, but who knows?

[ed 123] 01/11/2017 11:17

Agro-textiles sale completed, as expected, albeit slightly delayed.

Trading in the shares continues its recent pattern. Someone is keeping the sell side replenished. Possibly a market maker working through sells from the recent update? At the same time, someone else(?) is willing to buy at 69.3p, ie above the mid-price of 69.125p.

Fwiw, Peel Hunt reiterated 'buy', 100p target yesterday.

[ed 123] 30/10/2017 17:45

Been looking at today's trades. Although nearly all today's deals have been marked as "buy"s, it is a false picture. Reason? There has been a buyer offering more than the mid-price to anyone wanting to sell.

As a holder, obviously I'm hoping this buyer continues to mop up and, eventually, the share price rises. But, who knows?

Low and Bonar's financial year will end one month today. Broker updates are showing an average estimate of 6.77p earnings for the current year and 7.93p for next year.

If those earnings figures are met and no more glitches, then a share price of 12.5 x 8p earnings, c. 100p, might be reasonable for February 2018?

Dreamland ..... if some bigger player wants LWB and offers, say, 9 x ebitda. That might give EV of c. 522 million (for y/e 30.11.17), say 392 million after debt, or 118p per share. That would be about a 68% rise from today's 70p share price. Unlikely to happen, of course, but no harm in my dreaming.

(No advice intended - no crystal ball, either.)

[justiceforthemany] 19/10/2017 15:44

Directors and institutions buying.

[ed 123] 17/10/2017 16:28

Obviously a disappointing update, though some parts of the Group are growing strongly.

The update finished with,

"The Board continues to expect the Group to show good progress overall for the year to 30 November 2017. "

So, eps for y/e 30.11.17 seven pence?

At 70p (current market price for the shares) that's a p/e ratio of 10. IF, this is the end of their mixed performance updates, with time for sentiment recovery, a p/e ratio of 15 might be right?

There is highly likely to be a writedown of the goodwill amount in the Civil Engineering Division. Also, the carrying value of CE Division stocks may be reduced? So, the balance sheet will take a hit. This won't affect the Company's ability to pay it's bills, dividends or interest on loans and doesn't affect the debt covenant measures used by LWB's lending banks. So, no existential risk to Low and Bonar.

I suppose, overall, it has to be said that Brett Simpson's moves to improve the quality of the business are turning out to be more extensive than some (including myself) had previously expected.

Others in the sector will be watching. I guess there's a small chance that someone will come along with an offer for the Group. Timing and shareholder sentiment might reward an interested party, just now.

FWIW, I weighed up everything and decided to add to my holding. (No advice intended.)