Solid H1 results, promising outlook
Strix H1 19 results published today: ‘The Group has delivered a solid H1 performance and is trading in line with full year market expectations’. Accordingly, we leave our FY 19/20 forecasts unchanged. Reassuringly, Strix reconfirms at this stage its intention to pay total dividends of 7.7p per share for FY 19, +10% YoY. This should underline the income attractions of this stock to investors.CEO Mark Bartlett highlights in his update the operating progress achieved by the Group in H1 together with comments on stable market share as the leading player in the global kettle controls market. This is a market still growing at c. 2% pa, in spite of well-flagged macro headwinds.
Re operating momentum in 2019, we signal the appointment of a CCO (Chief Commercial Officer) to increase focus on new product innovation plus the new, enlarged manufacturing facility in China, where construction is due to start imminently, with expected completion in Q1 2021. Agreement has also been reached for the recently acquired Astrea product to be launched globally under the Philips brand. Taken together, these initiatives highlight the scope for future value creation at Strix and the forward planning of management.
Time to revisit the Strix investment case. The shares have been treading water in recent months, in part reflecting the sell-down of a major institutional shareholding. In our view, this appears an attractive entry point to the shares. Valuation multiples are undemanding at 11x PER, 9.6x EV/EBITDA. The dividend yield at the current price is a compelling 4.7%. We estimate fair value for the shares in the 220p-240p range.
Strix is a unique strategic asset on the UK stockmarket, with industry leading margins and a number of growth initiatives. It also screens well for investors with a ‘sustainability’ mandate, with a focus on health products and improved filtration.
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.
Equity Development enables companies to become better understood and supported by investors. Since our launch in 1996 we have consistently focused on helping our clients improve their communication and relationships with both existing and potential shareholders. Our clients have come from a wide variety of sectors and domiciles, are both private and quoted and range in size from micro-cap to $multi-billions. We offer free access to company research notes written by experienced analysts. These notes include detailed forecasts, financial models and a fair value. We host regular Private Investor Forums at which investors have the opportunity to hear company directors present, and to ask questions. These are free to attend. We broadcast live Webinars with company management that include active Q&A. We also make the recordings available online. We arrange face to face meetings between private investors and company management. We are active users of Twitter, commenting daily on company news, share price moves, Directors’ Dealings, Equity Development Research Notes & Events.
Unfortunately, this report is not available for the investor type or country you selected.
Browse all ResearchPool reportsReport is subscription only.
Thank you, your report is ready.
Thank you, your report is ready.