FireAngel Safety Technology Group – target price of 27p leaves strong upside after Trading Update
Smoke alarms may well be proving their worth during this summer heat period.
Also showing some heat is the FireAngel Safety Technology Group (LON:FA.) whose business is home safety products, such as smoke and carbon monoxide detectors and accessories.
The first-half year’s trading
The group, which sells its products through distributors and retailers to the retail, trade do-it-yourself, fire and rescue service and utilities markets, this morning announced its Trading Update for the six months to the end of June.
The company performed strongly in its first half, better than even its own Management expectations, despite the impact of additional inflationary costs showing through.
It is now looking to get back into profits, positive cash generation and greater sales.
Supply chain disruptions eased across the Period and in Q2 2022, the Company sold a total of approximately 1.4 million units, against a supply-constrained total of 1.0 million in Q1 2022, with 581k products sold in June 2022 alone.
Furthermore, in Q1 2022, all standard freight from Asia was booked for the balance of the year offering greater certainty of supply.
The group, however, is expecting to better margins coming to the fore in the current quarter and then going forward, especially as the supply of components has eased in the latter part of the first half.
Executive Chairman John Conoley stated that:
"I am pleased that the Company has delivered solid growth and ended the first half ahead of the Board's expectations, thereby making good progress against our strategy for improved performance.
Despite all challenges so far, management action has preserved Company progress in the half, and we are still on track to meet our full year market expectations. The Board continues to expect a materially positive EBITDA performance for FY2022, along with a cash generative second half, thanks to strong product demand driven in part by continued regulation."
The group’s joint broker, Singer Capital, is looking for the group to end the year at close to break-even, while expecting larger sales next year to push it into significant returns.
For the current year, after this Update, Singer’s analyst Greg Poulton, is estimating £55.7m (£43.5m) sales revenues, with an adjusted pre-tax break even (£3.5m loss).
The year to end December 2023 is seen by Singer as bringing in £62.0m sales, £3.5m profits and 2.1p earnings per share.
Poulton rates the group’s shares as a Buy, with a Target Price of 27p per share.
Now that we know that the group has both its component supply and its pricings in a better frame, it gives the market more confidence in how the company is seeing its prospects.
That will soon shine through onto its share price, which closed last night at 11.4p.
Considering that Singer Capital is so positive and going for a 27p price aim, FireAngel’s shares look to be heading a great deal higher.