Interim Results 2017 - Still Travelling
Despite underlying KPIs emerging at the top end of expectations, the market appeared to focus on a slightly cautious outlook statement, a decline in Civil Engineering profits and a higher than expected cash outflow. Macro-economic caution aside, we believe that the “negatives†of the interim statement are essentially short-term and, in the case of cash flow, indicative of further strategic progress. Reviewing our forecasts, we maintain our current year PBT forecast but increase 2018 by 2.6% and 2019 by 4.7%. Critically, we now look for higher dividend payments across the forecast timeframe at earnings cover of over 2.0x. The shares look inexpensive in comparison with the wider peer group, on a range of comparative ratios. On dividend yield particularly, we believe that theoretical value is 127p. With no scheduled news flow from Low & Bonar until November 2017, share price performance may be prompted by further forecast upgrades. Given the current width in consensus forecast ranges and pessimistic low-end expectations, we believe that this is entirely possible before end financial 2017.
Low & Bonar manufactures and supplies performance materials commonly referred to as technical textiles. Co.'s business units are: Building and Industrial, which supplies technical textile solutions for applications in air and water filtration, building and roofing; Civil Engineering, which supplies woven and non-woven geotextiles and construction fibers used in infrastructure projects, including road and rail building, land reclamation and coastal defense; Coated Technical Textiles, which supplies a range of technical coated fabrics; and Interiors and Transportation, which supplies technical fabrics used in transportation, interior carpeting, resilient tiles and decorative products.
Capital Access Group advises companies on effective engagement with investors. Our experienced team offers market-leading access with hard-to-reach investors, including smaller institutions, pension funds and private client fund managers. These under-serviced investors are located not only in London but across the regions of the UK and Europe. We have an unrivalled knowledge of this extensive audience, to whom our published research is distributed, as well as to larger institutions. We offer this service as part of an integrated investor communications strategy to promote a company’s investment story.
Our clients, ranging from AIM to FTSE 100 companies, benefit from our professional, long-term relationships with investors. Not only do we identify and target investors, we contact them directly and relay their views back to clients with analysis, interpretation and advice. This ensures that our clients are in control of their investor engagement. The objective is to improve the reach and engagement with investors, which in turn strengthens the share price.
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