Strix (KETL) designs, manufactures and supplies kettle safety controls and other water temperature management components, and much of its time is spent successfully defending patent infringements. Based in the Isle of Man, a lot of its business is conducted in China with its original equipment manufacturers (OEMs), so Brexit worries come some way down the list.
Sales volume in the six months to June 2018 rose by 7.6 per cent to 36.8m units, while revenue growth at 1.5 per cent was lower because of a change in sales mix and because exchange rate movements reduced the sterling value of its US dollar revenue. Offsetting this to some extent was a reduction in dollar costs, which helped to push the gross profit margin up from 37.2 per cent to 37.9 per cent.
Despite the rise in sales volume, cost of sales increased by only 0.4 per cent, reflecting increased use of automation and lower distribution costs. The group is also assessing its options regarding the relocation of its manufacturing operations in China when the current lease expires in 2021. Relocation costs are expected to be around £15m. Following the success of its Aqua Optima water filter cartridges in the UK, a product launch in China will start in the fourth quarter.
House broker Zeus Capital is forecasting adjusted pre-tax profit for the year to December 2018 of £29.1m and EPS of 14.8p.
STRIX (KETL) | ||||
ORD PRICE: | 164.6p | MARKET VALUE: | £313m | |
TOUCH: | 163.4-164.6p | 12-MONTH HIGH: | 176p | LOW: 121p |
DIVIDEND YIELD: | 2.6% | PE RATIO: | 10 | |
NET ASSET VALUE: | * | NET DEBT: | £37.9m |
Half-year to 30 Jun | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
2017 | 42.2 | 10.3 | na | 1 |
2018 | 42.9 | 8.6 | 4.3 | 2.3 |
% change | +2 | -16 | - | +130 |
Ex-div: | 27 Sep | |||
Payment: | 26 Oct | |||
*Negative shareholders' funds |