Tyman — Meeting market expectations

Tyman (LN: TYMN)

Last close As at 21/12/2024

318.50

−4.50 (−1.39%)

Market capitalisation

625m

More on this equity

Research: Industrials

Tyman — Meeting market expectations

With a share price that has been under pressure this year, an in-line trading performance should provide some reassurance to investors. A lack of improvement in Tyman’s underlying markets should come as no surprise but, with steps being taken in each division, overall group progress is anticipated for the year as a whole. This provides grounds for greater confidence in the company’s prospects, in our view.

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Written by

Industrials

Tyman

Meeting market expectations

Trading update

Construction & materials

6 November 2019

Price

206.0p

Market cap

£405m

£/US$ 1.29

Net debt (£m) at end June 2019

228.0

Shares in issue

196.2m

Free float

91%

Code

TYMN

Primary exchange

LSE

Secondary exchange

N/A

Share price performance

%

1m

3m

12m

Abs

(13.6)

5.6

(25.6)

Rel (local)

(16.4)

2.4

(28.6)

52-week high/low

279.5p

195.6p

Business description

Tyman’s product portfolio substantially addresses the residential RMI and building markets with increasing commercial sector exposure following acquisitions. It manufactures and sources window and door hardware and seals, reporting in three divisions: AmesburyTruth (North America; 64% of reported FY18 revenue), ERA (UK; 16%) and SchlegelGiesse (RoW; 20%).

Next events

FY19 year end

December 2019

FY19 results announcement

5 March 2020

Analyst

Toby Thorrington

+44 (0)20 3077 5721

Tyman is a research client of Edison Investment Research Limited

With a share price that has been under pressure this year, an in-line trading performance should provide some reassurance to investors. A lack of improvement in Tyman’s underlying markets should come as no surprise but, with steps being taken in each division, overall group progress is anticipated for the year as a whole. This provides grounds for greater confidence in the company’s prospects, in our view.

Year end

Revenue (£m)

PBT*
(£m)

EPS*
(p)

DPS
(p)

P/E
(x)

Yield
(%)

12/17

522.7

68.3

26.7

11.3

7.7

5.5

12/18

591.5

72.7

27.5

12.0

7.5

5.8

12/19e

621.0

70.0

26.1

12.3

7.9

6.0

12/20e

629.1

74.3

27.7

12.9

7.4

6.2

Note: *PBT and EPS (fully diluted) are normalised, as defined by Tyman, excluding intangible amortisation and exceptional items.

US stabilises, group progress expectation confirmed

Tyman’s trading update points to flattish US markets and some weakening in the UK and RoW markets that it serves since the half year. Nevertheless, management expects to report small y-o-y progress in revenue and operating profit for the year as a whole, performing in line with consensus EBIT of £84.8m (slightly above our £83.9m estimate and versus the c £83.6m reported for FY18). As at the half year, favourable FX and full year acquisition effects contribute to this expected outturn, although to a lesser extent than seen in H1, we believe. There is some way to go to the year end, but management expects year-end gearing (frozen GAAP/pre-IFRS 16 basis) to be below 2x EBITDA. We believe a downward trend in core net debt will be well received as Tyman progresses towards its stated medium term 1–1.5x target.

In the US, AmesburyTruth (AT) customer service levels appear to have stabilised following factory move-related inefficiencies and are now said to be improving, but there is further to go. Options for problematic door seals line production (ie make or buy) are still under review. Otherwise, AT is seeing normal seasonal trading patterns in the group’s largest market. Elsewhere, new next-generation smartware product launches by ERA in the UK and general cost reduction steps at SchlegelGiesse (RoW) operations are noted actions in mixed but generally soft market conditions.

Valuation: Unchanged estimates, low valuation

Tyman’s share price has recovered somewhat from a 196p low following the interim results, but is yet to regain pre-results levels. The trading update – and our unchanged estimates – suggests grounds for further recovery with valuation multiples having compressed too far. A current year P/E and EV/EBITDA (adjusted for pensions cash) of 7.9x and 5.9x respectively are low historically and a prospective dividend yield of 6% reinforces this view.

Exhibit 1: Financial summary

£m

2014

2015

2016

2017

2018

2019e

2020e

2021e

December

IFRS

IFRS

IFRS

IFRS

IFRS

IFRS

IFRS

IFRS

PROFIT & LOSS

 

 

 

 

 

 

 

 

 

 

Revenue

 

 

350.9

353.4

457.6

522.7

591.5

621.0

629.1

637.3

Cost of Sales

 

 

(236.1)

(234.0)

(290.4)

(331.8)

(383.3)

(388.9)

(385.9)

(387.6)

Gross Profit

 

 

114.8

119.4

167.3

190.9

208.3

232.1

243.2

249.8

EBITDA*

 

 

54.6

60.9

82.5

91.7

98.5

101.1

105.5

113.4

Operating Profit (Edison)

 

 

46.9

52.9

70.9

78.8

84.7

85.1

89.0

96.4

Net Interest

 

 

(4.5)

(6.0)

(6.9)

(8.0)

(10.1)

(10.8)

(10.3)

(9.8)

Other Finance

 

 

(2.2)

(0.6)

(0.4)

(0.8)

(1.3)

(3.5)

(3.5)

(3.5)

Share Based Payments

 

 

(0.9)

(1.0)

(1.0)

(2.0)

(1.1)

(1.2)

(1.2)

(1.2)

