Chargeurs released a solid set of results in Q3, with Protective Films continuing to perform strongly and Fashion Technologies showing signs that the recovery is picking up pace. The Museum activity will see a new addition to bolster its offer following the acquisition of Event Communications and Luxury Materials marks its return to pre-pandemic levels. All these elements support our upbeat FY21 view, although cost and raw material pressures loom over next year’s outlook.
Companies: Chargeurs (CRI:EPA)Chargeurs SA (CRI:PAR)
Stronger than expected Q3 21 sales trends
Chargeurs posted Q3 21 sales of EUR173m up 2% of which 0.7% LFL. This came 13% above our forecast of EUR153m (-10% organic growth). The upside to expectations was driven by stronger trends at CPF, CFT PCC and Luxury Materials.
Strong CPF, CFT PCC gradually returning to normal
CPF (+28% LFL) continued to see strong trends driven by demand in construction and price hikes. CFT PCC (+20% LFL) saw a strong momentum in the US where sales were above 2019 lev
We had initiated coverage of Chargeurs as a holding company then battling on to pay back its debt,. However, the strategy pursued by the new owner since 2015 and its moves into new capital-light businesses, with a B2B service-focused dimension, have had us reassess our view of Chargeurs to now as an industrial group.
The company reported an encouraging first half, driven by the strong performance of Protective Films and Healthcare Solutions, though all divisions contributed positively to the group’s profitability in H1. With cash generation from operations having reached €131m over the past 18 months, Chargeurs disposes of a sizeable war chest with its acquisition strategy now back on the offensive. On the organic growth front, strong order books for its core activities stand as encouraging signs of an upbea
Q2 21 trends tracking significantly above forecasts
Q2 21 sales came out at EUR192m down 46% LFL from a high comparison basis (last year was boosted by face masks) but tracked 19% above our estimates with the beat driven by virtually all divisions. CPF benefited from a pick-up in demand from construction and appliance end-markets. CFT PCC rebounded from a depressed base and grew in line with the clothing market. Business momentum remained strong at CHS on the back of several contracts with pub
As US and European economies reopen, Chargeurs is expected to benefit from volume tailwinds at its protective films and fashion technologies activities. We upgrade our forecasts and valuation range.
Improved visibility at CPF
With 55% of sales in construction end-markets Chargeurs Protective Films is expected to fully benefit from the ongoing steady growth in building permits in both Europe and the US, extending the division''s top line visibility. This should increase capacity utilisation at
Minor EPS adjustments following Q1 top-line publication
CHANGE IN TARGET PRICE € 33.9 vs 34.0 -0.32 %
The adjustments made to our FY21-22 EPS estimates have a negligible effect on our target price. We remain convinced on Chargeurs' solid business models and operational strengths, which are set to benefit from supportive demand trends including the progressive recovery of sectors such as construction and the lifting of lockdown restrictions in Western markets. The latter sh
Leveraging the strong demand from the construction sector, Chargeurs’ Protective Films recorded robust sales growth, which, in combination with the top-line contribution of the group’s novel division, Healthcare Solutions, allowed the group to record its best quarterly result in Q1. As the business lines most impacted by the pandemic continue on their progressive recovery, the solid momentum shown by CPF and CHS point to a very encouraging FY performance.
Solid Q1 21 trading update
Chargeurs posted Q1 21 sales of EUR181m up 14.8% of which15.6% LFL, tracking 8% above our EUR168m (+7% LFLe). The upside to our forecasts was driven by acceleration at protective films and sustained activity at Healthcare Solutions.
Protective films and CHS driving the beat
Trends at protective films picked up to reach +10.9% LFL thanks to strong demand in construction end markets, the ramp up of the Italian production facility and growing contribution from the
Restocking effect uplifts our FY21-22 view on CPF
CHANGE IN TARGET PRICE € 34.2 vs 30.0 +14.0%
The valuation increases across the different valuation metrics result in a 14.0% higher target price, pushing us further in our Buy recommendation. Chargeurs Protective Films' strategic positioning and operational strengths stands to benefit from the supportive trading environment as global supply chains are subjected to the inventory rebuilding trend, as demonstrated by high raw
CHANGE IN EPS
2021 : € 0.68 vs 0.78 -13.1%
2022 : € 1.07 vs 1.04 +2.91%
We have revised our earnings expectations after incorporating the FY20 figures and rolling forward our estimates through to 2023. The FY21 EPS forecast sees a slight decline due to a more gradual recovery at CFT-PCC, with the fast-fashion market still in a weakened state due to the sanitary and economic crisis. Based on this, the FY21 margin stands at 5.5% versus 6.2% previously. Meanwhile, Protective Film
In a display of astute and agile management to face the difficult market context brought about by the pandemic, Chargeurs closed a successful FY20 with record profitability. This was driven by the group’s new personal protective equipment venture, in addition to a solid rebound at its core Protective Films division. Parting from an improved scenario in 2021, the group now looks forward to its ambitious 2025 objectives which put a bigger focus on nurturing lfl growth.
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