Tyman — More upgrades from ongoing trading momentum

Tyman (LN: TYMN)

Last close As at 25/04/2024

318.50

−4.50 (−1.39%)

Market capitalisation

625m

More on this equity

Research: Industrials

Tyman — More upgrades from ongoing trading momentum

A strong end to FY20 has fed into good momentum at the beginning of FY21 and all three divisions performed ahead of management’s expectations in the first four months of the year. Moreover, Tyman is more optimistic now about the outlook for the remainder of the year. We have raised our earnings estimates by c 10% following similar upgrades with the FY20 results at the beginning of March.

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Industrials

Tyman

More upgrades from ongoing trading momentum

Trading update

Construction & materials

12 May 2021

Price

479p

Market cap

£942m

US$1.40/£

Net debt (£m) at end December 2020
(ex IFRS 16 leases £54m)

99

Shares in issue

196.8m

Free float

91%

Code

TYMN

Primary exchange

LSE

Secondary exchange

N/A

Share price performance

%

1m

3m

12m

Abs

20.1

39.7

193.9

Rel (local)

19.6

31.3

142.7

52-week high/low

482.5p

152.2p

Business description

Tyman’s product portfolio substantially addresses the residential RMI and building markets with increasing commercial sector exposure following acquisitions. It manufactures and sources window and door hardware and seals, reporting in three divisions: AmesburyTruth (North America; 65% of reported FY20 revenue), ERA (UK; 16%) and SchlegelGiesse (RoW; 19%).

Next events

AGM & CMD

20 May 2021

FY20 final DPS expected to be paid

28 May 2021

Analyst

Toby Thorrington

+44 (0)20 3077 5721

A strong end to FY20 has fed into good momentum at the beginning of FY21 and all three divisions performed ahead of management’s expectations in the first four months of the year. Moreover, Tyman is more optimistic now about the outlook for the remainder of the year. We have raised our earnings estimates by c 10% following similar upgrades with the FY20 results at the beginning of March.

Year end

Revenue (£m)

PBT*
(£m)

EPS*
(p)

DPS**
(p)

P/E
(x)

Yield
(%)

12/19

613.7

71.0

27.3

3.9

17.5

0.8

12/20

572.8

68.4

27.1

4.0

17.7

0.8

12/21e

620.0

80.1

31.5

10.0

15.2

2.1

12/22e

635.8

85.1

33.0

12.0

14.5

2.5

Note: *PBT and EPS (fully diluted) are normalised, as defined by Tyman, excluding intangible amortisation and exceptional items. **DPS – FY19 was an interim dividend only and FY20 a final dividend only.

Good broad-based progress, optimistic outlook

Tyman’s FY20 results included commentary noting that year-end momentum had carried over into the early months of FY21. A four-month (to end April) update indicates that this has continued and even accelerated in places. Looking at pre-pandemic benchmarks, Tyman provides more normalised context by pointing to y-o-y revenue uplifts versus FY19; on this basis, all three divisions are ahead by c 9–10% in reported terms, including underlying/local FX progress of 16% in North America, the company’s largest market. Unsurprisingly, this is causing industry supply chain strains – which will differ by region – that the company is working hard to mitigate through a combination of pricing/surcharges, production capacity increases and freight actions. Limited visibility of likely post-pandemic market behaviours meant that management comments in early FY21 were heavily caveated – they now express optimism ‘for the remainder of the year’.

Divisional and group estimates raised

FY21 EBIT guidance has been raised above the previous top of the estimate range (ie £85m). We have increased our expected contributions from all three divisions – North America being the largest in value terms – and for all three estimate years, resulting in an FY21 EPS uplift of c 11%, followed by +9% in each of the following two years (with FX inputs unchanged). At the PBT/EPS level, our FY21 estimates are now comfortably ahead of pre-pandemic FY19 levels (including an unfavourable £/US$ comparator effect). This corporate update pre-empts the usual AGM one, but a capital markets day (CMD) scheduled for the same day later this month (20 May) should provide further insight on the current ‘Focus, Define, Grow’ improvement strategy.

