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02 Mar 2022
FY21 postview (+15 questions for management)
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FY21 postview (+15 questions for management)
Travis Perkins plc (TPK:LON) | 725 50.8 1.0% | Mkt Cap: 1,541m
- Published:
02 Mar 2022 -
Author:
Bromehead Yves YB | Roger Paul PR -
Pages:
9
Summary of FY21 results
Travis Perkins'' FY21 Adj. operating profit excluding property gains reached GBP304m, in line with consensus estimates. Q421 organic growth of 25.4% came slightly below our expectations of 26.2%, as a result of slower merchanting growth towards year-end.
Key news
Management provided reassuring comments during the conference call with anticipation for adjusted operating profit post property gains to improve further despite GBP25m lower real-estate gains. The group expects further volume growth in 2022 against a challenging base effect, driven by supportive renovation trends, robust trends in new-housing and a recovery across the commercial end-market. Merchanting margins should remain within the 8-8.5% range in 2022. Toolstation will face a tough comparison effect in H122 as DIY trends normalise, but management is seeing very strong traction from the B2B segment, with a growing share of the wallet from its existing and larger customers.
Earnings
We trim our FY22 by -1% and our FY23 EPS by -3% to reflect slightly reduced buyback expectations amidst broadly flat EBIT revisions. Our net-debt estimate is also higher to reflect the higher debt profile of the company in 2021 vs our prior expectations.
Rating and target price
We reiterate our Outperform rating and trim our target price to GBp2,000/share from Gbp2,050/share reflecting higher debt forecasts and slightly higher share count.
Investment case
A successful turnaround story with attractive FCF generation and a capital return focused mind-set.