Goodwin - A share to own and sleep well
I only recently came across Goodwin (LON:GDWN), and prompted by reader comments on Stocko, decided to delve into the company. I have to say I was very impressed by the company, and posted a somewhat lengthy comment on one of the SCVR threads. I think Goodwin deserves a separate discussion, so I have copied my previous comments below:
Goodwin's latest report I came across was really impressive – its contents were clear, precise, and easy to understand. Reading the report left me with the conviction that Goodwin could be a solid long-term investment. It's not often one comes away with a feeling of conviction after reading a company report. About the company
“Goodwin PLC is a mechanical and refractory engineering company. The Company specializes in the design, manufacture and supply of products and solutions. The Company’s segments include Mechanical and Refractory Engineering. The Mechanical Engineering segment is engaged in casting, machining and general engineering. “
Some extracts from the latest report:
“After due consideration, from listening to shareholder enquiries at the AGM, we recognise the importance of providing more frequent updates. Considering our Group's diverse and complex operations, we have decided to introduce quarterly trading updates to keep our investors more informed.”
“The new Calciner at Hoben International Limited has proved to be approximately 15% more efficient than the original Calciner due to the strategic design modifications that were incorporated into the initial design. This efficiency improvement has translated into enhanced productivity and energy cost savings. Hoben's sales of Soluform concrete bags continue to grow and there is wider adoption amongst some project engineers who are increasingly favouring it as their product of choice.”
“Keeping one eye on the future, our patent pending polyimide resin production company, Duvelco Limited, remains on track to have its production plant commissioned and operational by June 2024. All the major capital expenditure has been completed with the majority of any spend left being labour to finish off the wiring, pipework and commissioning. All initial chemicals to make up to 30 tonnes of polymer resin are on site, so there should not be any large increases in working capital affecting the Group's future cash position, as it should become self-funding once operational.”
Searching the Stocko forum I also came across
“However, for investors looking for businesses with the ability to deliver long-term compound growth, I think Goodwin could be worth further investigation.” Roland, 22 Dec 2022
“...personally I wouldn’t want to chase the share price any higher, without having much more detailed, and reliable knowledge about what level of profits we should expect to see in the coming few years. If any readers have more detail on that future outlook, do please share it, and what your share price targets are? I believe we have some very knowledgeable members here on GDWN.” Paul, 11 Aug 2023
“The UK steel industry has been under pressure for decades, hit by rising costs, falling demand and intense competition. Goodwin runs one of the oldest foundries in the country but this robust family business shows what can be done with ingenuity, clear sight and true grit. At £50.40, these shares are a long-term buy.” Midas Verdict, 11 Dec 2023
I was also highly impressed by the detailed plans drawn up by the company in setting up Develco.
Roland's gave a neutral stance on 22 Dec 2023 but noted "With Goodwin, I do see mention of intellectural property and interesting patents. Along with the track record and the positive culture, I'm inclined to think that it's worth a considerably more expensive rating than the average engineering stock."
Bear points mentioned by Roland include possible order delays from Goodwin's customers, net debt position making share price more sensitive to doubts on trading performance, modest capex (imminent cash performance improvement indicated by company).
I think the decision to introduce quarterly trading updates to keep investors more informed will help bring the company to a larger number of investors attention. Also worth mentioning a comment by rhomboid1 on 20 Dec 2023:
"…it’s important to note that they are now at most 6 months away from the launch of a new polyimide range of products designed for extreme applications where it’s unparalleled thermal range & self lubricant characteristics will command a very high price…they’ve designed it to slot straight into use cases such as aero engine components, semi conductor manufacturing, & glass bottle manufacturing where a chemically identical competitor is now out of patent. They are already in communication with prospective customers & today we learnt that they’ve raw materials for 30 tonnes of output..if their aspirations are realistic this 30tonnes alone will in itself be by far the largest part of the business in valuation terms….the costs of developing this have largely been absorbed…the benefits will accrue over future years."
(I hold)
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32 comments
An announcement Duvelco Limited's production plant has been commissioned and operational should be coming out soon (all initial chemicals to make up to 30 tonnes of polymer resin already on site means no large increases in working capital, so Duvelco should become self-funding once operational).
And joining the FTSE 250 tomorrow. I imagine most funds are light on this name, so it could be an interesting couple of weeks ahead.
Great article on one of my larger positions. Thank you also for the sub stack link to a very detailed and useful analysis.
