Firstextile: Guidance Maintained Despite A Slow Start
Edison | May 22, 2014 05:58AM ET
Guidance maintained despite a slow start
Despite a slow start to the year, management remains very confident of reaching its FY14 targets set in April. With the new production facility expected to come on stream in 2015, Firstextile (XETRA:FT8) looks well prepared to benefit from the high demand for its products over the long term. At 2014 4.2x P/E and 1.6x EV/EBITDA the valuation looks low.
Strong Q113 comparator
Q1 results reflect a slow start to FY14, in part due to the expected quarterly fluctuation in the Uniforms segment and the very strong comparator in Q113, especially in the Fabrics segment. While the comparators remain tough in Q2, in H2 not only will the company benefit from significantly easier comparators, but more importantly from the impact of the new Uniforms contracts the company has recently won with China Telecom, China Unicom, China Mobile and China Post. Revenues and gross profit in Branded products were up 55% and 10.7% respectively in Q1, with gross margin of 54.7% (Q113: 78.7%) reflecting the competitive strength of Firstextile’s branded products, and the success of its strategy to expand its product portfolio. We maintain our forecasts, which we revised in our Update note of 2 May.
On 13 May management released a statement that 100% net profit for FY13 would be retained.
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