Low & Bonar Share Discussion Threads

[nick rubens] 14/12/2018 08:06

Paying a dividend(albeit reduced)and potentially asking for money via a fund raise at the same time?

[danny baker] 14/12/2018 07:30

Baner I think 20's is optimistic. The final dividend in token form remains only as a bribe to try and get the rescue placing away. Meanwhile corporate vultures will make cheeky offers for any good bits of LWB to test how desperate they are to reduce debt. An awful situation for shareholders but this all stems in my opinion from poor decisions 5 years ago which weakened the business and when I sold my shares at around 80p.

[baner] 14/12/2018 07:21

Relatively positive update from L&B this morning. EPS ca 4p, debt coming down - however they now announce potential placing of new equity. Without the latter - and this is really a clumpsy way of handling this - the shares would have gone up to 30-35p. Now they are likely to stay in the 20´s.

[cc2014] 12/12/2018 14:43

I've stopped dithering and bought a small amount. Less than I usually would.

The 15k iceberg bot has finished. The 5k iceberg bot still running but it's been pushed back which suggests to me it's not in a hurry.

[baner] 12/12/2018 11:55

many thanks CC! this time next year we shall know if this was a good timing or not !

[ed 123] 12/12/2018 11:55

Well, if you're looking for an opposing view .....

Global macro economy is one of my concerns. Of the major trading blocks/countries only USA is growing healthily ..... and that is forecast to slow, as Trump's tax cuts annualise and impact of trade tariffs begin to bite. US long and short bond yields are closing in on each other (inversion could herald a recession). Eurozone is virtually stagnant. China's car sales fell for the first time in 6 years recently (important for macro and LWB specific reasons).

LWB specifically .... LWB has been suffering from competition from Asia. Asian quality has had issues but will inevitably improve. LWB's CTT division has had its own quality problems for a couple of years. Is it finally now resolved? It had been losing customers. LWB's production second line at Changzhou has added to capacity at an unfortunate time, with China car sales declining. (Note, China sales falling due to the removal of a government subsidy on car purchases.) China's government debt is ballooning, so perhaps little chance of that subsidy coming back?

The danger is that EBITDA could fall and the banking covenant ratios would then come into sharp focus.

Good, Simpson and De Klerk have all had time wrestling with the issues here. Balance sheet strength and therefore capacity to recover, have gradually be draining away over the past half dozen years. Result? Concerns about viability if things worsen ... expressed as a share price of 20p.

Of course I can't see into the future but, having held the shares many times over the past 30 years, I sold my last at 37p and won't be buying back unless I see some big improvement.

(No advice intended and apologies to holders for my pessimism.)

[cc2014] 12/12/2018 11:33

Thank you Baner,

I share your thoughts on the upside and downside risk and I find your insight on Mr. Dayan extremely helpful.

I've been struggling as to whether to buy any more or not and have to keep reminding myself that the only reason I make a profit in this game is that over the years I've never got sucked in to buying over and over on the way down. I haven't gone overweight on LWB and my trading rules would allow me to buy more but something is holding me back. Possibly most of my trades this year have gone wrong and although I am up overall this year it has more to do with trades made 3-4 years ago rather than in the last 12 months.

I'm pretty sure the selling is just portfolio clearance and therefore represents a great opportunity but still I hesitate. Rabbit in the headlights. lol. Also, I'm not really looking for any more risk at the moment more reliable bond/fixed income returns.

Ah well, back to dithering, which is what I'm doing right now. I hope you've picked the bottom. Good luck.

[meijiman] 12/12/2018 11:22

Previous Chairman was a disaster..........

[cc2014] 12/12/2018 10:05

Baner,

I would be most grateful if you can tone down the self-righteousness please. It's not helpful and doesn't contribute to an informed debate

No-one has reacted angrily. Yes, people have chosen to disagree with you (mostly on your position that a rights issue is required), but no-one has been impolite.

You clearly know a decent amount about the stock market and I for one welcome some balance as I know from other threads holding a contrarian view is not always received well.

So, I'mm interested. We've hit your 20p. Have you gone long or are you still waiting? I'm still long regrettably and it's apparent from L2 and the trade flow there is one (maybe two) parties that want out at almost any price. It's hard for me to know right now why this would be. My thoughts are:

1. The low oil price will be helping polymer prices and so the share price should already have found a low and bounced (perhaps not far)
2. The inversion of the yield curve suggests negotiation of banking facilities will be at higher rates and could add say another £5m in interest costs (that's quite a pessimistic view and would imply loan rates going up about 3%). Even this is manageable although unpleasant for LWB
3. The exchange rate continues to decline which should be helping the value of repatriated pounds.
4. No directors buys - ouch

Perhaps most importantly the question for me is when the seller(s) finish as clearly they must sometime, are they simply a distressed seller and the share price will bounce. The general market is covered with distressed sellers right now or sellers that whilst perhaps not distressed are selling down large stakes. At an individual stock basis these are slowly working their way through.

