Polypipe

LN: PLP

£1142.3m market cap

500p last close

Polypipe is a leading supplier of largely plastic building products and systems. Operations in the UK (c 90% of revenue) address a broad range of sectors including residential, commercial and civil building demand and a number of subsectors within them.

Investment summary

After a flat Q1 y-o-y, Polypipe’s H120 revenue was down c 22% for the period as a whole (-25% like-for-like) and the associated c £50m reduction fed through into c £29m lower EBIT, illustrating significant operational gearing in the business. Commercial & Infrastructure was relatively more resilient in revenue terms (-14%) compared to Residential Systems (-28%) substantially reflecting the timing of returning/restoring non-residential site activity versus a slower process in residential newbuild. All main factories were operational at the period end. End H120 net debt of c £71m benefitted from the May equity funding (£120m gross, £116.4m net) and, otherwise, we believe that the underlying cash outflow from the end of March was very modest. No interim dividend was declared. Thus far in H2, y-o-y revenue trends (July -6%, August -3%) confirm a pick up from the -19% exit rate level in June. Our estimates are under review.

Y/E Dec
Revenue (£m)
EBITDA (£m)
PBT (£m)
EPS (p)
P/E (x)
P/CF (x)
2018A 433.2 90.6 67.1 28.1 17.8 11.1
2019A 447.6 99.1 70.6 29.1 17.2 11.1
2020E N/A N/A N/A N/A N/A N/A
2021E N/A N/A N/A N/A N/A N/A
Industry outlook

The Construction Products Association’s Spring outlook update was unsurprisingly more bearish than previously and included a number of different scenarios all of which involved sharp contractions in total construction activity in 2020 and material rebounds in 2021.

Last updated on 27/11/2020
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Sector
Industrials
Share price graph
Balance sheet
Forecast net debt (£m) 165.4
Forecast gearing ratio (%) 46
Price performance
%
1m
3m
12m
Actual 7.2 16.0 2.6
Relative* (3.6) 8.4 17.3
52-week high/low 619.0p/395.5p
*% relative to local index
Key management
Martin Payne CEO
Paul James CFO

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