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  • Writer's pictureMark Watson-Mitchell

Renold – record order book running faster than sales

The industrial chains and related power transmission products group Renold (LON:RNO) has issued a very positive Trading Update, it is noting record order books and is now expecting to beat market profit forecasts for the year.

The group, which is a global leader in the manufacture of industrial chains, is also a manufacturer of a range of torque transmission products.

Its products, which are sold throughout the world to a broad range of original equipment manufacturers and distributors, are used in a wide variety of industries including manufacturing, transportation, energy, steel and mining.

For the ten months to the end of January 2023 the group’s order intake was £216.5m, some 19.2% better, leaving the current order book at a record £104.1m.

Its order intake is running far ahead of its sales, with its turnover for the first ten months of the current year to end March, showing a 25.4% growth at £199.0m.

In excess of market expectations

The group stated that given the continued sales growth, a strong orderbook, benefits of the cost reduction and efficiency programmes, and the successful recovery of cost inflation on raw material and energy, the company is confident the current trading momentum will deliver revenues and underlying operating profit for the full year in excess of market expectations.

Analyst Opinion – Target Price of 52p

David Buxton at brokers finnCap has estimated that the current year to end March will see revenues lift to £238.3m (£195.2m) generating adjusted pre-tax profits of £14.3m (£11.5m) and taking earnings up to 4.8p (4.0p) per share.

For the coming year he has pencilled in £233.8m sales, £13.9m profits and 4.6p of earnings.

Anticipating a rerating for the group’s shares over the next two years he has a 52p Target Price out on the shares.

Conclusion – a very healthy upside on 5.4 pe

This group’s shares are currently on a very low rating, trading at 24.5p which puts them on only a 5.4 times price-to-earnings ratio.

These shares offer a very healthy upside.


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