Northbridge Industrial Services
Ticker: NBI Exchange: AIM

Northbridge Industrial Services is a holding company focused on two divisions. Crestchic, the larger division, is a specialist provider of electrical equipment used primarily to commission, test and service within power reliability and power security markets globally. Tasman Oil Tools is a rental specialist of down-hole tools to the oil & gas, geothermal energy and coal bed methane markets

Proving the doubters wrong

Northbridge’s results for 6 months to June were most encouraging, with revenues falling just 4.5% and adj. PBT maintained at breakeven.

While the pandemic reduced higher margin hire revenues, the performance of the Group’s North American operations represented particularly good news. Recovery commenced from August within hire and the strong manufacturing order book translated to revenues from Q2. We anticipate normal trading levels resuming from FY21.

Despite hire service revenues adversely affected during Q2, particularly at the higher margin Crestchic, the manufacturing arm of the loadbank/transformer supplier performed very strongly due to record order books.

Another bright spot was the performance of the North American arm of Crestchic, which has delivered a CAGR in revenues of 111% between 2016 and 2020. The region has rapidly grown to represent the second largest geographical area for the Group. With a market share of less than 2% of the loadbank market, we anticipate further strong growth from the region over the medium-to-long term.

The balance sheet remains strong, with management extending the facilities for the RCF and the loan notes by 12-months to June 2022. We anticipate net debt reducing to £5.4m by the year-end, representing gearing of only 18% and a net debt/EBITDA ratio of just 0.9x.

The shares are well underpinned by the NAV per share of 109p, itself backed by a combination of freehold property and the hire fleet. On EV/EBITDA multiples we see Northbridge trading at a 40% discount to its peer group. With the shares trading only modestly above 12-month lows, we believe they are yet to fairly reflect the recovery underway.

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