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Trifast tightens its grip on Asia

The industrial fastener specialist ended the year with a gross margin in excess of 30 per cent for the first time in its history
June 13, 2017

Trifast (TRI) has delivered a strong performance across all of its geographies, with revenues up 7 per cent overall, at constant currencies. The group revealed strong organic growth through its multinational network of branded re-sellers. As a result, underlying operating profit, ex-amortisation and one-offs, increased 11 per cent at fixed currencies to £18.6m.

IC TIP: Buy at 223p

Favourable cost effects and increased capacity at the group's Italian manufacturing operations bolstered profitability, while the UK gross margin increased by 100 basis points. All of this helped the industrial fastener specialist to end the year with a gross margin in excess of 30 per cent for the first time in its history. Pleasingly, Trifast's operations in Asia saw "robust" growth, with total sales (including intercompany sales) up 6 per cent to £47.8m.

Cash generation remains healthy, with an operating cash inflow of £22.5m, while working capital commitments only increased marginally despite the step-up in trading activity. The cash conversion rate stood at 97.3 per cent, up from a respectable 88.9 per cent in the prior year.

Peel Hunt gives adjusted pre-tax profits of £20.8m for the March 2018 year-end, with EPS of 12.8p, against £20.5m and 12.8p in FY2017.

TRIFAST (TRI)
ORD PRICE:223pMARKET VALUE:£268m
TOUCH:218-223p12-MONTH HIGH:228pLOW: 120p
DIVIDEND YIELD:1.6%PE RATIO:21
NET ASSET VALUE:85p*NET DEBT:6%

Year to 31 MarTurnover (£m)Pre-tax profit (£m)Earnings per share (p)Dividend per share (p)
20131226.44.40.8
20141308.96.11.4
201515511.87.42.1
201616113.18.82.8
201718717.310.73.5
% change+16+17+22+25

Ex-div: 14 Sep

Payment: 13 Oct

*Includes intangible assets of £39.6m, or 33p a share