Equity Dev12 Oct 2015 09:51
Tristel, a developer of infection control products based its own proprietary chlorine dioxide (Clo2) chemistry (>75% sales). Its wipes, foams, gels, liquids and surface disinfectants are considered to be the 'gold standard' in the UK for decontaminating small medical instruments in out-patient departments and for surface cleaning in hospitals.
Today the company has posted like-for-like top line growth of 13.8% to £15.3m for the 12 months ending June 2015 (FY15) - driven by the launch of innovative new products, greater adoption in the UK and excellent growth abroad.
Better still, we think that this momentum is set to continue, and may actually accelerate as more customers realise the benefits of switching to Clo2 technology. Last year foreign markets generated 35.9% of group turnover - climbing sequentially from 32.5% in H1 to 39.1% in H2, reflecting strong demand across most of Tristel's international footprint of 38 countries. In aggregate, we anticipate total revenues will motor along at a 15% pa clip for the foreseeable future,
Tristel has logical ambitions regarding the vast US market, but even if the FDA there were to thwart their application, we still think this science rich stock represents good value at 107p, trading on an underlying PEG ratio of only 1.0x that is 45% below the peer group average.
In fact, not only is the stock good value on an absolute basis versus our upgraded price target of 135p/share (from 110p), but it is also cheap relative to the wider healthcare ecosystem - trading below peer group averages with regards to EV/sales, EV/EBITA and PE multiples, despite offering much better prospects.