Significantly improved guidance in today’s FY20 trading update has resulted in adj PBT expectations rising for a second time within three months. The strong finish to the year was driven by the CEE businesses, toys (ISL), and Freight Forwarding - alongside cost savings.
The FY20F trading update delivered a positive profits surprise, with guidance for adj. PBT lifted by 20% from £6.0m to £7.2m, reflecting a much stronger than anticipated Christmas trading period in November and December. Trading continued to be strong across several businesses: CEE, (especially Lithuania), ISL (toys) and Freight Forwarding well into the third week of December.
While several businesses have had a slow start to FY21, reflecting the business recorded during late December, we believe Brexit to be an opportunity for Xpediator. The Group’s customs clearance resource has been improved and the current chaos at borders is likely to result in XPD attracting new customers, with an opportunity to then cross-sell additional services.
We raise our guidance on fair value / share to 60p (previously 50p) to reflect the 20% uplift to adj. PBT projections. The shares continue to represent good value relative to its peers, with XPD shares trading at a significant discount to that group’s average valuation.