Low & Bonar Share Discussion Threads

[time_traveller] 17/6/2019 12:07

Can sterling really be so stupid? Not even a hapless PI such as me, would have added quite so aggressively on the long way down, as they have. Their knowledge of the company must surely be far better than mine. Do they have some insight how this might become a turn around, or are they massively reckless and incompetent?

Kinwah - Logically, yes it should have been folded instead (and personally I wish it had been, so I wouldn't have been enticed into subscribing to the fund raise)

[kinwah] 17/6/2019 10:47

This feels exactly like Kier. A history of heavy indebtedness, reliance on questionable working capital practices, over-distributing dividends plus businesses not as profitable as previously. The institutions who took stock at 15p in February must be fuming. The company is now worth what it raised in February. Maybe it should have been allowed to collapse 6 months ago.

[meijiman] 17/6/2019 10:37

Has Sterling ever got one right...can't say any spring to mind.

[baner] 17/6/2019 09:58

a good guess should be £20m+ for all Civils businesses. so net debt pro forma ca £85-90m. 11/2018 net debt was just under £130m. following this they raised £50m of new capital/cash, taking debt down to £80m pro forma. how on earth did they manage to get this back up to £110m in a few months ? seasonal swings explain some of this, but £30m ??

assume they make £30m ebidta with net interest of £5m (incl pension top up) and they should have a strong free cash flow going forward - most of the plant should today be modern and efficient. with EBT of say £15m EPS will be ca 2p and the shares trade at a PER of 4. not expensive albeit risks are of course way above average.

this must be the nail in the coffin for sterling.......

[justiceforthemany] 15/6/2019 17:52

Latest EDISON estimates
They have EBITDA as £32.6M (seems too high IMO but if they are correct covenants should be ok at 3.3x EBITDA reducing to ~ 2.5x EBITDA in 2020) this year, EPS 0.9p and PBT £8.3M rising to £39M EBITDA, 1.6p EPS and £15.7M PBT in 2020.

2019E 402.9 32.6 8.3 0.9 10.0
2020E 412.4 39.0 15.7 1.6 5.6
LAST UPDATED ON 14/06/2019

hxxps://www.edisongroup.com/company/low-bonar/1059/

A sale of the loss making CE division could improve the situation significantly - not sure how much it could sell for.

[time_traveller] 14/6/2019 15:47

Nobody's adding at the moment- why would they whilst funds keep dropping in stock in at any price to get rid of it before formal delisting from the ftse small cap.

Maybe next week they'll add, or I fear, an opportunistic bid to rob us blind.

[justiceforthemany] 14/6/2019 15:35

Sterling and Co not adding???

[justiceforthemany] 14/6/2019 15:35

Bid below 8p now...

[justiceforthemany] 14/6/2019 13:29

Huge spread yet again.

[ed 123] 13/6/2019 22:52

Fwiw, I can't see Sterling writing off the investment, quite the reverse actually. I think Sterling will stay the course, whatever happens.

The next results almost don't matter. We've got an idea how it will be. What matters is getting the remainder of the Civils sold and then how trading is looking going forward.

If the shares were 9p without the difficult international politics and economics, I'd be a buyer.

Good luck.

[justiceforthemany] 13/6/2019 22:35

About a third of the company is in the hands of the activists Sterling and Luxunion. The big question is would they let the company fold writing off their investment? Or put in an offer/go for another placing? We know H1 Results will not be pretty but an EPS around 2p full year should get shares re-rated to 16p-20p.

[ed 123] 13/6/2019 21:05

Yes, it's a big fall. Looking behind those bare numbers, we can see Low and Bonar have been serially unlucky.

They bought Texiplast at a time when Eastern Europe was about to reduce its civils work and when competition from Asia was about to pick up. After a few years of struggling, they are now selling their whole Civils Division.

They put money into a Saudi joint venture with NATPET, coming on line when the oil price had fallen sharply, resulting in poor demand for its output (there was little money available for sports pitches and suchlike). The venture never made a profit and eventually LWB negotiated a walk-away, writing down the full cost of the investment. Subsequently, the oil price made a partial recovery. (I don't know how that factory is performing these days.)

They moved into China, making Colback for the car industry. They had good initial demand and profit, and set up a second Colback line only to see the US impose tariffs on China, hitting demand for the factory's output.

They had quality problems in their Coated Technical Textiles division. After a couple of years of slowly getting things sorted, they emerged fixed but into a Brexit affected Europe. They are having trouble winning back old customers in mainland Europe. I wonder if some of this is an inclination to avoid buying from a Brexit Britain headquartered company when mainland Europe competitors can supply?

