On Monday 22nd July, after the Full Year Trading Update, I wrote that I felt that the shares of this sustainable building products, systems and solutions group were ready to run again and that they looked very appealing at 213p.
On Tuesday 3rd September, the group announced its results for the year to end-June, showing record underlying pre-tax profits up 16% at £13.0m, on the back of a 13% boost in revenues to £100.7m.
Almost 80% of group sales are driven by building regulations and specifications (architects and structural engineers) because of the performance characteristics offered.
The group has three business segments with strong positions and brands in their individual markets: Water Management, Building Envelope, and Housebuilding Products.
At that time CEO Paul Hooper stated that:
"We are extremely pleased to report a further upgrade to our 2024 profit, with underlying profit before tax of £13.0m, 16% ahead of the prior year.
All three divisions saw organic revenue and strong profit growth, a result of continued delivery on our strategic priorities and Alumasc's position as a market leader in the provision of sustainable products, which provide efficient solutions to the challenges presented by our changing climate.
Sustainability is at the core of what the construction industry needs to do to address climate change and the Group is well placed to benefit from these long-term growth drivers.
This environmental focus, together with an effective commercial strategy, has enabled us to continue to outperform the wider UK construction market.
Since we completed the strategic acquisition of ARP Group and welcomed our new colleagues, the business has performed extremely well, bringing exciting synergies and opportunities for cross-selling to the business.
Alumasc's performance against the backdrop of challenging markets during 2024 shows the business's quality and as we progress into 2025 we have a clear line of sight of our ambitious growth plans, capacity to invest and opportunity to deliver significant shareholder value."
Following the results and accompanying statement analyst David Buxton at Cavendish Capital Markets upped his Price Objective for the group’s shares to 330p.
He noted that the group was outperforming most of its sector peers, helped by a more positive construction and infrastructure government agenda and expectation of further interest rate reductions.
He also lifted his estimates for the group’s future performance.
For the current year to end-June 2025 he looks for revenues of £110.5m (£100.7m), while adjusted pre-tax profits could rise to £14.2m (£13.0m), generating 29.4p (26.6p) of earnings and paying a dividend of 11.0p (10.8p) per share.
His estimates for the 2026 year are £116.4m sales, £15.3m profits, 31.4p earnings and a dividend of 11.3p.
The £102m capitalised group should be holding its AGM at the end of this month, at which time I expect to see an encouraging AGM Trading Update.
As far as I see it, the shares of this group at 284p still represent a great opportunity to participate in the envisaged boom to come within the housebuilding and construction sector under the new Government proposals.
(Profile 13.02.20 @ 116p set a Target Price of 145p*)
(Profile 08.06.20 @ 80p set a Target Price of 105p*)
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