The company has today released a positive AGM update, signalling a good start to the year and further progress against strategic objectives. There is also favourable commentary around the recent Dudson transaction. In short, the general reassurance offered this morning reinforces the fact that Churchill has a different market and strategic positioning vs peer Portmeirion, which recently warned. Given it is difficult to second guess to what extent the strong start to the year reflects an element of stockpiling ahead of Brexit and the fact that c.2/3rd of profits are generated in H2, we hold off adjusting our forecasts at this stage. To reflect the Group’s growth and balance sheet attractions, the shares have re-rated by a significant 8 P/E points since the start of the year to an FY19 P/E of 21.6x falling to 19.6x for FY20. Short-term they look up with events on quality and growth considerations but on a 12m view we see upside towards 1800p (22.5x FY20 P/E). Fundamentally we see Churchill China as a highly attractive growth story in a sector with positive secular drivers. We expect the focus on hospitality tableware with an added value and international dimension to continue serving the Group well.
