FY21 ahead – scope for 5-6% upgrades to consensus The interim pre-close update confirmed that trading in May and June has been better than management had expected, despite the lockdown impact in India. 1H Group revenue is $732m, materially ahead of our $608m. Group 1H21 organic sales are up 1% over the same period in FY19; this would have been +3% excluding the India impact in May/June. In A&F, the core threads sales were up 2% (flat versus FY19) and accounted for 85% of division revenue. Positive improvement continues with strong growth in sports and athleisure wear as the casualization trend continues. Zips and trims within A&F continue to see weak demand. Performance Materials saw 4% revenue growth versus the FY19 comparative, with all sub-segments performing strongly apart from PPE which continues to suffer from US labour shortages, as previously announced. This is expected to ease post September when government support is withdrawn. Likely upgrades to consensus Group adjusted operating profit in 1H21 is now expected to be $95m, ahead of FY20 ($34m) and getting closer to the FY19 level of $102m, showing the recovery to be v-shaped. Historical 1H:2H splits are broadly evenly weighted, so we would expect a similar EBITA outturn in 2H21. We therefore see scope for consensus adjusted EBITA to upgrade by 5-6% from the current $179m (INVe $176m) towards $190m. We put our forecasts under review. Cost inflation Cost inflation, especially raw materials, is being offset by price increases and operational self-help. We expect further raw material inflation in 2H21 as the higher oil price feeds through, albeit we fully expected this to be passed on in higher selling prices. Shares continue to look good value for a global market leader On current forecasts, the shares trade on only c.16x CY21E earnings, falling to c.13x in CY22E, CY22E EV/EBITDA of 6.4x, with a FCF yield of 3.5%, improving to 7% in CY23E. The progressive dividend currently yields 2.3% in CY22E. Interims results are due on 3 August.