reports
- Andy Hanson
Audio Note: Norcros - Sale of Johnson Tiles UK streamlines the busines...
In this audio note, Zeus’ Andy Hanson summarises the investment case for Norcros. Norcros has announced the sale of its Johnson Tiles UK business to the current management team for a consideration of £1.0m, with a further modest earnout based on the equity value of the business, both payable in April 2028. Listen to the audio note below, and read the full research here.
- Toby Thorrington
Norcros - Sale of Johnson Tiles UK agreed
Norcros’s disposal of Johnson Tiles is the latest strategic activity taken by management to better allocate capital to fit with priorities. Last year it closed its UK adhesives operation. Norcros has a compelling investment case, where its new product development initiatives, market positioning and self-help initiatives allow it to take market share in both the UK and South Africa. Its rating is low at 6.0x FY24e P/E, which is attractive, especially when compared to its yield of 5.4% on its well...
- Andy Hanson
Audio Note: Norcros - FY24 trading update
In this audio note, Zeus’ Andy Hanson summarises the investment case for Norcros. Norcros has provided a FY24 trading update for the year to 31 March 2024 showing revenue and profitability to be in line with expectations. Listen to the audio note below, and read the full research here.
- Toby Thorrington
Norcros - FY24 trading in line with expectations
FY24 trading underpins Norcros’s compelling investment case, where its new product development initiatives, market positioning and self-help initiatives allow it to take market share in both the UK and South Africa. We believe that Norcros’s key strengths are underappreciated and that legacy issues have been resolved. Its rating is low at 5.6x FY24e P/E, which is attractive, especially when compared to its yield of 5.7% on its well-covered dividend. We retain our estimates and value the shares a...
- Toby Thorrington
FY24 matching up to our expectations
In meeting expectations for FY24, Norcros has demonstrated business resilience in the face of challenges in both of its primary markets. A positive cash flow performance has also left year end pre IFRS16 gearing below 0.9x underlying EBITDA. In our view, neither virtue is reflected in the company’s valuation and the 1 May Capital Markets event should help to shed more light on the company’s strategy, market positions and medium-term prospects. Encouragingly, UK margins improved further where...
- Andy Hanson
- Andy Hanson
Audio Note: Norcros - Strong historic growth, steep discount to peers ...
In this audio note, Zeus’ Andy Hanson summarises the investment case for Norcros. Norcros, a market leading provider of high quality, design-led bathroom and kitchen products in the UK and South Africa, is trading significantly below Zeus’ estimate of intrinsic value. Listen to the audio note below, and read the full research here.
- Andy Hanson
- Bob Liao
- Carl Smith
- Daniel Slater
- Rachel Birkett
- Robin Byde
- Robin Savage
- Zeus Research Team
- Andy Hanson
Norcros (NXR LN) - Initiation
Norcros, a market leading provider of high quality, design-led bathroom and kitchen products in the UK and South Africa, is trading significantly below Zeus’ estimate of intrinsic value. This note focuses on the market leading positions and performance of its UK business whilst arguing Norcros South Africa (NXRSA) has become underappreciated despite consistently growing over the last decade to become a major player in the SA market. Zeus initiate today introducing FY24-FY26 forecasts. Based on t...
- Andy Hanson
- Bob Liao
- Carl Smith
- Daniel Slater
- Rachel Birkett
- Robin Byde
- Robin Savage
Zeus Top Picks for 2024
On 9 January last year, we set out our ten top stock picks for 2023, for what turned out to be another relatively poor twelve months for UK equities due to two wars, stubbornly high inflation and further tightening of monetary policy. This was even as other major markets, such as the US, largely recovered in the year. In the 2023 calendar year, the AIM All-Share index fell 8.2% and is still 42% off its 2021 high. From the release of our 2023 top picks note, the average total return (assuming div...
- Toby Thorrington
Norcros - UK margins up materially, South Africa stabilising
Norcros’s compelling investment case was underpinned at the half year where underlying operating profit was down less than 3% despite material revenue pressure. Group operating margins rose 60bp, the UK business reported record underlying profits and Norcros continued to take market share in both the UK and South Africa. We believe that Norcros’s key strengths are underappreciated and that legacy issues, notably the pension deficit, have been resolved. We retain our estimates and value the share...
