Walking the talk
​Tristel develops proprietary infection, hygiene and contamination control products used by: Human Healthcare (branded Tristel, 85% of sales); Contamination Control (Crystel, 9%); and Animal care (Anistel. 6%) organisations. For many years now management have communicated what they’re planning to do - and like clockwork successfully delivered against it, as illustrated again in this morning’s better than expected prelims for the year ending June 2016.
FY16 turnover climbed 11.5% LFL to £17.1m (H1:H2 split 8.1%:14.8%), with 95% derived from every-day consumables and 39% from overseas territories (vs 36% LY), up an impressive 22% LFL. UK healthcare posted 4% organic growth, which we think was creditable, especially given its greater hospital penetration, the current squeeze on NHS budgets and after a flat H1 (-1.8%).
Adjusted PBT (before SBPs of £674k) and EPS came in at £3.2m (+27%) and 6.62p (+20%) respectively, with cash conversion (OCF/EBIT) strong at 148% vs 113% LY; in turn helping to lift net funds to £5.7m (vs £4.0) by the period close. There could even be more one-off distributions in due course, since we suspect the business only needs liquid reserves of up to £3m to adequately fund its internal operations.
Going forward, one of several possible positive catalysts could come from the firm’s application to sell Clo2 products in North America – where the Board has made encouraging progress to date in its discussions with the US FDA and EPA.
We have upgraded our forecasts again – although only marginally this time with adjusted FY17 PBT now pitched at £3.6m vs £3.5m before. Accordingly our price target rises from 135p to 140p/share, with scope for future appreciation in line with hopefully more positive newsflow.
Tristel is a manufacturer of infection prevention and contamination control products. Its key technology is a proprietary chlorine dioxide formulation. Co. has three segments: human healthcare, which includes the manufacture, development and sale of infection control and hygine products including products that incorporate Co.'s chlorine dioxide chemistry, and are used primarily for infection controls in hospitals; animal healthcare, which involves the manufacture and sale of disinfection and cleaning products into veterinary and animal welfare sectors; and contamination control, which addresses the pharmaceutical and personal care manufacturing industries.
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