Nice to see SP moving up sharply, not sure why. Perhaps the last Trading report on 14 March holds a clue when it was reported Goodwin Steel Castings had a record order input of £77.2 million last year, higher than the total input of the previous five years. This increased workload involved highly technical and specialist castings, which boosted the foundry's profits. Most of these components had gone through development and were being delivered successfully.
The report also highlighted Goodwin's confidence in securing several contracts within six months for their Easat Radar Systems (although the tendering process was still ongoing at that time). They said the Easat team was focused on providing advanced and commercially attractive radar systems, and would issue progress updates as the situation develops.
From ADVFN, and highly relevant to the investor case for GDWN...
someuwin17 Jun '24 - 21:25 - 1469 of 1469
Duvelco Ltd
Stand: 1720
The launch of a new material: Duvelco® presents Ducoya®, a patent–pending material, combining the beneficial properties of metallics, ceramics and plastics to help solve your critical challenges. Discover how Ducoya can enhance your products’ performance, cutting costs in demanding applications.
htTps://advancedmaterialsshow....
And then as if by magic - I have read something this morning.
No new news, but an excellent and thorough analysis of Goodwin (LON:GDWN) and its growth prospects by Alex at sweet stocks on substack appeared in my inbox. I have not yet read in detail and there does appear to be a lot of detail to like.
https://sweetstocks.substack.c...
cheers
Mark
Thanks for the link Mark. I did manage to top up with small amounts recently.
3 June 2024 RNS reports that directors have also been busy buying!
Thanks for replying with your thoughts. Will take a look at the link.
Interesting read. One comment I wasn’t sure about was the reference to being in the FTSE All share index. Stocko’s page for the company doesn’t suggest it is in any index, but maybe it is.
I was thinking about this the other day when looking at the FTSE250 index changes. Assuming there’s a free float test, I’m guessing getting into indices is difficult but companies with a strong family holding like Associated British Foods (LON:ABF) seem to find a way so maybe there is a way too for Goodwin (LON:GDWN) one day.
Anyone read anything to explain yesterday’s move up? This share has been quite jumpy (up and down) of late so maybe it’s nothing.
No I haven't read anything. I think it unlikely that there is anything out there. There are no forecasts, no analyst coverage and the company is simply getting on with business. The shares are expensive enough on historicals to have shaken out most short term holders already (you can see that by the recent posts on this thread) - very few shares are traded daily, the volatile share price reflects shortage of further sellers when there are buyers and price subsides again without buyers. I'd expect this to continue - but there does seem to be a rising trend which perhaps indicates investors are more willing to top up as business steadily grows.
Investment in long term businesses looks to have been very well executed with increasing capacity and order books extending many years, decades even, into the future. The new lithium fire extinguisher business looks to be growing into a rapidly expanding desparate market and prospects for the new polymer business enormous, but as yet unproven.
Shame I didn't buy more when it was cheap. Except it didn't look cheap then - in the same way I think that there is a very good chance that today's price will look cheap in a few years time. Recent buying by the controlling family tends to support that view.
Just my opinion and I my research on the company is very limited compared to some,
cheers
Mark
Just think this is now ludicrously expensive at 6,640p.
I certainly wouldn't sleep well with the SP at these levels to answer the title. Priced for perfection - anything goes mildly wrong and this will crash.
BWDIK
For me it's a major drawback that I can't see any forecasts. Are any available anywhere?
Not really, from Paul's last review, last month "Forecasts - there don’t seem to be any, with Shore saying it intends to introduce figures in due course. But we have good guidance from the company today, which I’ve worked out as c.231p EPS this year, as above."
So therefore 29x PER for an engineering firm!
Why?
Goodwin (LON:GDWN) isn’t a plain vanilla engineering business…it’s developed a number of highly profitable new products that are just ramping up eg https://advancedmaterialsshow....
Perhaps the most immediate opportunity is the AVD fire https://www.avdfire.com/ division with it’s lithium battery fire suppression range..they move into a new 50000 sq ft factory this month as sales are doubling every year.
Also new last month is a new 60000 sq ft factory in Chennai India to double capacity for their pumps business
Meanwhile their core foundry business has just completed an expansion to double its capacity…for the last 10 years it’s been running at about 50% of capacity..the new work to fill it is focussed on Defence (AUKUS etc) & Nuclear..all high margin decades long programmes.
Looking backwards isn’t going to capture any of this but it’s all in the AR’s along with an awful lot more..I’m biased as I believe this business is a superb opportunity to tap into some major growth opportunities for decades to come.
