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  • Writer's pictureMark Watson-Mitchell

Is it now time to get switched on to Luceco?

This group’s shares look cheap ahead of its imminent results.

Wiring, LED lighting, EV chargers and portable power equipment is what drives this Telford-based business, and it markets its products across the globe.

‘Bringing power to life’ is the group’s proud proclaim, while it describes its purpose as helping people to harness power sustainably in everyday life.

Employing over 1,600 people, Luceco (LON:LUCE) serves some 2,000 customers, working with around 1,000 key suppliers and has a total product range of over 11,500 different items.

Ahead Of Expectations, With A Better Outlook

After a fallback from its strong 2021 year, the group is now looking to see a notable pick-up in its business this year and next.

At the end of January, in its Full Year Trading Update, the company informed investors that its profitability was ahead of expectations despite economic headwinds and challenging residential markets, continued growth and strong free cash flow generation.

Management Comment

CEO John Hornby stated that:

"Luceco has performed well in the second half, producing strong results despite ongoing macroeconomic headwinds in the UK and challenges in residential markets.

As a result, we expect to report Adjusted Operating Profit for the full year above current market expectations.

Further strengthening of the Group's balance sheet has been driven by the continuation of our track record of strong cash generation, leaving the Group well placed to invest for growth and enhance earnings in line with our strategic priorities."

Final Results Due In Three Weeks

On Tuesday 26th March it will be declaring its Final Results to end December 2023, so it will be very interesting to see just how it fared and exactly what do its current year prospects look like.

Broker’s View

Analyst Edward Prest at Liberum Capital is expecting 2023 sales of £209m (£206m), with pre-tax profits of £20.6m (£19.4m), generating earnings of 10.8p (11.0p), while maintain its dividend at 4.6p per share.

For the current year Prest is looking for £234m sales, £23.4m profits, earnings of 12.1p and a 4.8p per share dividend.

Already the broker has £252m revenues for 2025 and a big lift-up in profits to £28.1m, worth 14.3p earnings and amply covering a 5.5p dividend.

My View

Hopefully, any delays caused by missile-firing Houthi rebels to others shipping goods from the Far East will not prove to have too much of an impact on its product supply situation.

With its shares at 128p each, after having hit 162p in late January, the whole group is valued at around £207m.

Based on

Liberum’s estimates, this group’s shares are looking under-rated and very capable of a near-term price rise to back over that 162p level scored less than two months ago.


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