The trading update for FY21 was encouraging, with results in-line with consensus expectations and record levels achieved at the revenue and PAT level. Headwinds continue, placing pressure on gross margins, although management actions and a price rise have eased their impact. Our previous estimates were at the top-end of the consensus range, and we have subsequently fine-tuned them to bring them back in-line. We continue to anticipate satisfactory progress, with the goal of doubling of revenues to FY25 unchanged. Encouragingly, the Group remains on track to achieve sustainability goals.
Rising input costs were in part offset by price rises to legacy products, yet this challenge is expected to continue into FY22. To mitigate these increases, management has increased levels of insourcing within the new manufacturing facility, helping to ease some of the supply chain pressures. Strix has also entered into hedging agreements on currency and is forward-buying commodities (copper, silver, and certain plastics). Further price rises on legacy products is also a potential option.
Strix remains confident of its strong positioning, but we prudently shave our FY21 adj. EPS estimate by 3% to reflect the headwinds discussed. Our fair value / share adjusts to 350p, still more than a third above current levels.
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