Strix Group – green shoots appearing at undervalued global kettle safety controls leading group
The Isle of Man based global leader in kettle safety controls Strix Group (LON:KETL) has today announced a positive AGM Statement.
CEO Mark Bartlett reported an improved trading performance in its second quarter.
He stated that following a period of uncertainty across a number of its key export markets, the group’s sales data in 2023 has indicated that some green shoots were appearing.
“I can report that this trend has continued with Group performance in Q2 improving versus Q1. We are continuing to receive increased frequency of orders from customers, albeit with smaller quantities as they manage their cash balances prudently.
We also continue to make successful progress on the integration of Billi which is in line and remains on track with our plan for the full year.
This is another step that will propel Strix into a new growth phase, further diversifying away from the core Kettle Controls business.”
The group is involved in the design, manufacture and supply of kettle safety controls and other components and devices involving water heating and temperature control, steam management and water filtration.
Its core product range comprises a variety of safety controls for small domestic appliances, primarily kettles.
Kettle safety controls require precision engineering and intricate knowledge of material properties in order to repeatedly function correctly.
Analyst Opinion – average Target Price of 132p
Andy Hanson at the group’s NOMAD and broker Zeus Capital is encouraged by the AGM Statement.
Hanson considers that the improvement is in part due to seasonality, but also due to the potential re-stocking of customer inventories as management continue to see an increased frequency of orders from customers.
For the current year to end December he goes for a leap in sales from £106.9m to £155.6m, enabling a rise in adjusted pre-tax profits of £29.7m (£22.2m), lifting earnings to 12.1p (10.9p) and raising the dividend to 6.3p (6.0p) per share.
For 2024 his figures suggest £171.6m revenues, £33.8m profits, 13.8p earnings and a 6.8p dividend.
Conclusion – time to get switched on to Strix?
We will get some further market guidance within the next month or so when the company announces its Interim Pre-close Trading Update.
This £229m group’s shares are looking undervalued at the current 101p, where they are trading at just 8.5 times its price earnings ratio, while yielding a very attractive 6.3%.
On the face of it these shares could put on at least 30% and still look cheap.