Edison Investment Research Limited: Edison issues outlook on Carclo (CAR)

London, UK, 3 October 2017

Edison issues outlook on Carclo (CAR)

Carclo is focusing investment on its two larger established businesses - Technical Plastics (CTP) and LED Technologies (LED). Here a differentiated offer and long-term relationships with customers provide good earnings visibility and higher probability of a sustainable return. This strategy delivered strong revenue and profits growth during FY17. Despite a temporary setback at CTP during H118, which was balanced by outperformance at LED, growth appears set to continue, underpinned by contracts with blue-chip customers.

We use a P/E-based, sum-of-the-parts methodology with three sets of sample peers drawn from the medical device manufacturing (P/E of 16.1x), automotive (mean P/E of 16.4x) and aerospace (mean P/E 20.9x) sectors to reflect the diversity of Carclo's operations. This gives an indicative valuation range of 182-193p (previously 181-191p), which is equivalent to an implied EV/EBITDA range of 8.2x-8.6x (vs peer group blended year one EV/EBITDA of 8.7x). The share price has dropped by around 13% since the AGM statement advised of short-term setbacks in the Technical Plastics division. Positive newsflow confirming the recovery in CTP should be supportive of the stock, helping to close the valuation gap.Click here to view the full report.

All reports published by Edison are available to download free of charge from its websitewww.edisoninvestmentresearch.com

About Edison: Edison is an investment research and advisory company, with offices in North America, Europe, the Middle East and AsiaPac. The heart of Edison is our world-renowned equity research platform and deep multi-sector expertise. At Edison Investment Research, our research is widely read by international investors, advisers and stakeholders. Edison Advisors leverages our core research platform to provide differentiated services including investor relations and strategic consulting.

Edison is authorised and regulated by the Financial Conduct Authority.

Edison is not an adviser or broker-dealer and does not provide investment advice. Edison's reports are not solicitations to buy or sell any securities.

For more information please contact Edison:

Anne Margaret Crow, +44 (0)20 3077 5700Dan Ridsdale, +44 (0)20 3077 5729tech@edisongroup.com

Learn more at www.edisongroup.com and connect with Edison on:

LinkedIn https://www.linkedin.com/company/edison-investment-research

Twitter www.twitter.com/Edison_Inv_Res

YouTube www.youtube.com/edisonitv