When management guided FY22E EBITDA up to £32m in its trading update in January – see our report incorporating the 13% implied upgrade for detail (DOWNLOAD) – we would not have had in mind that the eventual ‘flash' outcome would be another 19% higher.
The first upgrade reflected an easing of earlier precaution over weather, lumber pricing and a combination of general market threats around pricing, supply chain and Covid disruption. Today's further upgrade to a minimum £38m EBITDA reflects the difference between an absence of any negative profitability impact and the realisation that Q4 actually swung these factors hugely positively.
A colossal result with FY22E EBITDA growth of 117% and EPS estimated 72% higher at 9.6p (after a flat FY21 which bore the Covid hit profits). Q4 trading has been exceptionally strong, outperforming progressively in every month and right across the divisions although we suspect driven by product price inflation and stock profits ahead of volume improvement. In our view, Brickability's sourcing skills and entrepreneurial management style has been a factor too, in a market where if you had product as a supplier then buyers would be knocking at your door to take it.
For FY23E we are increasing the EBITDA forecast by £2m or 5%, to £41m and EPS by 0.4p or c4%, to 9.9p. Our model ‘Fair Value' price, which reflects the smaller upgrades to fiscal 2023E and 2024E, rises to 136p from 131p but takes no account of:
The prospect of higher dividends than previously assumed.
Any benefits of future, accretive, acquisitions.
Against a 100p share price, 10% off its YTD ‘high', the shares offer outstanding value trading on a (Mar) 2023E EV/EBITDA of 7.3x, PE of c10x and a 2.3% yield covered over 4x with FCF yield 5.5%. Buy.