The decision for me right now is fairly easy as I think 20p decent value. The harder decision is deciding what to do if it bounces to say 30p. I am not one to stubbornly hold onto something forever. 30p would put me in a very indecisive place.

Any thoughts?

[baner] 12/12/2018 08:25

So, here we go, L&B now below the 20p i have warned for so many times - with very angry reactions from some commentators on this site. I agree with Time that the company should now make a statement re this serious drop in the share price - mr Dayan recently bought a significant number of shares at 40+ - so what has happened since he came to the conclusion that this was an attractive price level to invest?

[danny baker] 11/12/2018 22:01

Time traveller do you really want an update from tbe board? I think you'd get the following :- The offers for the civil engineering division have not been forthcoming therefore they'll try and sell the Building and Industrial division instead. Debt reduction remains the priority therefore bye bye final dividend. Oh and trading conditions are getting more competitive with no easing of raw material prices.Are you sure you want a trading update? We can all get stocks wrong just as Sterling SICAV have got this one wrong.

[time_traveller] 11/12/2018 21:09

Lowest close ever. Still the board can't do us the courtesy of a statement.

[baner] 10/12/2018 14:43

if things have gone even worse than indicated by most recent update, they would have to inform market again. i guess insiders are prevented from buying more shares due to "some reason". stirling have made a fool of themselves and really need to take action here - best option is to trigger a break up in which case they will get at least 40p/share. however for that to be possible they need lenders to sit still in the boat - mr dayan and his new CFO should be up to the job.

[cc2014] 10/12/2018 13:56

I expect the Luxembourg guys were on the interview panel. Maybe even encouraged him to apply.

Bizarrely buyers starting to arrive.

[time_traveller] 10/12/2018 09:31

CFOs first day in the job today. IRV spooking other indebted companies. It would be nice if he could share the numbers he's seeing as he opens the books, because all we see is the share price, and it ain't pretty. I expect he'll be getting a call from luxembourg anyway.

[nick rubens] 10/12/2018 08:50

LWB share price is a good reminder why 'investing' is baloney alot if not most of the time.
No comment from the company to reassure investors? Are things going from bad to worse on the trading outlook?

[cc2014] 06/12/2018 14:32

tbh the market is starting to look like it's capitulating. FTSE down 180 today and the speed of the fall doesn't match the underlying earnings position.

As for LWB someone keeps selling. Looks like one party to me.

I have resigned myself that until the market changes I'm stuck in a whole load of trades which aren't going so well. Not sure what to do tbh. Happy to hold as I think this is oversold. The more difficult decision comes if the share price gets back to 30p

[baner] 05/12/2018 14:36

i have repeatedly stated that there is a 20p placing in the pipeline, in order to sort the balance sheet up - a view that met very angry objection some months ago. today we are at a share price where even 20p may be too high for a placing. however, i am not as certain there is the need for such a placing today, as L&B´s margins could improve in 2019 as a result of reduced raw material prices, following the crude price south.mr dayan has a strong reputation in the City and may be able to convince lenders things are under control until they have managed to sell the Civils division. in such a scenario the EPS should reach 5-7p in 2019-20 and the shares are not expensive. sound risk reward at 23.5p and worth a punt.

[time_traveller] 04/12/2018 18:41

Do you have level 2? I don't but judging by the tiny daily volume, there are very few buyers or seller's (hence the huge bid/offer spread), so the trickle of sells kills the share price

But yes it is odd. Everyone's investment here is down massively - sterling, directors, PIs, etc ... yet the silence is deafening! CC says the board will have good news, but they could stop the slide with an ad hoc trading update. There is a point where a very low share price becomes a problem, and an MCap less than net debt isn't a good look!

At least debt hasn't ballooned, like Thomas cook's has (or it hasn't as far as we know, which isn't a lot - if I was being charitable, I would say this BOD are effing useless, if I was being cynical, I would suspect they are being complicit in screwing over the ordinary shareholders)

[baner] 04/12/2018 17:12

it is obvious L&B´s shareholders outside of the board room have little trust in daniel dayan and his colleagues! directors bought into the stock at 40p+ a few weeks ago - and the shares are now 25p-ish with ample supply in the market. who are wrong? the insider directors or the outsiders selling at these levels ?

[time_traveller] 03/12/2018 07:13

Excellent - found a new CFO. Useful background.