Valuation: Upgrades driving share price higher

The company’s share price has travelled well since the FY20 results announcement (up c 40%), a move that looks well underpinned by the latest trading update. Our revised estimates – which raise the three-year EPS CAGR to 7.7% – result in P/E and EV/EBITDA (adjusted for pensions cash) multiples of 14.1x and 8.4x respectively by the end of our estimate horizon.

Tyman is a research client of Edison Investment Research Limited

Exhibit 1: Financial summary

£m

2014

2015

2016

2017

2018

2019

2020

2021e

2022e

2023e

December

IFRS

IFRS

IFRS

IFRS

IFRS

IFRS

IFRS

IFRS

IFRS

IFRS

PROFIT & LOSS

 

 

 

 

 

 

 

 

 

 

 

 

Revenue

 

 

350.9

353.4

457.6

522.7

591.5

613.7

572.8

620.0

635.8

653.1

Cost of Sales

 

 

(236.1)

(234.0)

(290.4)

(331.8)

(383.3)

(408.1)

(380.7)

(411.5)

(420.3)

(432.1)

Gross Profit

 

 

114.8

119.4

167.3

190.9

208.3

205.6

192.1

208.5

215.5

221.0

EBITDA (pre-IFRS16)

 

 

54.6

60.9

82.5

91.7

98.5

100.8

94.9

104.7

108.9

112.2

Operating Profit (Edison)

 

 

46.9

52.9

70.9

78.8

84.7

86.2

80.7

90.2

94.2

97.2

Net Interest

 

 

(4.5)

(6.0)

(6.9)

(8.0)

(10.0)

(11.9)

(8.3)

(6.0)

(5.0)

(4.5)

Other Finance

 

 

(2.2)

(0.6)

(0.4)

(0.8)

(1.3)

(3.5)

(3.5)

(3.0)

(3.0)

(3.0)

Share Based Payments

 

 

(0.9)

(1.0)

(1.0)

(2.0)

(1.1)

(0.8)

(0.4)

(0.8)

(0.8)

(0.8)

Intangible Amortisation

 

 

(17.8)

(19.6)

(21.7)

(22.9)

(25.8)

(23.5)

(18.8)

(18.8)

(18.8)

(18.8)

Exceptionals

 

 

(9.3)

(9.4)

(10.9)

(10.0)

(7.3)

(21.4)

(1.8)

(1.0)

0.0

0.0

Other

 

 

(0.3)

(0.4)

(0.5)

(0.6)

(0.3)

(0.3)

(0.3)

(0.3)

(0.3)

(0.3)

Profit Before Tax (Edison norm)

 

 

39.3

45.4

62.5

68.0

72.3

70.0

68.5

80.4

85.4

88.9

Profit Before Tax (Company norm)

 

 

41.6

45.4

62.1

68.3

72.7

71.0

68.4

80.1

85.1

88.6

Profit Before Tax (statutory)

 

 

11.9

16.1

29.4

34.5

38.9

24.8

47.6

60.3

66.3

69.8

Tax

 

 

(2.6)

(8.0)

(8.6)

(3.3)

(12.5)

(7.1)

(10.4)

(12.9)

(14.9)

(16.6)

Profit After Tax (norm)

 

 

36.8

37.3

53.8

64.7

59.8

62.9

58.1

67.6

70.6

72.3

Profit After Tax (statutory)

 

 

9.3

8.1

20.7

31.2

26.3

17.7

37.2

47.5

51.5

53.2

Average Number of Shares Outstanding (m)

 

167.8

168.2

173.0

177.2

191.4

194.9

195.1

195.1

195.1

195.1

EPS - Edison norm (p) FD

 

 

17.1

19.3

25.5

26.6

27.3

26.8

27.2

31.6

33.2

34.1

EPS - Company norm (p) FD

 

 

18.4

19.4

25.3

26.7

27.5

27.3

27.1

31.5

33.0

33.9

EPS - statutory (p)

 

 

5.6

4.8

12.0

17.6

13.8

9.1

19.1

24.3

26.4

27.3

Dividend per share (p)

 

 

