British Polythene Industries - Strong Start To The Year
Edison | Apr 28, 2016 05:02AM ET
British Polythene Industries (LON:BRPI) has a seasonally stronger H1 trading pattern and a positive Q1 trading update allows us to upgrade estimates again, having done so after the FY15 results. The previously announced disposal of a Chinese subsidiary has completed on slightly better terms than previous guidance. Despite this progress, BPI’s rating remains stubbornly in single-digit P/E territory.
Strong Q1 trading and further upgrades
Following the FY15 results announcement at the end of February, we raised FY16 and FY17 EPS estimates by 5-6% (mainly reflecting updated FX assumptions). At that time, BPI commented that the current year had started well. It appears that this continued throughout Q1, which management now describes as “strong and ahead of expectations”. No particular sector was highlighted, but the effects of relative sterling weakness and lower input costs (chiefly net energy prices) are benefiting UK performance in particular. BPI’s seasonal H1 bias (eg more than 60% of FY15 EBIT was generated in the first six months) provides a good foundation for the full year outturn. To reflect this, we have raised our FY16 PBT estimate by £1m (or 3.4%) and, with some energy cost visibility into the following year also, lifted our expected FY17 PBT by £0.5m (+1.6%).
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