4imprint order book to pre-pandemic level

4Imprint (FOUR), which sells customised merchandise direct to customers, is on the way to matching its 2019 trading level after taking a pandemic hit last year. Its full year revenue for the year was $327m (£236m), which was 23 per cent up on 2020 and 20 per cent down on 2019. More indicative of the improvement is order counts for June 2021 hitting 96 per cent of the 2019 comparator, suggesting revenue should continue to grow in the second half of the year.

A strength of 4Imprint is its cash generation. The company turns sales into cash quickly by  selling directly to consumers, which cuts out intermediaries. This, along with the postponement of capex until 2022, has meant that it has increased its cash holdings from $37.5m to $52.8m. It has also been able to resume its interim dividend at 15 cents per share.

A concern for the second half of the year could come in the shape of increasing transportation costs and wage inflation for its employees. Its gross profit margin for H1 was 29.3 per cent, this is 20 basis points ahead of 2020 but 200 basis points behind 2019. Given the global issues around logistics and the flagged issue of wage increases, it seems unlikely it will recover its margin until the following year.

Despite these cost pressures, Peel Hunt has still raised its pre-tax profit estimate for the full year by 9 per cent to $27.1m off the back of its strong order book. Hold.

Last IC View: Hold, 2,435p, 16 March 2021