At very best these results tell us EPWN are very unlikely to show significant improvement for a long time.
There is a hidden mini profit warning: from Directors Talk (https://www.directorstalkinterviews.com/epwin-group-plc-fy17-line-industry-outlook-remains-difficult/412749077)
"FY18 outlook: Todays results state that FY18 has started in line with expectations. However, considering recent statements from peers in the industry we take the opportunity to trim forecasts. Revenue assumptions are broadly stable in both FY18 and FY19 but profit forecasts decline by c. 4% and c. 3% respectively as we factor in the continued difficult operating environment, limiting price and volume increases, and cost input pressures."
The change of dividend policy is sensible, but maintaining the promised improved final 2017 dividend is uncharacteristically rash and suggests the board are given a higher priority to city expectations then to the good of their operations.
The best hope for long term shareholders may be a buyer, there is certainly
value in the operations.
Only read the summary but I am pleasantly surprised at the absence of further bad news and the various indications of confidence in their strategy. That may of course be misplaced but as they are ¼ of the way through the current year and feel they can state a new and progressive dividend policy which yields almost 8.5% I tentatively take that as encouraging.
If - and its a big if- the management show over the coming year that they really are in control of what they can deliver then the yield will attract supporters and probably compress significantly. I am holding for blended capital and income over the medium term and expect the market to get greater insight from the analyst call.
Not sure upside is worth the risk but hoping risk reduces over coming 6 months
I doubt the SP will do much over the coming 12 months, so holders are presumably relying on the very good yield. the issue is whether or not it will be cut.
After the recent trading statement and it's reference to "selective acquisitions" my take is that the Board must expect to continue the dividend at the current yield. Normally they wouldn't pay for an acquisition if that would require the dividend to be cut ! That doesn't mean they won't mess up and have to cut it but I suspect that the yield will be safe and support the price around this sort of level ( perhaps up to the low 100's) whilst their strategic & operational improvements are either proven to work 9 and drive longer term value) or not.
So despite the good recovery since the lows some months back this still seems to be a reasonable hold to me for those taking a 2 year plus view AND wanting yield.
I'm a bit embarassed to admit that I've sold my EPWN for a modest profit. I'm a bit concerned that there is no sign of the management buying in, and the price has risen in advance of the dividend. I think that the forecasts are still too optimistic. Maybe I'll be back some time......
Quite. I'll stick around for the time being for the dividend. Not a great deal of confidence in the long term as I don't trust the management not to do the dirty on the shareholders. Costs up, outlook below expectations but dividend up, not a good long term formula. Paying out over £3M in interim dividends of which Kennedy will get a fair chunk, probably enough to cover his buying of & investing in Entu. We may as well have bought it & cut the dividend in the long term interest. But for now I'll take my cut, see how long they can hold it together.
Looking more at the earnings calculations, it might be safer to think about EPS running at around 8 to 9 pence this year and next. My reasoning is that the exceptionals in each year aren't actually that exceptional. You will always have bad debts and you will always have reorganisation in a market like this.
I don't like the management suggesting that they could gear the company up further. It's too risky and is likely to destroy value. They should reduce gearing.
It's a tangled web. Entu has been bought by Latium, owned by Brian Kennedy, former owner of Entu, who also owns 14% of the shares in Epwin. He's got a good deal, hopefully it's in his interests to see that Epwin do ok out of it but who knows. Let's hope the merry-go-round continues a while longer with a steady share price & regular decent divi's, but I won't be taking my eyes of this share & I can't say I'll be here longterm. Learn from the directors/owners, take the money & run when the time is right.
Note the update this morning. It doesn't say much, other than the likelihood that £4m of debtor has gone up in smoke. Lucky new owner of Entu, who presumably has a debt free business, and a pity that it's not Epwin.
In my view this is manageable for EPWN and doesn't alter my view that the business is still good value at this price. I take heart from good Redrow results yesterday, although general construction industry numbers aren't so good.
I came in here with the yield at 6% & it's only the recent falls that have made it 10%. The sentence in the trading statement "commenced a programme aimed at adjusting its capacity and cost base" sounds to me like there could be a review of the dividend whilst the other sentence "continuing our record of strong cash generation and our ability to offer an attractive dividend to shareholders." implies it will be maintained . We'll find out 13th Sept, I intend to hold, expecting an interim of between 2% & 3% of the current SP, hoping of course for a pleasant surprise & the maintaining of 2.2p.
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