Strix announced three important updates in relation to its IP and patent protection in an RNS yesterday. This announcement is important both for the quality of the company’s growth and for the valuation placed on the company’s shares. As a result, we view it positively.
Strix’s ability to deliver organic sales volume growth from its core kettle safety devices business and closely related extensions into new products, remain central to the company’s investment case. However, the quality of that growth and its implications for valuation require vigorous IP and patent protection.
Strix announced in a 12th December 2018 RNS that it has again successfully defended key patents in China. These announcements covered three actions. Our overall view is that the Strix’s organic growth outlook remains positive. There is clear demand for its high specification products and substantial headroom for growth. A vigorous approach to IP and patent protection should help sustain its leading 38% market share in kettle safety devices. For valuation, these kinds of announcements are important. After the recent global stock market weakness, Strix currently trades on a 9.6x 2018 P/E (based on our forecasts) and yields 5.2%, both of which look attractive.
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