Northbridge Industrial Services
Ticker: NBI Exchange: AIM

Northbridge Industrial Services is now focused on Crestchic,  a specialist provider of electrical equipment used primarily to commission, test and service within power reliability and power security markets globally. It has substantially disposed of its Tasman division and is seeking to change its name to Crestchic Plc.

Good news from Crestchic and on refinancing

The trading update from Northbridge ahead of its AGM was positive, with activity levels within the core Crestchic loadbank division markedly higher YoY. Good order visibility into Q3 underlines their confidence in the outlook. The timetable to dispose of Tasman at a sensible price remains intact whilst work is expected to commence on the extension of manufacturing in Burton-on-Trent during Q3, adding 50% to capacity.

Crestchic continues to build momentum, reflecting record orders, a return of oil & gas/marine activity in the Far East and continuing strength of the datacentre, renewable energy and grid resilience markets in Europe, the US, and the Middle East. Trading remains comfortably ahead YoY and Crestchic’s performance YTD underlines the reasons for the additional manufacturing facility.

Tasman continues to suffer from a strong pre-COVID Q1 comparative in 2020, although current activity levels demonstrate early signs of improvement. The timetable to dispose of Tasman remains intact, albeit should acceptable bids fail to emerge, the alternative plan involves targeting margin improvements.

Despite global economic recovery is building nicely, we are not yet changing revenue and EBIT projections, although the restructuring of the balance sheet and conversion/settlement of the loan notes reduces net interest. On this basis, we have increased our adj. EPS projections by 5.6%

As loadbank markets continue to recover/improve and the expansion of manufacturing capacity leads to an accelerated expansion in the hire fleet, we see profitability rising disproportionately to revenue growth. Even on our conservative estimates, the shares remain clearly undervalued relative to peers.

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