Strix Group PLC

https://www.strixplc.com/ TICKER: KETL     EXCHANGE: AIM

Strix is a global leader 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.

LATEST REPORTS

 
Strix at the Equity Development investor forum September 2018
Published: Oct 03 2018

CEO of Strix Group, Mark Bartlett discusses the businesses progress one year into its listing and how its global domination of the kettle safety control market, coupled with the growth opportunities in Hot Water on Demand, and Aqua Optima, are driving the business forward.
 
Strix plc September 2018 interim results interview
Published: Sep 19 2018

Mark Barlett, CEO and Raudres Wong, CFO, discuss how the business has successfully maintained its global market share in kettle safety controls, while funding growth and new opportunities in Aqua Optima and Hot Water on Demand segments. 
 
 
Interims Confirm Growth Optimism
Published: Sep 19 2018

Strix announced interim results this morning.  Net revenue advanced by 1.5% to £42.9m and adjusted EBITDA by a faster 4.3% as gross and EBITDA margins both expanded: to 37.9% (37.2%) and 34.5% (33.6%) respectively.  Pre-tax profit to fall by 1.9% to £11.0m but the cash position remains strong.  Net debt fell by £8.0m to £37.9m as net cash from operations was positive by £15.2m: a 97% conversion rate.
Kettle controls revenue was slightly lower in the half year at 1.9%. Global category volume was strong at 6% with China returning to growth and recovering by a similar amount.  Despite global category growth, Strix maintained a 38% world market share in kettle safety controls. Volumes advanced by 7.6% to 36.8m units in the period. In the USA, growth was pleasingly strong at 20%. The new U9 series of controls continued to win new business.  It also drove growth in the less regulated and China market segments.
Aqua Optima nearly doubled in size in the first half (+88%) and was close to 9% of group revenue.  Its reach into an additional 2,500 outlets augurs well for future growth and we look forward to seeing the impact of its launch in China in the next six months.
We continue to regard the US as an important growth story across both kettle controls and the hot water on demand category. Not only is there substantial per capita volume increase in consumption in tea, but there is also a significant opportunity for meaningful growth in single-serve coffee, illustrated on 30th August when Strix announced a coffee collaboration with a leading US consumer products company.
Strix remains well placed to match market expectations for the full year and should enjoy sustained organic sales growth in our view thereafter.  Moreover, its FY2018 12.0x P/E ratio and 4.2% dividend yields appear undemanding.  In our view a 200p fair value – which would imply a 14.3x P/E and a 3.5% - seems realistic as further growth opportunities continue to reveal themselves, as well as offering more than 20% upside.  
 
An Introduction to Strix Plc, analyst Chris Wickham
Published: Jul 31 2018

Following their IPO twelve months ago Chris Wickham discusses the themes he explores in his initiation note. These include opportunities for growth in the US as well as new product development initiatives. 
 
Steaming ahead
Published: Jul 18 2018

A combination of steady top line expansion, operating margins fully supported by technological excellence and unique product experience, all support the case for Strix – the world’s largest supplier of kettle controls – consistently to deliver profit growth to shareholders.  Despite strong cash conversion, a circa 38% global market share and high growth visibility, the valuation looks undemanding.
Strix kettle safety controls should deliver steady sales growth for some time in our view.  With a clearly articulated market structure, broken down into Regulated, Less Regulated and China, the company demonstrates an ability to perform well at the premium, arguably most demanding, end of the spectrum. Its market share in Regulated markets is an impressive 61%, bolstered by a commitment to technological excellence.  Kettle safety controls represent around 90% of Strix’s sales revenue.
Strix's latest trading update, which refers to the first half of 2018, was released today.  The company confirms that it is on-track to meet current market expectations with very strong cash conversion likely to be achieved.  Key revenue growth highlights included North America and the success of the company's U9 series of controls.  Among new products Aqua Otima performed well and achieved c.20% market share.  The company continues to protect its IP rigorously.  Strix cited a successful infringement claim in China and that it effected the removal of a number of webpages from Amazon's European platform.  
Based on our forecasts the 2019 P/E ratio is just 11x. As investors become more aware of the group’s strengths and growth, it would be logical for that rating to increase accordingly.  

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