This describes some of the journey from 6.3p eps to a rescue 15p rights issue. They have certainly been unlucky.

Going forward? I just can't see how things will turn out. The geo-political issues are uncertain but important to Low and Bonar. I hope it goes well but at the moment I'm not re-entering here. That may change? If one day I think I can make money by buying back into LWB, then I would do so.

Some are hoping for a takeover. It's possible but Sterling don't give up easily on their investments. I don't think they would accept a bid by another party with the current shareprice around 9p (just my view). Maybe Sterling could take LWB private? It's not their normal style but who knows?

Sorry, I can't write anything of much encouragement. Commiserations to holders.

[justiceforthemany] 13/6/2019 18:54

EPS was 6.4p here not so long ago and shares at 90p! Hard to believe now. A 90% drop in share price...

Sterling and Luxunion started buying in the 60's. Don't seem to be adding at 8-9p though - waiting to make an offer?

[justiceforthemany] 13/6/2019 18:50

Good points Ed and let us hope Trump and Xi compromise at the G20 in 2 weeks time.

Would be interesting to know how US tariffs compare with Europe and Asia for exports from our Chinese factories. My point was they blamed the profit warnings in part to ONE major customer.
Over reliance.

CE has never turned a profit so must be finally sold if a decent offer is on the table.

Dayan seems more capable than De Klerk but time will tell.

[ed 123] 13/6/2019 17:10

Justiceforthemany.

At some point in time Trump will stop the trade hostility. He would like to be re-elected, so I'd guess he carries on for now, as it pleases his support base. Maybe a year from now he announces 'victory' and eases up, just in nice time for the run-up to the presidential election.

[ed 123] 13/6/2019 16:59

Did anyone else watch the closing auction? CC2014? You're good at commenting on this sort of thing.

There were two extensions of time today before the close was uncrossed. So little interest in this one that it would have uncrossed on a buy side price of 9.14p, with the sell side at 9.5p, on a handful of shares. Eventually, someone offered up shares at 9.0p and that became the uncrossing price.

Looked to me that some party was trying to achieve a close well above the last normal trade (8.36p). Why would someone want the closing price to be recorded 'artificially' high?

[justiceforthemany] 13/6/2019 16:54

Closed at 9p.
Helped by what looked like a 167K buy at 1014.
The drop here from 16p to 8p is no doubt mainly due to the Trump trade tariffs.

You would think Trump will need to secure a deal with China at the G20 in 2 weeks. A weak economy will seriously harm his election chances next year.

The lower crude prices should help margins.

[ed 123] 13/6/2019 13:58

Justiceforthemany.

I can see why you might say this but can they do it?

They are in the process of reducing debt to keep safe within their borrowings to ebitda banking covenant. Diversification would cost money (let alone being a distraction for management at a difficult time). I don't think they could or would even want to diversify. Imo (and I suspect their opinion too) they need to focus on raising the performance of the operations they already have. As to exploring other markets, they do have sales offices in places like India, Brazil, Russia, Turkey, so they are already 'out there', trying for new sales. However, they have located their production facilities where there is known and sufficient demand for product (or there was at the time of set-up). They could sell further afield but then there would be added transportation cost and they would have to adjust the factory lines and inputs to meet any new and different local quality standards. There would be start up costs and uncertainty to this, at a time when they don't need any added difficulty.

Imo, they need to improve operational performance and hope that the US/China trade dispute, Brexit and the global slowdown play out kindly for them.

[kinwah] 13/6/2019 13:21

This share price action is ridiculous. My small buy order was filled in an auction at 8.10p.

[dplewis1] 12/6/2019 15:25

Yes all the trades since the midday auction are algo buys except the 50k off book buy above the ask.

[cc2014] 12/6/2019 12:37

9k buy bot still going whilst the sell bot disappeared. Should keep some upward pressure on the price

[cc2014] 12/6/2019 10:29

What a laugh the trades are today.

You can see a buy program buying about 9k shares every 10 mintues or so, provided it doesn't get filled on the bid.

But there also appears to be a sell program selling 16k shares running every 15 mintues or so, provided it doesn't get filled on the offer.

Who will win? Who knows? sometimes they run all day, sometimes they stop part way through.

My money is on the buy program, as it seems predictable and determined. The sell program seems erratic which suggest to me it may only have a few to shift.

[bc4] 11/6/2019 19:55

Well do not buy then, bye