I should add that there are no f’casts but they have an April y/e so none of the expansionary activities will be captured in the current year’s numbers
Thanks Rusty2. I can see how you came to that forecast. I would be looking for a company that does not have forecasts to be cheaper than companies that do have forecasts. I can see that its prospects are looking good, but for me it is too expensive. I want my companies performance to be fairly easy to predict, and for the shares to be at a reasonable price. So it does not fit in with my rather short term strategy. But I can see that it might be good for a long term holder.
Hi WarranterStar, that was Paul's forecast based on the latest update, not mine.
I agree the price looks too expensive and l have sold out, if the share price falls down, l will probably buy again.
Not sure why, but the sharp move upwards of the SP bodes well for the longer term I think. Disappointed I didn't top up during the recent dip, will continue to hold longer term.
Enjoyed watching that Sellafield video, thanks for posting.
There must be some mighty technology in those lids to allow monitoring of what's happening inside without releasing anything. Impressive. And I don't know if they chose the presenters carefully but I was comforted by how down-to-earth the Sellafield staff interviewed were!
DIRECTORS' SHAREHOLDINGS
The Company received notification on 15th April, 2024 of a number of transactions in which Mr. T. J. W. Goodwin, Mr. B. R.E Goodwin and Mr. J. W Goodwin are interested.
J W Goodwin buy 850
B R E Goodwin sell 668
B R E Goodwin buy 675
T J W Goodwin buy 1105
Rhomboid kindly posted a link on Twitter to this fascinating video from Sellafield showing Goodwin's shielded waste container. Goodwin is a unique company in my opinion, supplying critically important components to the nuclear and defence industries.
&ab_channel=SellafieldLtdFascinating video!
Don't Avingtrans (LON:AVG) also make those or is that a different product?
Avingtrans (LON:AVG) supply another type of box ..details are here ..https://assets.publishing.serv...
the 29 tonne ..or 30 tonne SSB containers that Goodwin supply are a rather larger & more complex item but the volumes required have shifted significantly since that document was issued ..not least as alluded to at approximately 7.54m into that sellafield video
OK, thanks for that information.
Goodwin Family also marginally increased holding, in value terms another £500k - 54.13% holding
Goodwin (LON:GDWN) have just launched their Duvelco website this week…entering “the largest market we’ve ever entered”
Interesting post by rhomboid1 on SCVR thread, 14 March 2024:
"Goodwin (LON:GDWN) is my largest position so my bias is considerable….my belief is one of the few free lunches we get on the stock market is when a business is complex & fast changing but ignored by analysts and
off the radar of institutions….that enables private investors who have the stomach/patience/time available to understand the business evolution & the significance of the pieces of information that are out there.…to bag a free lunch ..obviously that only applies if the business is any good…in this case it is one of best long term compounders on the LSE so there’s a chance they might know a thing or two about business building ..
we’ve also not *yet* seen the fruits of all the enormous step up in activity/capex/innovation/physical footprint over the last 10 yrs or so, but in addition you’ve also got 3 bought & paid for potentially transformative projects just starting to ramp up…first is AVD..https://www.avdfire.com/what-i...
new factory opens next month 2.5 acre site 50000 sq ft factory …sales doubling every year for the foreseeable future (AGM discussion ) …then the ramp up in EASAT …https://www.easat.com/ which is imminent ..albeit later than initially appeared likely…and then from June you get Ducoya products beginning their journey into “the largest market we’ve ever entered”
..& the rest of the business is looking well set too….(understatement alert) …the foundry was running at half capacity..they’ve just finished extending it & re-equipping it to double capacity…& they expect to be flat out for the next decade or more…predominantly with high margin U.K. & USA defence work…I could go on but I’d probably outstay my welcome…"
Goodwin publishes its March 2024 Trading Update today:
A little more detail on what Goodwin (LON:GDWN) does:
Goodwin PLC, together with its subsidiaries, provides mechanical and refractory engineering solutions primarily in the United Kingdom, rest of Europe, the United States, the Pacific Basin, and internationally. The company designs, manufactures, and sells dual plate check valves, axial nozzle check valves and axial piston control, and isolation valves for large construction projects, including the construction of naval vessels, nuclear waste treatment, nuclear power generation, liquefied natural gas, gas, oil, petrochemical, mining, and water markets; submersible slurry pumps; and radar surveillance systems for defense contractors, civil aviation authorities, and coastal border security agencies.
Unsurprisingly I agree with your view….in spite of my best PR efforts this company still flies under the https://www.easat.com/ radar..they are expanding on many many fronts…not least ~doubling their pump manufacturing capacity in India..this pic is from January & shows the progress on their new 7690 sq m factory ..I can recommend attending the AGM as a way of understanding more about your investment