The H1 pre-close trading update from Northbridge suggests that H1 adj. PBT is likely to be broadly unchanged y-o-y at the break-even level. This, however, masks a strong Q1 which mostly followed the positive trends seen in 2019 and a COVID-19 related downturn in Q2.
Delays to longer-term projects may affect Q3 trading at Tasman, with recovery more likely from Q4. Crestchic sales and rental in advanced economies continues to perform well, with 2020 hire revenues likely to be impacted by reduced testing in the Middle and Far East, related to natural resources and shipyards.
Overall revenues declined just 4.8% y-o-y during H1, which we consider an incredibly positive result given the wider global economic impact of COVID-19. Management has previously stated that revenues in April and May fell by 13% y-o-y, suggesting a near double-digit improvement during Q1. The mix of revenue, however, did change markedly with manufacturing likely to have improved on the 38.2% share of revenues delivered during H1 2019, reflecting record order books.
Net debt has declined modestly from the year-end to £6.3m (FY2019A: £6.4m). What is encouraging is that management has confirmed that it has formally extended its existing banking facilities and loan notes (£4.0m) by a further year to June 2022.
We continue to believe that the share price is both well supported and yet to reflect improved group trading. That view is supported by lowly ratings: a 27% discount to NAV and a trailing (2019) EV/EBITDA multiple of just 4x, which represents a 32.4% discount to its peers.
