Trifast
Written by
Trifast |
Still delivering |
Trading update |
Industrial support services |
17 February 2016 |
Share price performance
Business description
Next events
Analysts
Trifast is a research client of Edison Investment Research Limited |
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Trifast is still delivering to plan, despite the more challenging trading climate. Management reports that trading has not been unduly affected, while investment continues in response to new business opportunities both in Europe and South-East Asia. The shares remain attractively priced.
Year end |
Revenue (£m) |
PBT* |
EPS* |
DPS |
P/E |
Yield |
03/14 |
129.8 |
9.16 |
5.96 |
1.40 |
18.8 |
1.3 |
03/15 |
154.7 |
14.31 |
8.68 |
2.10 |
12.9 |
1.9 |
03/16e |
158.0 |
15.40 |
9.21 |
2.40 |
12.1 |
2.1 |
03/17e |
170.0 |
16.50 |
9.86 |
2.70 |
11.3 |
2.4 |
Note: *PBT and EPS are normalised and diluted, excluding intangible amortisation, exceptional items and share-based payments.
Momentum sustained
Despite the deteriorating global trading climate, the clear message from Trifast is that the group is on course to deliver market estimates. We understand from management that very few schedules have been cut, while the upward momentum of new business continues. The two recent acquisitions are reported to be trading well; the recent recovery in the euro has begun to restore margins at VIC (Italy), while Kuhlmann (Germany) is more than meeting management expectations. A further trading update from management can be expected as the group enters its closed season in early April; meanwhile we are leaving our estimates unchanged.
Strategy still to deliver
We remain optimistic about the medium term. The policy of building the group’s share of business with its major global customers continues to deliver, with Trifast reporting negotiations with multinational customers, increasing the number of manufacturing plants being supplied and widening the range of products being delivered to each plant. New investment planned for the group’s Italian factory is aimed at meeting increased cross-selling demand from elsewhere in the group and responding to customers seeking the greater flexibility that can emanate from using a local component supplier.
Balance sheet remains sound
In our Outlook report last November we estimated March 2016 net debt of £17.5m to £18.0m (gearing 24%). The recent recovery of the euro will have an impact on year-end net borrowings, but our earlier target range remains realistic.
Valuation: Potential not recognised
The share price has come back by 5% since November, much in line with most of Trifast’s peer group (Brammer is down 32% on fears about market estimates). The rating is in line with Bossard (a leading European competitor), but at a 30% discount to that of global electronic component distributors. The potential from recent acquisitions and contract gains is still not recognised in the share price.
Exhibit 1: Financial summary
£000s |
2010 |
2011 |
2012 |
2013 |
2014 |
2015 |
2016e |
2017e |
||
Year end 31 March |
IFRS |
IFRS |
IFRS |
IFRS |
IFRS |
IFRS |
IFRS |
IFRS |
||
PROFIT & LOSS |
||||||||||
Revenue |
|
|
85,935 |
106,089 |
112,510 |
121,544 |
129,775 |
154,741 |
158,000 |
170,000 |
Cost of Sales |
(64,927) |
(79,368) |
(83,680) |
(89,969) |
(93,809) |
(109,866) |
(111,700) |
(120,200) |
||
Gross Profit |
21,008 |
26,721 |
28,830 |
31,575 |
35,966 |
44,875 |
46,300 |
49,800 |
||
EBITDA |
|
|
2,133 |
5,264 |
6,544 |
9,226 |
10,798 |
16,491 |
17,600 |
18,900 |
Operating Profit (before GW and except.) |
|
|
1,065 |
4,327 |
5,629 |
7,971 |
9,696 |
15,274 |
16,300 |
17,500 |
Intangibles amortisation/impairments |
(261) |
(261) |
(281) |
(331) |
(221) |
(551) |
(600) |
(600) |
||
Exceptionals |
(3,605) |
(801) |
265 |
(389) |
0 |
(1,167) |
(300) |
0 |
||
Share based payments |
143 |
(189) |
(227) |
(91) |
(67) |
(741) |
(1,000) |
(1,000) |
||
Operating Profit |
(2,658) |
3,076 |
5,386 |
7,160 |
9,408 |
12,815 |
14,400 |
15,900 |
||
Net Interest |
(150) |
(554) |
(627) |
(718) |
(534) |
(966) |
(900) |
(1,000) |
||
Profit Before Tax (norm) |