8.0

8.8

10.5

11.3

12.0

3.9

4.0

10.0

12.0

14.0

Gross Margin (%)

 

 

32.7

33.8

36.5

36.5

35.2

33.5

33.5

33.6

33.9

33.8

EBITDA Margin (%)

 

 

15.6

17.2

18.0

17.5

16.7

16.4

16.6

16.9

17.1

17.2

Operating Margin (before GW and except.) (%)

 

13.4

15.0

15.5

15.1

14.3

14.0

14.1

14.6

14.8

14.9

BALANCE SHEET

 

 

 

 

 

 

 

 

 

 

 

 

Fixed Assets

 

 

410.6

398.4

564.7

509.9

612.5

618.8

575.9

568.2

550.3

532.2

Intangible Assets

 

 

355.7

340.5

480.0

427.2

516.9

475.3

446.0

426.3

406.6

386.9

Tangible Assets

 

 

42.9

42.8

71.7

68.4

77.0

125.2

112.5

124.6

126.4

127.9

Investments

 

 

12.1

15.0

12.9

14.2

18.6

18.3

17.4

17.4

17.4

17.4

Current Assets

 

 

124.0

111.0

180.6

188.1

244.8

213.9

226.6

228.2

276.1

321.3

Stocks

 

 

47.6

46.0

70.7

75.3

105.3

88.6

84.0

95.8

97.9

100.6

Debtors

 

 

37.1

35.0

69.0

70.2

87.7

76.3

72.9

77.5

79.2

81.1

Cash

 

 

39.3

30.0

40.9

42.6

51.9

49.0

69.7

54.8

99.0

139.6

Current Liabilities

 

 

(52.3)

(44.4)

(86.4)

(82.0)

(102.9)

(100.9)

(138.4)

(102.8)

(106.7)

(111.0)

Creditors

 

 

(52.3)

(44.4)

(86.4)

(80.9)

(101.4)

(100.6)

(98.1)

(102.8)

(106.7)

(111.0)

Short term borrowings

 

 

0.0

0.0

0.0

(1.1)

(1.5)

(0.3)

(40.3)

0.0

0.0

0.0

Long Term Liabilities

 

 

(176.2)

(156.7)

(285.3)

(251.4)

(320.5)

(315.5)

(221.0)

(219.3)

(217.6)

(215.9)

Long term borrowings

 

 

(128.0)

(111.6)

(216.5)

(204.3)

(259.2)

(211.5)

(128.8)

(128.8)

(128.8)

(128.8)

Other long-term liabilities

 

 

(48.2)

(45.1)

(68.8)

(47.0)

(61.3)

(104.0)

(92.2)

(90.5)

(88.8)

(87.1)

Net Assets

 

 

306.1

308.3

373.6

364.5

433.8

416.3

443.1

474.3

502.1

526.6

CASH FLOW

 

 

 

 

 

 

 

 

 

 

 

 

Operating Cash Flow

 

 

40.1

49.4

79.9

67.0

85.0

111.3

109.7

95.1

112.1

115.0

Net Interest

 

 

(4.6)

(6.2)

(7.0)

(7.6)

(9.1)

(15.0)

(12.5)

(9.0)

(8.0)

(7.5)

Tax

 

 

(6.3)

(8.9)

(12.7)

(15.1)

(12.3)

(14.2)

(13.8)

(12.4)

(14.4)

(16.1)

Capex

 

 

(10.2)

(10.9)

(15.3)

(12.6)

(12.0)

(10.7)

(10.5)

(25.6)

(15.6)

(15.6)

Acquisitions/disposals

 

 

(6.5)

6.8

(96.1)

(6.3)

(106.4)

(0.9)

(1.5)

0.0

0.0

0.0

Financing

 

 

(4.3)

(2.6)

16.7

(0.8)

47.2

(2.0)

(0.3)

(2.0)

(2.0)

(2.0)

Dividends

 

 

(10.9)

(14.6)

(15.6)

(19.5)

(22.4)

(23.6)

0.0

(14.3)

(21.6)

(26.8)

Net Cash Flow

 

 

(2.8)

