Strix Group
Ticker: KETL Exchange: AIM

Strix is a global leader in the design, manufacture and supply of kettle safety controls and other components and devices involving water heating and temperature control, steam management and water filtration.

Temporary relaxation of covenants

Strix has issued a brief statement that should ease investors’ concerns in the short-term. The Group’s consortium of lenders has agreed to temporarily ease its key banking covenant (net debt/EBITDA) from 2.25x to 2.5x at the Q3 period end, reverting to 2.25x in December. The Board has also confirmed the timing of the payment of the interim dividend of 0.9p / share on 29 December.

Finally, the announcement reported the wish of the CFO, Raudres Wong to retire from the Group, effective immediately. Mark Kirkland, a NED of the Group, will replace Raudres on an interim basis until a permanent replacement is hired. 

The lenders’ agreement suggests to us that either net debt levels have already fallen sufficiently to meet targets, or that trading is currently at levels to reduce immediate concerns on debt. We expect year end net debt to decline enough for a net debt/EBITDA ratio of 2.1x, before falling further to 1.8x by the end of FY24. The medium-term goal is to reduce the net debt/EBITDA ratio to below 1.5x.

Our financial estimates remain unchanged, but we adjust our fair value / share to 167p (from 180p) to reflect recent share price movements within its peer group. Strix continues to trade at a significant discount relative to its peers whilst possessing an above average yield. 


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