4imprint Group

LN: FOUR

£834.1m market cap

2970p last close

4imprint is the leading direct marketer of promotional products in the US, Canada, the UK and Ireland. In FY18, 97% of revenues were generated in the US and Canada.

Investment summary

4imprint’s interims (published end July) 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 lifted our FY19 revenue and EPS forecasts on the figures, by 4% and 3% respectively. For FY20e the EPS uplift was 5%. Management’s revenue target of $1bn by FY22e looks likely to be achieved ahead of schedule. The group has a 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 34.8 23.5
2018A 738.4 48.5 46.1 133.5 28.1 23.0
2019E 855.0 58.1 54.6 152.4 24.6 17.6
2020E 950.0 64.0 60.7 169.3 22.1 16.3
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%. Q219 sales for the market were up 5.4%, having increased by 4.9% in FY18. 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 19/11/2019
Sector
TMT
Share price graph
Balance sheet
Forecast net cash (US$m) 39.5
Forecast gearing ratio (%) N/A
Price performance
%
1m
3m
12m
Actual (2.6) 2.4 49.3
Relative* (4.8) (0.4) 41.5
52-week high/low 3130.0p/1800.0p
*% relative to local index
Key management
Kevin Lyons-Tarr CEO
David Seekings FD