Zeus Capital Equity Research Director Andy Hanson caught up with DirectorsTalk to discuss Epwin Group PLC (LON:EPWN)
Q1: Now Epwin Group, they posted their first half results this morning, Andy how did the results look?
A1: They’ve had a very good first half driven by the acquisitions they did in the final quarter of 2015 so revenue increased 15.5% to £143 million, most of that was driven by the acquisitions, the core business was flat in terms of revenue which I think in the greater scheme of things is not a bad result. So looking forward to the end of the year I think they’ll do about 18% or 19% profit growth this year which in the greater scheme of things does look a good result.
Q2: I know you touched on this but what’s been happening in the underlying market & how is the business performing there?
A2: Well as I said the core business is sort of flat in the first half which I think mirrors the RMI market which Epwin Group are heavily focussed to so they’re trading broadly in line with the market which is reassuring, you look at bother statements from other companies out there, I think a flat performance is pretty good. Obviously the referendum in June caused a bit of turbulence in trading & has clouded the visibility a little bit but the fact that the group seems to have traded through that is very much a positive.
Q3: How does the valuation for Epwin Group look?
A3: The shares still look really good value, on a P/E basis they’re trading at 7.5 times current year which falls to 7 times next year, you compare this to the wider sector which trades on about 14 times multiple. So even factoring in Epwin’s smaller size & maybe lower growth in the core business, the discount is still pretty good & the yield on it is pretty handsome at the moment, at the current share price the yield is about 6.2%.
