Stealth Global Limited (ASX:SGI) has reported statutory results following their trading update mid-February, and we have fine-tuned our numbers from our update (Underlying sales momentum set to accelerate, February 18 2021) accordingly, with changes at the margin. The key message continues to be the group is well placed to grow revenue and earnings over the next 12-months, driven by 1) easy comparable period sales beginning Q421 (neutral Africa impact, and when Australian sales declined ~20% early in the quarter) and into 1H22 (underlying 1HFY21 Australian sales were down ~7%), 2) a full 12-month contribution from the C&L Tool Centre acquisition, which should contribute ~$14m in revenue (and represent ~20% of group sales) and ~$1.4m EBITDA (>50% of underlying earnings), 3) the BSA potential beyond the UK lockdown, supported by the launch of a new on-line portal, 4) a cost structure which has been built for growth and should not require additional resources to accommodate our forecast medium-term sales growth (promising operating leverage), and 5) the cycling of the exit from Africa, which has been a drag on group margins and comparable sales growth. Subsequent to the 1H21 result release selected peers have reported generally solid numbers (SNL, CYG and CLT), and as a result we have seen a widening in the FY21 EV/sales discount of SGI to the peer group, with SGI trading at a 35% discount to the nearest peer.
24 Mar 2021
Acquisition and improving outlook offer operating leverage
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Acquisition and improving outlook offer operating leverage
Stealth Group holdings Ltd. (SGI:ASX) | 0 0 0.0%
- Published:
24 Mar 2021 -
Author:
Finola Burke | John Burgess -
Pages:
8
Stealth Global Limited (ASX:SGI) has reported statutory results following their trading update mid-February, and we have fine-tuned our numbers from our update (Underlying sales momentum set to accelerate, February 18 2021) accordingly, with changes at the margin. The key message continues to be the group is well placed to grow revenue and earnings over the next 12-months, driven by 1) easy comparable period sales beginning Q421 (neutral Africa impact, and when Australian sales declined ~20% early in the quarter) and into 1H22 (underlying 1HFY21 Australian sales were down ~7%), 2) a full 12-month contribution from the C&L Tool Centre acquisition, which should contribute ~$14m in revenue (and represent ~20% of group sales) and ~$1.4m EBITDA (>50% of underlying earnings), 3) the BSA potential beyond the UK lockdown, supported by the launch of a new on-line portal, 4) a cost structure which has been built for growth and should not require additional resources to accommodate our forecast medium-term sales growth (promising operating leverage), and 5) the cycling of the exit from Africa, which has been a drag on group margins and comparable sales growth. Subsequent to the 1H21 result release selected peers have reported generally solid numbers (SNL, CYG and CLT), and as a result we have seen a widening in the FY21 EV/sales discount of SGI to the peer group, with SGI trading at a 35% discount to the nearest peer.