4imprint Group

LN: FOUR

£837m market cap

2980p last close

4imprint is the leading direct marketer of promotional products in the US, Canada, the UK and Ireland. 97% of 2018 revenues were generated in the US and Canada.

Investment summary

4imprint’s interims showed 16% revenue growth (all organic) and a further small tick up in underlying operating margin to 4.8% (H118: 4.7%). The brand promotion initiative, launched in H118, is delivering online traffic and conversion better than initial expectations. We again lifted our FY19 revenue and EPS forecasts, by 4% and 3% respectively. For FY20e the EPS uplift is 5%. Management’s revenue target of $1bn by FY22e looks likely to be achieved ahead of schedule. The group has five-year average cash conversion of 103% and a cash-rich balance sheet and we regard the current share price as well underpinned, with further potential upside.

Y/E Dec
Revenue (US$m)
EBITDA (US$m)
PBT (US$m)
EPS (c)
P/E (x)
P/CF (x)
2017A 627.5 45.1 42.5 107.7 33.6 22.7
2018A 738.4 48.5 46.1 133.5 27.1 22.2
2019E 845.0 57.5 54.0 150.7 24.0 17.2
2020E 940.0 63.5 60.1 167.8 21.6 15.9
Last updated on 16/09/2019
Industry outlook

The PPAI, an industry body, estimates the value of the US promotional products distribution market at US$25bn. 4imprint is the largest distributor in this large and diverse market, yet has market share of around 3%. The market reportedly grew by 4.9% for FY18 and 4imprint has consistently grown faster than the market, building share through its reputation for quality, reliability and customer service. There are no direct comparators, as the other larger players have differentiated business models.

Last updated on 16/09/2019
Sector
TMT
Share price graph
Balance sheet
Forecast net cash (US$m) 39
Forecast gearing ratio (%) N/A
Price performance
%
1m
3m
12m
Actual 4.6 14.6 43.3
Relative* 1.1 14.1 43.6
52-week high/low 3010.0p/1800.0p
*% relative to local index
Key management
Kevin Lyons-Tarr CEO
David Seekings FD