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Market capitalisation
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Research: Industrials
Epwin’s H124 trading update confirmed that management expects to achieve full-year expectations despite market headwinds. Long-term, well-established growth trends imply that the company is well-placed to leverage increasing demand for its energy-efficient and low-maintenance building products. It offers an attractive investment case with the potential for uplifts from additional self-funded M&A. It trades on an FY24e P/E ratio of 8.8x, materially below the long-term average of 10.5x, and yields nearly 6%. The share buyback programme should help support the share price.
Epwin Group |
Robust H1 performance in tough markets |
H124 trading update |
Construction and materials |
28 August 2024 |
Share price performance
Business description
Analyst
Epwin Group is a research client of Edison Investment Research Limited |
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Epwin’s H124 trading update confirmed that management expects to achieve full-year expectations despite market headwinds. Long-term, wellestablished growth trends imply that the company is well-placed to leverage increasing demand for its energy-efficient and low-maintenance building products. It offers an attractive investment case with the potential for uplifts from additional self-funded M&A. It trades on an FY24e P/E ratio of 8.8x, materially below the long-term average of 10.5x, and yields nearly 6%. The share buyback programme should help support the share price.
Year end |
Revenue (£m) |
PBT* |
EPS* |
DPS |
P/E |
Yield |
12/22 |
355.8 |
16.5 |
8.9 |
4.5 |
10.2 |
4.9 |
12/23 |
345.4 |
18.0 |
9.7 |
4.8 |
9.4 |
5.2 |
12/24e |
345.5 |
19.4 |
10.4 |
5.0 |
8.8 |
5.5 |
12/25e |
349.0 |
19.7 |
10.7 |
5.2 |
8.6 |
5.7 |
Note: *PBT and EPS are normalised, excluding amortisation of acquired intangibles, exceptional items and share-based payments.
The trading update confirmed that activity in H1 was in line with management expectations and that underlying operating profit was also in line with last year’s strong comparative. Furthermore, the underlying operating margin is ahead of last year. Despite lower PVC prices and reduced surcharges, underlying revenue is expected to be 8% lower than H123, but only 2% lower than H223, reflecting lower new build and RMI demand.
Epwin ended the period with net debt of £19.5m (FY23: £14.4m), reflecting the £4m final dividend paid and £3.3m invested in the value-enhancing share buyback programme. This implies a net debt to adjusted EBITDA ratio of 0.6x and c £55m headroom in facilities to support the company’s strategic objectives.
The company completed its initial share buyback programme in April and extended it by a further 3m shares, 2.7m of which were repurchased by the statement date (6 August) and subsequently cancelled. Management expects the current extended programme to be completed by the end of September. Epwin expects to announce H1 results on 11 September.
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Research: Healthcare
Basilea has announced yet another milestone following the European Commission (EC) approval for Cresemba’s use in the paediatric population (in invasive aspergillosis (IA) or mucormycosis (IM)). The approval extends the market exclusivity of Cresemba by two years to October 2027, which triggered a CHF10m milestone payment from Pfizer, its European license partner. The EU nod follows the December 2023 approval in the US in the same indications, making Cresemba the first azole to be approved for children across the two key regions (it has been approved for adults since 2015). Cresemba reported strong in-market sales in H124, and the second half of the year is expected to be milestone rich with another CHF25–30m in payments expected, based on management guidance.