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  • Writer's pictureMark Watson-Mitchell

Coral Products – Trading Update sees broker up its ‘fair value’ to 50% higher

Coral Products – Trading Update sees broker up its ‘fair value’ to 50% higher than last night’s price


This morning’s Trading Update from Coral Products (LON:CRU) has seen its Broker up its ‘fair value’ for the group’s shares some 17% from 21.6p to 25.2p, compared to last night’s close of 16.75p.


The Wythenshawe, Manchester-based group is a specialist in the design, manufacture and supply of plastic products has guided that the results for the year to end April 2023 will be slightly better than market expectations.


Despite some challenging conditions having been faced in the second half of the year the company looks to see its revenues rise over 140% to some £35m (£14.4m) while its EBITDA is expected to be nearly 95% better at £3.5m (£1.8m).


The group should see its robust balance sheet bolstered by a healthy cash and cash equivalents balance of £5m, compared to its £15.4m capitalisation.


Executive Chairman Jo Grimmond commented that:


“In spite of the challenging trading conditions in the second half of the year, we have had a successful year, completing a further 4 acquisitions, which has led to the Group more than doubling the revenue base together with a near doubling of Group EBITDA.


This marks a significant step towards our objective of building a specialist UK plastics business of scale, targeting profitable, high-demand sectors.”


Analyst Opinion – shares are a Buy


At Cenkos Securities, the group’s NOMAD and Broker, Edward Stacey has upped his estimates for the last year.


He is now going for £35.1m sales, £3.5m EBITDA, with earnings of 2.3p covering a 1.2p dividend per share.


For the current year to end April 2024 he goes for £38m revenues, EBITDA of £3.9m, earnings of 2.4p and a 1.3p dividend per share.


Conclusion – still looking for 25p in due course


The group’s shares have been up to 19p since our last feature on the company and its prospects and down to as low as 14.75p.


This group has undergone quite a transformation in the last few years, and it is fair to expect double-digit growth in its EBITDA in the forthcoming period.


At 16.75p they have good upside.

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