13.0

(50.0)

5.1

(30.1)

44.9

71.1

31.8

50.5

47.0

Opening net debt/(cash)

 

 

78.7

88.7

81.6

175.6

162.9

208.8

162.8

99.4

74.0

29.8

Finance leases initiated

 

 

0.0

0.0

0.0

0.0

(2.0)

(0.3)

0.0

0.0

0.0

0.0

Other

 

 

(7.2)

(5.9)

(44.0)

7.6

(13.9)

1.4

(7.7)

(6.4)

(6.4)

(6.4)

Closing net debt/(cash)

 

 

88.7

81.6

175.6

162.9

208.8

162.8

99.4

74.0

29.8

(10.8)

Lease finance (under IFRS 16)

 

 

 

 

 

 

 

60.0

53.8

53.8

53.8

53.8

Source: Company accounts, Edison Investment Research

General disclaimer and copyright

This report has been commissioned by Tyman and prepared and issued by Edison, in consideration of a fee payable by Tyman. Edison Investment Research standard fees are £49,500 pa for the production and broad dissemination of a detailed note (Outlook) following by regular (typically quarterly) update notes. Fees are paid upfront in cash without recourse. Edison may seek additional fees for the provision of roadshows and related IR services for the client but does not get remunerated for any investment banking services. We never take payment in stock, options or warrants for any of our services.

Accuracy of content: All information used in the publication of this report has been compiled from publicly available sources that are believed to be reliable, however we do not guarantee the accuracy or completeness of this report and have not sought for this information to be independently verified. Opinions contained in this report represent those of the research department of Edison at the time of publication. Forward-looking information or statements in this report contain information that is based on assumptions, forecasts of future results, estimates of amounts not yet determinable, and therefore involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of their subject matter to be materially different from current expectations.

Exclusion of Liability: To the fullest extent allowed by law, Edison shall not be liable for any direct, indirect or consequential losses, loss of profits, damages, costs or expenses incurred or suffered by you arising out or in connection with the access to, use of or reliance on any information contained on this note.

No personalised advice: The information that we provide should not be construed in any manner whatsoever as, personalised advice. Also, the information provided by us should not be construed by any subscriber or prospective subscriber as Edison’s solicitation to effect, or attempt to effect, any transaction in a security. The securities described in the report may not be eligible for sale in all jurisdictions or to certain categories of investors.

Investment in securities mentioned: Edison has a restrictive policy relating to personal dealing and conflicts of interest. Edison Group does not conduct any investment business and, accordingly, does not itself hold any positions in the securities mentioned in this report. However, the respective directors, officers, employees and contractors of Edison may have a position in any or related securities mentioned in this report, subject to Edison's policies on personal dealing and conflicts of interest.

Copyright: Copyright 2021 Edison Investment Research Limited (Edison).

Australia

Edison Investment Research Pty Ltd (Edison AU) is the Australian subsidiary of Edison. Edison AU is a Corporate Authorised Representative (1252501) of Crown Wealth Group Pty Ltd who holds an Australian Financial Services Licence (Number: 494274). This research is issued in Australia by Edison AU and any access to it, is intended only for "wholesale clients" within the meaning of the Corporations Act 2001 of Australia. Any advice given by Edison AU is general advice only and does not take into account your personal circumstances, needs or objectives. You should, before acting on this advice, consider the appropriateness of the advice, having regard to your objectives, financial situation and needs. If our advice relates to the acquisition, or possible acquisition, of a particular financial product you should read any relevant Product Disclosure Statement or like instrument.

New Zealand

The research in this document is intended for New Zealand resident professional financial advisers or brokers (for use in their roles as financial advisers or brokers) and habitual investors who are “wholesale clients” for the purpose of the Financial Advisers Act 2008 (FAA) (as described in sections 5(c) (1)(a), (b) and (c) of the FAA). This is not a solicitation or inducement to buy, sell, subscribe, or underwrite any securities mentioned or in the topic of this document. For the purpose of the FAA, the content of this report is of a general nature, is intended as a source of general information only and is not intended to constitute a recommendation or opinion in relation to acquiring or disposing (including refraining from acquiring or disposing) of securities. The distribution of this document is not a “personalised service” and, to the extent that it contains any financial advice, is intended only as a “class service” provided by Edison within the meaning of the FAA (i.e. without taking into account the particular financial situation or goals of any person). As such, it should not be relied upon in making an investment decision.

