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Safestyle grows, improves manufacturing

The group is nearing completion on a factory expansion
March 27, 2017

Window specialist Safestyle (SFE) continued to grow in 2016, with installation volumes up 5 per cent to 62,989. This, together with a 6 per cent average sales price rise, helped move the top line in the right direction. The group now accounts for 10.2 per cent of the market, according to industry installation numbers. Underlying cash profits ended 13 per cent higher for the year at £21.6m. Post-period end, the order intake is up 4 per cent, which management has attributed to increased prices more than offsetting the effect of a weaker pound.

IC TIP: Buy at 290.5p

Work is under way to improve the quality, efficiency and capacity of Safestyle's factory operations. The group expects to transfer existing glass manufacturing to its new factory by June 2017. Crucially, this will mean frames and double-glazed units are made on a single site.

Chief executive Stephen Birmingham said the group would start recouping its investment in the factory once operational in the second half, with benefits trickling down to the bottom line in 2018. In the meantime, the group is also looking to improve conversion rates of new business leads.

Analysts at Zeus Capital are forecasting adjusted profit before tax of £21.5m, giving EPS of 20.9p for 2017 (from £20.5m and 19.8p in 2016).

SAFESTYLE (SFE)

ORD PRICE:291pMARKET VALUE:£241m
TOUCH:291-294p12-MONTH HIGH:314pLOW: 205p
DIVIDEND YIELD*:3.9%PE RATIO:15
NET ASSET VALUE:46p**NET CASH:13.5m

Year to 31 DecTurnover (£m)Pre-tax profit (£m)Earnings per share (p)Dividend per share (p)
20121109.59.1nil
20131259.58.35.50
201413616.416.59.30
201514917.617.810.20
201616319.319.011.25
% change+9+10+7+10

Ex-div: 15 Jun

Payment: 10 Jul

*Does not include a special dividend of 6.8p paid in Nov 2016

**Includes intangible assets of £21.7m, or 26p a share