Amidst all the talk of trade wars, tit-for-tat tariffs and a post-Brexit bonfire of red tape, it’s worth remembering that some exporters thrive on the back of a tight (or tightening) regulatory framework. Take Strix (KETL), an Alternative Investment Market (Aim)-traded manufacturer of kettle safety controls. The last thing anyone needs is a trip to A&E simply because they fancied a cup of tea, but health and safety standards are either lax or virtually non-existent in certain locales.
So, while Strix boasts a global market share of 38 per cent (c.50 per cent by value), and enjoyed better-than-expected 5 per cent volume growth in regulated markets through 2017, the real structural driver going forward is the rise of middle-class consumption in emerging markets – discretionary income brings with it certain expectations on product quality.
The company notes that "less regulated markets" grew by around 12 per cent during 2017, against an historic annual volume growth rate of 8 per cent. Strix made significant inroads, securing 16 per cent growth, with encouraging activity levels in South America and the Commonwealth of Independent States.
Zeus Capital expects adjusted pre-tax profits of £29.1m for the 2018 year-end, giving EPS of 11.6p, rising to £31.6m and 12.6p in 2019.
| STRIX (KETL) | ||||
| ORD PRICE: | 126p | MARKET VALUE: | £239m | |
| TOUCH: | 126-130p | 12-MONTH HIGH: | 151p | LOW: 121p |
| DIVIDEND YIELD: | 2.3% | PE RATIO: | 10 | |
| NET ASSET VALUE: | † | NET DEBT: | £45.9m | |
| Year to 31 Dec | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
| 2014 * | 78.1 | 26.4 | na | na |
| 2015 * | 79.9 | 22.0 | na | na |
| 2016 * | 88.7 | 24.3 | na | na |
| 2017 | 91.3 | 25.4 | 13.0 | 2.9 |
| % change | +3 | +5 | - | - |
| Ex-div: | 03 May | |||
| Payment: | 01 Jun | |||
| * Pre-IPO (August 2017) †Negative shareholder funds (including intangible assets of £5.2m, or 2.7p a share). | ||||