United Kingdom

This document is prepared and provided by Edison for information purposes only and should not be construed as an offer or solicitation for investment in any securities mentioned or in the topic of this document. A marketing communication under FCA Rules, this document has not been prepared in accordance with the legal requirements designed to promote the independence of investment research and is not subject to any prohibition on dealing ahead of the dissemination of investment research.

This Communication is being distributed in the United Kingdom and is directed only at (i) persons having professional experience in matters relating to investments, i.e. investment professionals within the meaning of Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005, as amended (the "FPO") (ii) high net-worth companies, unincorporated associations or other bodies within the meaning of Article 49 of the FPO and (iii) persons to whom it is otherwise lawful to distribute it. The investment or investment activity to which this document relates is available only to such persons. It is not intended that this document be distributed or passed on, directly or indirectly, to any other class of persons and in any event and under no circumstances should persons of any other description rely on or act upon the contents of this document.

This Communication is being supplied to you solely for your information and may not be reproduced by, further distributed to or published in whole or in part by, any other person.

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Edison relies upon the "publishers' exclusion" from the definition of investment adviser under Section 202(a)(11) of the Investment Advisers Act of 1940 and corresponding state securities laws. This report is a bona fide publication of general and regular circulation offering impersonal investment-related advice, not tailored to a specific investment portfolio or the needs of current and/or prospective subscribers. As such, Edison does not offer or provide personal advice and the research provided is for informational purposes only. No mention of a particular security in this report constitutes a recommendation to buy, sell or hold that or any security, or that any particular security, portfolio of securities, transaction or investment strategy is suitable for any specific person.

Frankfurt +49 (0)69 78 8076 960

Schumannstrasse 34b

60325 Frankfurt

Germany

London +44 (0)20 3077 5700

280 High Holborn

London, WC1V 7EE

United Kingdom

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1185 Avenue of the Americas

3rd Floor, New York, NY 10036

United States of America

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General disclaimer and copyright

This report has been commissioned by Tyman and prepared and issued by Edison, in consideration of a fee payable by Tyman. Edison Investment Research standard fees are £49,500 pa for the production and broad dissemination of a detailed note (Outlook) following by regular (typically quarterly) update notes. Fees are paid upfront in cash without recourse. Edison may seek additional fees for the provision of roadshows and related IR services for the client but does not get remunerated for any investment banking services. We never take payment in stock, options or warrants for any of our services.

Accuracy of content: All information used in the publication of this report has been compiled from publicly available sources that are believed to be reliable, however we do not guarantee the accuracy or completeness of this report and have not sought for this information to be independently verified. Opinions contained in this report represent those of the research department of Edison at the time of publication. Forward-looking information or statements in this report contain information that is based on assumptions, forecasts of future results, estimates of amounts not yet determinable, and therefore involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of their subject matter to be materially different from current expectations.

Exclusion of Liability: To the fullest extent allowed by law, Edison shall not be liable for any direct, indirect or consequential losses, loss of profits, damages, costs or expenses incurred or suffered by you arising out or in connection with the access to, use of or reliance on any information contained on this note.

No personalised advice: The information that we provide should not be construed in any manner whatsoever as, personalised advice. Also, the information provided by us should not be construed by any subscriber or prospective subscriber as Edison’s solicitation to effect, or attempt to effect, any transaction in a security. The securities described in the report may not be eligible for sale in all jurisdictions or to certain categories of investors.

Investment in securities mentioned: Edison has a restrictive policy relating to personal dealing and conflicts of interest. Edison Group does not conduct any investment business and, accordingly, does not itself hold any positions in the securities mentioned in this report. However, the respective directors, officers, employees and contractors of Edison may have a position in any or related securities mentioned in this report, subject to Edison's policies on personal dealing and conflicts of interest.