- Toby Thorrington
Overlooked and undervalued
Norcros has leading positions in its market segments built upon strong brands, new product development, channel diversity and supply chain strengths. It is seeking to drive further market share gains organically by intensifying group synergy benefits and through M&A activity. H1 results saw an 8.3% reported group revenue decline (or -4.1% on a constant currency, LFL basis) was substantially driven by lower demand in South Africa while the UK was broadly flat y-o-y. EBIT came in 2.7% lower (unch...
Norcros: 1 director
A director at Norcros bought 30,000 shares at 150p and the significance rating of the trade was 70/100. Is that information sufficient for you to make an investment decision? This report gives details of those trades and adds context and analysis to them such that you can judge whether these trading decisions are ones worth following. Included in the report is a detailed share price chart which plots discretionary trades by all the company's directors over the last two years clearly showing Cl...
- Toby Thorrington
Norcros - Strong anchors weather the storms
Norcros’s total revenue grew 2.1% in Q124 versus a strong comparator period despite tough UK market conditions and power outages in South Africa as the company’s strong service offering and multiple routes to market allowed it to unlock market share opportunities. We continue to believe Norcros’s key strengths are undervalued and that most, if not all, of the legacy issues, particularly the pension deficit, have been resolved. We retain our estimates and value Norcros at 246p, implying c 50% ups...
- Toby Thorrington
Norcros - New CEO likely to pursue existing strategy
Norcros’s final results highlighted a solid FY23 performance, and although we have reduced our estimates to reflect a weaker macro outlook, we believe Norcros has an excellent base to evolve its strategy, which should allow it to unlock significant market share opportunities. We also believe that its key strengths are undervalued and that most, if not all, of the legacy issues, particularly the pension deficit, have been resolved. We have trimmed our valuation from 252p/sh to 246p, implying c 50...
- Toby Thorrington
Norcros - In-line update highlights undervalued entity
Norcros’s FY23 trading update highlighted a solid performance, particularly in the UK in H2, as well as the closure of the loss-making Norcros Adhesives division. We believe that Norcros’s proven strategy remains on track, which should allow it to unlock significant market share gain and M&A opportunities given its robust balance sheet. We also believe that its key strengths are undervalued and that most, if not all, of the legacy issues, particularly relating to the pension, have been resolved....
- Andy Hanson
- Bob Liao
- Carl Smith
- Mike Allen
- Rachel Birkett
- Robin Byde
- Robin Savage
- Andy Hanson
- Bob Liao
- Carl Smith
- Mike Allen
- Rachel Birkett
- Robin Byde
- Robin Savage
Zeus Top Picks for 2023
On 10 January last year, we set out our ten top stock picks for 2022, in what turned out to be a very poor twelve months for global equities, due to war, accelerating inflation, political instability and recession fears. Between 7 January 2022 and 31 December 2022, the AIM All-Share Index declined 30.0%, whilst the average performance of our ten top picks was -24.7%, a modest relative outperformance. In this note we discuss the performance of our 2022 top picks, equities trends in 2022, and our ...
- Toby Thorrington
Norcros - Well placed to gain market share
Norcros’s interims highlighted a solid H1 performance, and although we have reduced our estimates to reflect a weaker outlook into FY24, we believe that Norcros’s proven strategy remains on track, which should allow it to unlock significant market share opportunities. We also believe that its key strengths are undervalued and that most, if not all, of the legacy issues, particularly the pension deficit, have been resolved. We have reduced our valuation from 314p/sh to 252p implying c 40% upside.
- Toby Thorrington
Norcros - Key strengths undervalued, legacy issues fixed
We believe that Norcros’s proven strategy remains on track, which should allow it to unlock significant market growth opportunities. We also believe that its key strengths are undervalued and that investors continue to underappreciate that most, if not all, of the legacy issues have been resolved. South Africa is now a large and rapidly growing part of the group, and the IAS 19R pension deficit has been eliminated. We value Norcros at 314p/share, implying c 45% upside.
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