Strix Group trading update

Strix (KETL.L, Aim 100, Market cap. £357m, 188p, 4.2% of JIC Portfolio and 9.2% of JIC Top 10): 

Trading update from Strix for the year ended 31st December 2019.

Conclusion: A solid trading update from a solid, if unexciting company. One of the attractions is the strong cash flow and stability of earnings. I have it as Low Risk/Medium Reward; Low Risk due to strong cash flow and stability of earnings and Medium Reward due to a prospective 4.1% dividend yield. A possible total return of 10% -20% over the next year feels about right to me. My rating suggests a 5.0% weighting. On weakness, I would look to take it up to 5.0% target weight. Happy Holder!

Profit after tax is in line with expectations Trading but “as a result of strong cash generation and an improvement in cash outflows, the Group will report a better than expected net debt figure of c.£26.3 million.”

There is a commentary on its performance in different geographic regions. It has maintained its market share in regulated markets, where there was marginal growth. The less-regulated markets saw 8% growth. It has maintained its market share in these markets.

It says it is committed to launching twelve new products in 2020.

It says, “the Board reconfirms its intention to pay total dividends of 7.7p per share in respect of the 2019 financial year, inclusive of the 2.6p per share paid as an interim dividend”.

Mark Bartlett, Chief Executive Officer, said:

“The Group has achieved another solid performance with adjusted profit after tax in line with market expectations. Strix remains committed to investing in the growth of our business and bringing new products to the market where we are on track to deliver 12 new products across the appliance and water categories during 2020.

“We continue to strengthen our long-term strategic position through the construction of a new factory in China. Strix improved its net debt position through sustained cash generation and revisions to the timing of cash outflows relating to the new factory. As a result, we look forward to the year ahead with confidence and have put in place the foundations to achieve our strategic objectives for 2020 and beyond.”

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