Copyright: Copyright 2021 Edison Investment Research Limited (Edison).

Australia

Edison Investment Research Pty Ltd (Edison AU) is the Australian subsidiary of Edison. Edison AU is a Corporate Authorised Representative (1252501) of Crown Wealth Group Pty Ltd who holds an Australian Financial Services Licence (Number: 494274). This research is issued in Australia by Edison AU and any access to it, is intended only for "wholesale clients" within the meaning of the Corporations Act 2001 of Australia. Any advice given by Edison AU is general advice only and does not take into account your personal circumstances, needs or objectives. You should, before acting on this advice, consider the appropriateness of the advice, having regard to your objectives, financial situation and needs. If our advice relates to the acquisition, or possible acquisition, of a particular financial product you should read any relevant Product Disclosure Statement or like instrument.

New Zealand

The research in this document is intended for New Zealand resident professional financial advisers or brokers (for use in their roles as financial advisers or brokers) and habitual investors who are “wholesale clients” for the purpose of the Financial Advisers Act 2008 (FAA) (as described in sections 5(c) (1)(a), (b) and (c) of the FAA). This is not a solicitation or inducement to buy, sell, subscribe, or underwrite any securities mentioned or in the topic of this document. For the purpose of the FAA, the content of this report is of a general nature, is intended as a source of general information only and is not intended to constitute a recommendation or opinion in relation to acquiring or disposing (including refraining from acquiring or disposing) of securities. The distribution of this document is not a “personalised service” and, to the extent that it contains any financial advice, is intended only as a “class service” provided by Edison within the meaning of the FAA (i.e. without taking into account the particular financial situation or goals of any person). As such, it should not be relied upon in making an investment decision.

United Kingdom

This document is prepared and provided by Edison for information purposes only and should not be construed as an offer or solicitation for investment in any securities mentioned or in the topic of this document. A marketing communication under FCA Rules, this document has not been prepared in accordance with the legal requirements designed to promote the independence of investment research and is not subject to any prohibition on dealing ahead of the dissemination of investment research.

This Communication is being distributed in the United Kingdom and is directed only at (i) persons having professional experience in matters relating to investments, i.e. investment professionals within the meaning of Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005, as amended (the "FPO") (ii) high net-worth companies, unincorporated associations or other bodies within the meaning of Article 49 of the FPO and (iii) persons to whom it is otherwise lawful to distribute it. The investment or investment activity to which this document relates is available only to such persons. It is not intended that this document be distributed or passed on, directly or indirectly, to any other class of persons and in any event and under no circumstances should persons of any other description rely on or act upon the contents of this document.

This Communication is being supplied to you solely for your information and may not be reproduced by, further distributed to or published in whole or in part by, any other person.

United States

Edison relies upon the "publishers' exclusion" from the definition of investment adviser under Section 202(a)(11) of the Investment Advisers Act of 1940 and corresponding state securities laws. This report is a bona fide publication of general and regular circulation offering impersonal investment-related advice, not tailored to a specific investment portfolio or the needs of current and/or prospective subscribers. As such, Edison does not offer or provide personal advice and the research provided is for informational purposes only. No mention of a particular security in this report constitutes a recommendation to buy, sell or hold that or any security, or that any particular security, portfolio of securities, transaction or investment strategy is suitable for any specific person.

Frankfurt +49 (0)69 78 8076 960

Schumannstrasse 34b

60325 Frankfurt

Germany

London +44 (0)20 3077 5700

280 High Holborn

London, WC1V 7EE

United Kingdom

New York +1 646 653 7026

1185 Avenue of the Americas

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Research: Industrials

2G Energy — Fifth successive year of growth

2G Energy’s FY20 results marked the fifth successive year of revenue growth, despite the coronavirus pandemic. Customers in Germany and elsewhere continued to invest in combined heat and power (CHP) systems that help cut electricity costs, reduce dependence on overstretched electricity grids and address the variability of output from wind and solar sources. Importantly 2G’s CHP systems can be upgraded to run on hydrogen, future proofing the investment as the sector decarbonises.

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