Epwin Group - Solid H223 leads to useful earnings upgrade

Epwin Group’s H223 trading was robust and management has navigated inflationary pressures well. As a result we have increased our FY23 and FY24 underlying operating profit estimates by 13.6% and 10.3%, respectively. Longer term, well-established growth trends imply that Epwin is well placed to leverage off increasing demand for its energy-efficient and low-maintenance building products. Management action contributed to overall margin expansion, a feature that we expect to continue in FY24. Epwin offers an attractive investment case with the potential for uplifts from additional self-funded M&A. It trades on a P/E ratio of 7.4x, some 30% below the long-term average of 10.7x, and yields 6%.