Edison Investment Research Limited
London, UK, 14 March 2022
Epwin Group (EPWN): The best is yet to come FY21 ended on a firm note, modestly exceeding expectations. Price inflation will come through in a strong revenue performance but also some temporary margin dilution. As a result, the benefits of having repositioned and strengthened the group in recent years may not be visible to investors at first. We believe Epwin is well placed to regain and exceed historic levels of profitability as industry pricing issues work through. This scenario is not fully reflected in estimates, or the company's valuation, but the foundations are in place for this to happen.
Epwin's valuation metrics have moved to a small premium versus most of its UK building materials peers outside the most favoured stocks. Historically they have been in a close cluster, which suggests little differentiation was being made for individual exposures and prospects. The dividend yield is expected to remain attractive and we believe delivering the margin potential referenced above would translate to superior earnings growth.
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1300969 14-March-2022