Today’s trading update confirms that the strong recovery seen in H2 20 and the early part of FY21 has continued through the remaining weeks of the half, post the update provided in the AGM statement 27th May. All areas of the business are trading well. In Controls, the Regulated markets have continued to see good demand which underpins the margin outlook. This has been supplemented by price increases in legacy products in both Controls and Water categories to offset cost input inflation. New product launches are beginning to gain real traction helping the business achieve 50% revenue growth in H1 and underpinning c. 30% estimated growth for FY21. The new factory remains on course to be fully operational by August. As a result, capex will fall from FY22 improving the free cash flow generation and reducing net debt/EBITDA below 1.0x. The current rating of c.20.0x remains a discount to high quality larger cap peers and does not fully reflect the operational and financial performance of the business over the last eighteen months. The valuation gap to peers will close as Strix executes its medium-term growth strategy of doubling revenue by 2025.

Strix Group PLC

• 22 Jul 21
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Growth picked up pace in May and June with revenue in H121 13.1% ahead of the same period in 2019. After four months this figure was 10.9%. The higher level of demand sees profit growth ahead of expectations as operational gearing comes through more strongly than forecasts had assumed. Profit estimates for the current year increase by c. 16% to £6.9m (prev. £6.0m). Upgrades for outer years are more muted, but still significant, as estimates assumed a strong structural recovery in margin. The outlook is, perhaps, more muted than it was just a few months ago due to raw material cost pressures, supply chains being stretched, labour and operational issues from Covid-19 and demand patterns normalising. However, forecasts remain conservative as evidenced by today’s upgrade. The shares trade on a cheap c. 14x current year earnings falling to 12x in FY22.

Safestyle UK Plc

• 22 Jul 21
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DWF has announced FY21 results in line with our forecasts, delivering a material improvement in YOY performance, thanks to decisive management action to streamline divisions and control costs. We believe today’s results strongly endorse the strategic progress made to date, and leave the Group well placed to deliver profitable and cash generative growth.

DWF Group Plc

• 21 Jul 21
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