|
|
915 |
3,773 |
5,002 |
7,253 |
9,162 |
14,308 |
15,400 |
16,500 |
Profit Before Tax (FRS 3) |
|
|
(2,808) |
2,522 |
4,759 |
6,442 |
8,874 |
11,849 |
13,500 |
14,900 |
Tax |
621 |
(879) |
(1,597) |
(1,734) |
(2,276) |
(3,455) |
(4,300) |
(4,600) |
||
Profit After Tax (norm) |
578 |
2,894 |
3,663 |
5,324 |
6,820 |
10,312 |
11,050 |
11,850 |
||
Profit After Tax (FRS 3) |
(2,187) |
1,643 |
3,162 |
4,708 |
6,598 |
8,394 |
9,200 |
10,300 |
||
Average Number of Shares Outstanding (m) |
85.2 |
85.2 |
91.6 |
107.3 |
108.5 |
113.5 |
116.2 |
116.4 |
||
EPS - normalised (p) contg businesses |
|
|
0.68 |
3.39 |
4.00 |
4.96 |
6.28 |
9.08 |
9.51 |
10.18 |
EPS - normalised fully diluted (p) |
|
|
0.68 |
3.23 |
3.76 |
4.73 |
5.96 |
8.68 |
9.21 |
9.86 |
EPS - FRS 3 (p) |
|
|
(2.57) |
1.93 |
3.45 |
4.39 |
6.08 |
7.39 |
7.92 |
8.85 |
Dividend per share (p) |
0.0 |
0.0 |
0.5 |
0.8 |
1.4 |
2.1 |
2.4 |
2.7 |
||
Gross Margin (%) |
24.4% |
25.2% |
25.6% |
26.0% |
27.7% |
29.0% |
29.3% |
29.3% |
||
EBITDA Margin (%) |
2.5% |
5.0% |
5.8% |
7.6% |
8.3% |
10.7% |
11.1% |
11.1% |
||
Operating Margin (before GW and except.) (%) |
1.2% |
4.1% |
5.0% |
6.6% |
7.5% |
9.9% |
10.3% |
10.3% |
||
BALANCE SHEET |
||||||||||
Fixed Assets |
|
|
26,144 |
25,598 |
32,417 |
32,692 |
30,044 |
49,057 |
53,957 |
53,957 |
Intangible Assets |
16,358 |
16,540 |
17,869 |
18,366 |
16,959 |
32,162 |
37,462 |
36,862 |
||
Tangible Assets |
7,740 |
7,078 |
13,292 |
13,360 |
11,828 |
15,623 |
15,023 |
15,623 |
||
Investment in associates |
0 |
0 |
0 |
0 |
0 |
0 |
0 |
0 |
||
Deferred tax assets |
2,046 |
1,980 |
1,256 |
966 |
1,257 |
1,272 |
1,472 |
1,472 |
||
Current Assets |
|
|
48,019 |
57,086 |
69,424 |
68,437 |
73,774 |
92,735 |
96,460 |
105,646 |
Stocks |
20,141 |
25,116 |
30,517 |
30,439 |
30,574 |
37,418 |
39,406 |
44,399 |
||
Debtors |
20,458 |
24,828 |
26,295 |
27,248 |
27,665 |
39,864 |
42,054 |
46,248 |
||
Cash |
7,420 |
7,142 |
12,612 |
10,750 |
15,535 |
15,453 |
15,000 |
15,000 |
||
Other |
0 |
0 |
0 |
0 |
0 |
0 |
0 |
0 |
||
Current Liabilities |
|
|
(30,492) |
(35,579) |
(40,946) |
(34,578) |
(37,903) |
(49,052) |
(54,967) |
(57,150) |
Creditors |
(16,701) |
(20,625) |
(23,035) |
(21,029) |
(24,678) |
(34,482) |
(35,608) |
(38,313) |
||
Other creditors |
(1,688) |
(1,669) |
(2,577) |
(2,020) |
(2,244) |
(2,225) |
(2,138) |
(2,213) |
||
Short term borrowings |
(12,103) |
(13,285) |
(15,334) |
(11,529) |
(10,981) |
(12,345) |
(17,221) |
(16,625) |
||
Minority interests |
0 |
0 |
0 |
0 |
0 |
0 |
0 |
0 |
||
Long Term Liabilities |
|
|
(3,490) |
(4,260) |
(7,407) |
(6,129) |
(4,248) |
(21,060) |
(20,560) |
(19,760) |
Long term borrowings |
0 |
(1,000) |
(5,688) |
(4,418) |
(2,524) |
(16,523) |
(15,523) |
(14,523) |
||
Other long term liabilities |
(3,490) |
(3,260) |
(1,719) |
(1,711) |
(1,724) |
(4,537) |
(5,037) |
(5,237) |
||
Net Assets |
|
|
40,181 |
42,845 |
53,488 |
60,422 |
61,667 |
71,680 |
74,889 |
82,693 |
CASH FLOW |
||||||||||
Operating Cash Flow |
|
|
3,908 |
(1,051) |
4,418 |
7,872 |
11,825 |
6,767 |
14,549 |
13,461 |
Net Interest |
(523) |
(554) |
(627) |
(718) |
(534) |
(966) |
(900) |
(1,000) |
||
Tax |
119 |
(630) |
(678) |
(1,427) |
(1,809) |
(4,639) |
(4,089) |
(4,525) |
||
Capex |
(207) |
(291) |
(381) |
(851) |
(826) |
(1,389) |
(2,500) |
(2,000) |
||
Acquisitions/disposals |
332 |
0 |
(11,225) |
(1,389) |
0 |
(16,240) |
(8,600) |
(1,200) |
||
Financing |
0 |
0 |
7,177 |
233 |
84 |
494 |
0 |
0 |
||
Dividends |
0 |
0 |
0 |
(534) |
(867) |
(1,569) |
(2,789) |
(3,139) |
||
Other |
84 |
66 |
49 |
27 |
(646) |
2,097 |
0 |
0 |
||
Net Cash Flow |
3,713 |
(2,460) |
(1,267) |
3,213 |
7,227 |
(15,445) |
(4,329) |
1,596 |
||
Opening net debt/(cash) |
|
|
8,396 |
4,683 |
7,143 |
8,410 |
5,197 |
(2,030) |
13,415 |
17,744 |
HP finance leases initiated |
0 |
0 |
0 |
0 |
0 |
0 |
0 |
0 |
||
Other |
0 |
0 |
0 |
0 |
0 |
0 |
0 |
0 |
||
Closing net debt/(cash) |
|
|
4,683 |
7,143 |
8,410 |
5,197 |
(2,030) |
13,415 |
17,744 |
16,148 |
Source: Company reports, Edison Investment Research
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Martin Currie Asia Unconstrained Trust