The company reported performance in-line with expectations
Companies: Epwin Group PLC
Construction manufacturer Epwin Group Plc (LSE: EPWN) announced a trading update and gave notice of its half year results this morning, reporting performance in-line with the Board’s expectations, saying it remained confident of long term growth in the RMI (Remodelling Market Index) market, but acknowledging economic uncertainty had been caused by Brexit.
Broker Zeus Capital said the group’s trading had been on target in the first six months of the year, and that they were leaving estimates unchanged at +2% organic and +13.7% group revenue (£291.1m). However, they highlighted that H2 performance was uncertain:
“Trading has remained on course in the first six months of the year, albeit today’s statement does highlight uncertainty in H216 created by June’s referendum, in line with comments made by other companies in the sector.”
Delivering Growth
Analyst Andy Hanson commented that since its July 2014 IPO, EPWN’s FY16 profit estimates have increased 23%, the business has met or beaten earnings forecasts in each period and delivered two acquisitions:
“The acquired businesses met management’s stated strategy of broadening the product portfolio, offering structural growth opportunities and were completed within the targeted valuation range. Despite building a reputation for consistent delivery the FY16 PER multiple has declined from 8.3x at the time of the IPO to today’s 7.4x multiple.”
According to Zeus, recent 20% fall in the company’s share price meant the dividend yield was 2x covered by earnings:
“Trading on just 7.7x current year earnings falling to 7.4x in FY17, the c.20% share price decline appears to be discounting a significant cut to numbers…The yield of 6.0% is over twice covered by earnings and the low level of debt is reassuring and offers the potential for further acquisitions to drive growth.”
The company said:
“The Group continues to progress with its strategy, focused on operational improvement, selective acquisitions to broaden our product portfolio, and cross‐selling across our brands.”
Epwin Group will announce H116 on 14 September 2016.