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Currency in GBP
Last close As at 09/06/2023
GBP1.81
▲ 1.00 (0.56%)
Market capitalisation
GBP162m
Norcros is a leading supplier of showers, enclosures and trays, tiles, taps and related fittings and accessories for bathrooms, kitchens, washrooms and other commercial environments. It has operations in the UK and South Africa, with some export activity from both countries.
In the UK housing market’s recovery phase from the impact of the COVID-19 pandemic, repair, maintenance and improvement has clearly been the stronger sub-sector. UK newbuild fundamentals remain favourable also. Similar trends have been seen in South Africa. The commercial sub-sectors generally remain subdued.
Director, Financials & Industrials
James Eyre
CFO
Nick Kelsall
CEO
Forecast net debt (£m)
51.4
Forecast gearing ratio (%)
22
| % | 1M | 3M | 12M |
|---|---|---|---|
| Actual | (0.6) | (5.0) | (24.6) |
| Relative | 1.6 | (1.0) | (23.8) |
| 52 week high/low | 249.0p/165.0p |
Norcros’s FY23 trading update highlighted a solid performance, particularly in the UK in H2, as well as the closure of the loss-making Norcros Adhesives division. We believe that Norcros’s proven strategy remains on track, which should allow it to unlock significant market share gain and M&A opportunities given its robust balance sheet. We also believe that its key strengths are undervalued and that most, if not all, of the legacy issues, particularly relating to the pension, have been resolved. We maintain our estimates and our 252p/share valuation implying c 40% upside, while acknowledging that there is upside to estimates from a market recovery when it materialises.
| Y/E Mar | Revenue (£m) | EBITDA (£m) | PBT (£m) | EPS (fd) (p) | P/E (x) | P/CF (x) |
|---|---|---|---|---|---|---|
| 2021A | 324.2 | 39.2 | 27.4 | 29.58 | 6.1 | 3.7 |
| 2022A | 396.3 | 47.0 | 38.6 | 37.99 | 4.8 | 3.1 |
| 2023E | 448.9 | 53.6 | 41.8 | 35.86 | 5.0 | 3.0 |
| 2024E | 462.6 | 52.4 | 38.9 | 32.89 | 5.5 | 3.1 |
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