# Epwin Group PLC Q&A with Zeus Capital (LON:EPWN)

- Link: https://www.directorstalkinterviews.com/epwin-group-plc-qa-with-zeus-capital-lonepwn/412790404
- Published: 2019-08-14T08:29:19+01:00
- Author: Amilia Stone

**Epwin Group plc** (LON:EPWN) is the topic of conversation when **Zeus Capital’s**
Equity Research Director Andy Hanson caught up with DirectorsTalk for an exclusive
interview.

**Q1: Epwin Group, they’ve just provided a half-year update, can you talk us through
the highlights?**

**A1**: They really just flagged that trading in the first half of the year has 
been good, revenues in line with last year but importantly, like-for-like revenue
growth is ahead of last year. I think this will correspond to a reasonable performance
in terms of profitability relative to last year as well so in terms of trading, 
everything going along pretty well which is good in a difficult market.

The important thing today is the announcement of the sale & leaseback that they’ve
entered on the new facility up in Telford, this will generate an £8 million in cash
surplus net during the year which we then factor into our net debt forecast.

**Q2: Just talking about forecast, have you had to adjust it then?**

**A2**: The only big change today has been in net debt & we’ve reduced our net debt
from £25 million down to £17 million for FY19 so a big reduction. This now leaves
net debt at just 0.6 times EBITDA which is a very conservative level relative to
most companies in the UK, mid-cap sector, at the moment.

In terms of P&L, we’ve not changed our P&L forecasts & we’re very happy as I say
with the trading update in terms of the revenue performance & the profit performance
which Epwin Group are very confident of achieving our FY forecasts.

**Q3: How do you see the Epwin Group valuation in terms of an investment?**

**A3**: The valuation does look very very compelling. On an EV/EBITDA basis, trading
a little over 4 times which is very cheap, PE is sub 7 times & we have got a yield
crossover in the fact the shares are on a perspective yield of over 7%.

So, the market, I think, is undervaluing the shares at the moment, I think that’s
because the market is still focussing on the cost headwinds & the customer losses
that the business experienced in FY17 & FY18.

I think the rating will improve once the company achieves its FY19 numbers so I’m
still very confident on that front.

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