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BUZZ-View from the buyside: BMO's Wilson backs kitchen supplier Howden
February 14, 2017 / 9:33 AM / 10 months ago

BUZZ-View from the buyside: BMO's Wilson backs kitchen supplier Howden

** BMO fund manager Thomas Wilson adds to kitchen supplier Howden Joinery “substantially” over last six weeks to make UK-focused stock biggest position in midcap fund

** Stock largely out of favour (-c.20% since Brexit vote) on concerns around Brexit-led slowdown in domestic spending (co sells >350,000 kitchens/yr) & headwind from sterling’s slide increasing import costs

** However, Wilson, who invests on a medium- to long-term view (3-5 yrs) sees substantial value in business

** Values co on a DCF basis & says even inputting 2008-2009 type scenario (margins falling 300-400 bps/ LFL -10%) sees no downside to shares

** Co in Nov reports slowing growth: UK depots total rev in H2 to Oct. 29 at +4.1% vs 9.1% in H1; says gross margin performance has been in line with expectations

** Since then signs show consumer spending losing momentum: In Jan, British households spending grew at one of the slowest annual rates of the past 3 yrs, data from Visa shows

** Analysts view: “5” buy or higher , “8” hold & no sell or lower ratings, median PT 415p (stock traded below this level over last 3 weeks & >2500X 2008-09 values)

** Stock now accounts for >5% of value of fund (RM:; RM:

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