PAUL SCOTT comments - Stockopedia29 Jul 2021 10:27
Strong customer demand has continued
Consumer electricals “remains very strong”
Electric vehicle revenues “continue to grow”
Medical & complex industrial technology - seeing a “healthy recovery”
Recent acquisition (DE-KA, in Turkey) “continued to trade well”
Outlook - potential impact on trading from - supply chain shortages, cost inflation of materials, freight challenges, and the pandemic
Key point - increased price of copper has been “successfully passed through” to customers
Robust cashflow in Q1
Acquisitions - pipeline is being advanced, helped by financial flexibility
Guidance raised -
Overall, whilst still early in the year, the positive trends in the first quarter lead the Board to expect to deliver full year underlying operating profit slightly ahead of current market expectations1."
1 Latest company compiled view of market expectations shows an underlying operating profit consensus of $50.0m with a range of $48.9 million to $51.0 million.
Valuation - remember that results for FY 03/2021 benefited from an unusually advantageous tax charge, hence EPS will fall this year, despite pre-tax profits forecast to be up about 20%.
Stockopedia shows a consensus of 24.6c, so that’s probably likely to rise to about 26c after today’s update. Divide by 1.39 to go from dollars into sterling, that’s 18.7p EPS.
At 340p per share, the PER is 18.2.
We also have the likelihood of more acquisitions to boost earnings further, which should be possible without issuing fresh equity, because the balance sheet is strong, with only negligible net debt reported at FY 03/2021 - here are my notes on those results.
My opinion - this company is a class act, and remains one of my core, long-term holdings. Management with a major equity stake, are doing a terrific job. There are also industry tailwinds from electric vehicles, and the 1-2 year replacement cycle of cabling in data centres.
Today’s update confirms my view that this is an excellent company, reasonably priced, trading well, and with a successful acquisitions strategy.
Plenty to like here. The price doesn’t look stretched at all, despite having almost quadrupled in the last 2 years - performance has fully justified it.
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