Trifast Estimates
Edison | Apr 16, 2014 07:22AM ET
Estimates raised again
Trifast (TRFT.LSE)’s positive trading statement has led to a 6% increase in our current profit estimates, with continued progress across group operations. A 7% P/E discount to its peer group does not recognise the consistent performance in recent years and the developing potential.
Strong final quarter
The steady recovery in world trade and sound performance of the automotive industry in the UK (the group supplies, through component manufacturers, to several strongly performing OEMs, notably Jaguar/Land Rover and Nissan) point to a strong final quarter. It now looks as though the group will match its first-half profit (underlying pre-tax of £4.55m) during the second half, despite the fact there were seven fewer working days because of the incidence of holidays. In the light of the trading statement we are again lifting our full-year estimate, by £0.5m to £9.0m.
Investment in the future
Management has invested in lifting the quality of business being generated. It has walked away from some high volume business where suitable margins could not be agreed. This has been replaced by increased business from several of the group’s major customers and a steady flow of incremental contracts with new customers prepared to pay for Trifast’s product quality and logistics skills. We expect gross margins to have risen last year, enabling the group to continue its investment in specialist engineering sales personnel, while maintaining progress to the bottom line.
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