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.