Strix H1 trading update just published remains inline with market expectations. Accordingly, we leave our FY 19/20 forecasts unchanged. Reassuringly, Strix reconfirms at this stage its intention to pay total dividends of 7.7p per share for FY 19, +10% YoY. This should underline the income attractions of this stock to investors.
We think it is time to revisit the Strix investment case. The shares have been treading water through Q2 19, in part reflecting the sell-down of a major institutional shareholding. In our view, this appears a strong and attractive entry point to the shares, with additional confidence on the back of the trading update. Valuation multiples are undemanding at 11x PER, 9.8x EV/EBITDA. The dividend yield at the current price is a compelling 5%. We estimate fair value for the shares in the 220p-240p share price range.
Strix is a unique strategic asset on the UK stockmarket, with industry leading margins and a number of interesting growth initiatives underway. It also screens well for investors with a 'sustainability' mandate, given its alignment to health products and improved filtration.
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