Last close As at 05/08/2026
GBP1.30
▲ 1.90 (1.49%)
Market capitalisation
GBP1,448m
Research: Industrials
SigmaRoc’s (SRC) progressive M&A strategy and geographical diversification continues to pay off, with H122 revenue growth of 17%, on an adjusted like-for-like basis, to £247m. In spite of ongoing headwinds, the company is seeing persistent demand, which is well spread in terms of end-markets. SRC trades on an FY22e P/E of 5.7x, at a comfortable discount to its prospective average of c 11x over the past five years and at the lower end of a peer group of companies with similar exposures.
SigmaRoc |
Diversified model supports H122 growth
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Industrials |
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3 October 2022 |
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SigmaRoc’s (SRC) progressive M&A strategy and geographical diversification continues to pay off, with H122 revenue growth of 17%, on an adjusted like-for-like basis, to £247m. In spite of ongoing headwinds, the company is seeing persistent demand, which is well spread in terms of end-markets. SRC trades on an FY22e P/E of 5.7x, at a comfortable discount to its prospective average of c 11x over the past five years and at the lower end of a peer group of companies with similar exposures.
Interim results showed continued momentum
SRC delivered growth and maintained margins despite rising materials prices and energy costs in H122. The benefits of the Nordkalk acquisition were demonstrated by total revenue growth of 192% to £247m compared to H121, or 17% like-for-like. Underlying EBITDA rose by 6% on a pro forma basis to £48m, benefiting from cost pass-through mechanisms, dynamic pricing and cost control. The group continued to generate cash and, following the Johnston acquisition, the H122 leverage ratio was 2.2x, comfortably below its covenant limit of 3.5x. The share price has taken a hit over the last year, but H122 results suggest investor concerns are unwarranted.
Expected earnings enhancement in H222
We should see an improved performance in H222; the strike at UPM in Finland has ended and seasonality means that SRC consistently earns more in H2. The JV with ArcelorMittal, agreed in September, is an indication that SRC’s capacity should continue to expand, generating improved returns in the long term (reflected in the consensus numbers). In Q321, SRC completed its largest ever acquisition of Nordkalk, the leading limestone company in Northern Europe, for a total consideration of €470m. The deal should be value accretive and has the potential to significantly drive earnings growth as it benefits from operational efficiency and cross-selling. We expect infrastructure spend will continue to be a focus for European governments. SRC should benefit from this, given its market position and the quality of its assets. During H222, management is likely to focus on integrating its acquisitions, maximising earnings and reducing debt.
Valuation: Discount relative to established peers
The company trades on a P/E of 5.7x in FY22e, which is a comfortable discount to its average of c 11x over the past five years. It is at the lower end of a peer group of companies with similar exposures, which average a P/E of 8.7x. Since inception, SRC has had minimal net debt with a history of paying it down quickly. Despite the large acquisition of Nordkalk in mid-2021, at the end of H122 net debt/EBITDA was reduced to 2.2x and analyst consensus suggests this will fall to 1.5x at end FY23.
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Consensus estimates
Source: Company reports, Refinitiv |
EDISON QUICKVIEWS ARE NORMALLY ONE-OFF PUBLICATIONS WITH NO COMMITMENT TO WRITING ANY FOLLOW UP. QUICKVIEW NOTES USE CONSENSUS EARNINGS ESTIMATES.
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Research: Industrials
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