Recent trading proves challenging
At the time of the interim results in September it was clear that Q3 trading had proven volatile. Unfortunately, this has continued into Q4, with the greatest weakness witnessed in the highest margin areas, compounding the impact of operational gearing. Should the share price decline further as this trading update is digested and test new lows, we feel this presents a strong medium-term opportunity. One should bear in mind that the Group owns one global brand and two premium regional brands (with a desire to distribute globally). The Group’s largest market (kettle controls) is now 20%+ below its previous sales peak in 2019.Our new estimates (see adjustment to prior expectations on page 2) do not factor in much recovery in FY25. Notwithstanding the downgrades, the Group continues to operate comfortably within its core net debt banking covenant.
We still see material underlying worth in the global (Strix) and regional /premium (Billi/LAICA) brands but lower our current fair value in line with estimate changes to 102p / share.
Strix Group is a holding company. Through its subsidiaries, Co. is engaged in the designing, manufacturing and supply of kettle safety controls and other components and devices involving water heating and temperature control, steam management and water filtration. Co.'s core products are kettle safety controls, which are responsible for disconnecting the power to the heating element when either water has boiled, operated with no water present, or in some products when the kettle is lifted off its base.
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