Last close As at 25/08/2026
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Market capitalisation
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Research: Industrials
Norcros’s disposal of Johnson Tiles is the latest strategic activity taken by management to better allocate capital to fit with priorities. Last year it closed its UK adhesives operation. Norcros has a compelling investment case, where its new product development initiatives, market positioning and self-help initiatives allow it to take market share in both the UK and South Africa. Its rating is low at 6.0x FY24e P/E, which is attractive, especially when compared to its yield of 5.4% on its well-covered dividend. We retain our estimates and value the shares at 246p, implying c 30% upside.
Norcros |
Sale of Johnson Tiles UK agreed |
Disposal |
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25 April 2024 |
Share price performance
Business description
Analyst
Norcros is a research client of Edison Investment Research Limited |
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Norcros’s disposal of Johnson Tiles is the latest strategic activity taken by management to better allocate capital to fit with priorities. Last year it closed its UK adhesives operation. Norcros has a compelling investment case, where its new product development initiatives, market positioning and self-help initiatives allow it to take market share in both the UK and South Africa. Its rating is low at 6.0x FY24e P/E, which is attractive, especially when compared to its yield of 5.4% on its well-covered dividend. We retain our estimates and value the shares at 246p, implying c 30% upside.
Year end |
Revenue (£m) |
PBT* |
EPS* |
DPS |
P/E |
Yield |
03/22 |
396.3 |
39.3 |
38.2 |
10.0 |
4.9 |
5.3 |
03/23 |
441.0 |
41.8 |
37.4 |
10.2 |
5.0 |
5.4 |
03/24e |
411.7 |
36.7 |
31.5 |
10.2 |
6.0 |
5.4 |
03/25e |
412.0 |
37.9 |
32.5 |
10.2 |
5.8 |
5.4 |
Note: *PBT and EPS are normalised, excluding amortisation of acquired intangibles, exceptional items and share-based payments. EPS is ‘diluted’.
Following a ‘challenging’ year in the 12 months to March (see our 12 April update note), Norcros has today announced the sale of Johnson Tiles UK to its existing management team for £1m, with the potential for a further ‘modest’ earn out depending on the equity value of the business, payable in April 2028. The sale is expected to complete in May.
In the year to end March 2023, Johnson Tiles generated revenue of £35.3m and an operating profit of £0.5m, which was c 8% and 1% of group figures, respectively. It had gross assets of £25m and had absorbed cash in each of the last three years. There will be cash costs of less than £1m associated with the sale and non-cash balance sheet impairments that will be reported as exceptionals in the FY24 results.
Today’s announcement is in line with current strategy and is the latest action taken to streamline the business following the closure of the adhesives business in 2023.
Norcros previously announced that it will host a capital markets event on 1 May, ahead on its FY24 results, scheduled for 13 June.
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Research: Investment Companies
Henderson Far East Income (HFEL) has consistently delivered on its objective to provide a rising dividend. However, like many investors, HFEL’s managers overestimated the potential for a post-pandemic rebound in China. The trust’s resultant overweight to Chinese consumer and other cyclicals led to a fall in portfolio revenues and underperformance in the financial year ended 31 August 2023 (FY23). With a view to improving future returns, HFEL’s board has since indicated an increased willingness to use reserves when necessary to support dividend payments, which it did in FY23. This reduces the requirement to focus primarily on high income names to fund dividend payments, giving lead manager Sat Duhra scope to move into other areas of the market where he can acquire well-priced value names offering performance and yield, or the prospect of dividend growth over time. Duhra has been quick to reduce the trust’s exposure to China and increase positions into well-priced value names in India and Indonesia. Early signs suggest this repositioning is paying off – HFEL outperformed the market in the six months to end March 2024.