Intangible Amortisation

 

 

(17.8)

(19.6)

(21.7)

(22.9)

(25.8)

(28.2)

(28.2)

(28.2)

Exceptionals

 

 

(9.3)

(9.4)

(10.9)

(10.0)

(7.3)

(15.0)

(1.8)

0.0

Other

 

 

(0.3)

(0.4)

(0.5)

(0.6)

(0.2)

(0.2)

(0.2)

(0.2)

Profit Before Tax (Edison norm)

 

39.3

45.4

62.5

68.0

72.2

69.7

74.0

81.9

Profit Before Tax (Company norm)

 

41.6

45.4

62.1

68.3

72.7

70.0

74.3

82.2

Profit Before Tax (statutory)

 

 

11.9

16.1

29.4

34.5

38.9

26.3

43.9

53.5

Tax

 

 

(2.6)

(8.0)

(8.6)

(3.3)

(12.5)

(10.5)

(11.7)

(13.9)

Profit After Tax (norm)

 

 

36.8

37.3

53.8

64.7

59.7

59.1

62.3

68.0

Profit After Tax (statutory)

 

 

9.3

8.1

20.7

31.2

26.3

15.8

32.1

39.7

 

 

 

 

 

 

 

 

 

 

 

Average Number of Shares Outstanding (m)

 

167.8

168.2

173.0

177.2

191.4

194.9

194.9

194.9

EPS - Edison norm (p) FD

 

 

17.1

19.3

25.5

26.6

27.2

25.9

27.6

30.5

EPS - Company norm (p) FD

 

 

18.4

19.4

25.3

26.7

27.5

26.1

27.7

30.6

EPS - statutory (p)

 

 

5.6

4.8

12.0

17.6

13.8

8.1

16.5

20.4

Dividend per share (p)

 

 

8.0

8.8

10.5

11.3

12.0

12.3

12.9

13.5

 

 

 

 

 

 

 

 

 

 

 

Gross Margin (%)

 

 

32.7

33.8

36.5

36.5

35.2

37.4

38.7

39.2

EBITDA Margin (%)

 

 

15.6

17.2

18.0

17.5

16.7

16.3

16.8

17.8

Operating Margin (before GW and except.) (%)

13.4

15.0

15.5

15.1

14.3

13.7

14.1

15.1

 

 

 

 

 

 

 

 

 

 

 

BALANCE SHEET

 

 

 

 

 

 

 

 

 

 

Fixed Assets

 

 

410.6

398.4

564.7

509.9

612.5

640.4

604.7

568.5

Intangible Assets

 

 

355.7

340.5

480.0

427.2

516.9

494.5

465.9

437.3

Tangible Assets

 

 

42.9

42.8

71.7

68.4

77.0

127.6

120.5

112.9

Investments

 

 

12.1

15.0

12.9

14.2

18.6

18.3

18.3

18.3

Current Assets

 

 

124.0

111.0

180.6

188.1

244.8

288.1

322.9

366.3

Stocks

 

 

47.6

46.0

70.7

75.3

105.3

104.8

104.0

104.5

Debtors

 

 

37.1

35.0

69.0

70.2

87.7

87.8

88.7

89.7

Cash

 

 

39.3

30.0

40.9

42.6

51.9

95.5

130.2

172.2

Current Liabilities

 

 

(52.3)

(44.4)

(86.4)

(82.0)

(102.9)

(108.8)

(109.2)

(111.4)

Creditors

 

 

(52.3)

(44.4)

(86.4)

(80.9)

(101.4)

(108.8)

(109.2)

(111.4)

Short term borrowings

 

 

0.0

0.0

0.0

(1.1)

(1.5)

0.0

0.0

0.0

Long Term Liabilities

 

 

(176.2)

(156.7)

(285.3)

(251.4)

(320.5)

(392.8)

(385.9)

(379.0)

Long term borrowings

 

 

(128.0)

(111.6)

(216.5)

(204.3)

(259.2)

(277.6)

(277.6)

(277.6)

Other long term liabilities

 

 

(48.2)

(45.1)

(68.8)

(47.0)

(61.3)

(115.2)

(108.3)

(101.4)

Net Assets

 

 

306.1

308.3

373.6

364.5

433.8

427.0

432.5

444.4

 

 

 

 

 

 

 

 

 

 

 

CASH FLOW

 

 

 

 

 

 

 

 

 

 

Operating Cash Flow

 

 

40.1

49.4

79.9

67.0

85.0

96.8

109.1

117.8

Net Interest

 

 

(4.6)

(6.2)

(7.0)

(7.6)

(9.1)

(13.8)

(13.3)

(12.8)

Tax

 

 

(6.3)

(8.9)

(12.7)

(15.1)

(12.3)

(10.0)

(11.2)

(13.4)

Capex

 

 

(10.2)

(10.9)

(15.3)

(12.6)

(12.0)

(12.3)

(16.0)

(16.0)

Acquisitions/disposals

 

 

(6.5)

6.8

(96.1)

(6.3)

(106.4)

(1.0)

(1.5)

0.0

Financing

 

 

(4.3)

(2.6)

16.7

(0.8)

47.2

(2.0)

(2.0)

(2.0)

Dividends

 

 

(10.9)

(14.6)

(15.6)

(19.5)

(22.4)

(23.8)

(24.6)

(25.8)

Net Cash Flow

 

 

(2.8)

13.0

(50.0)

5.1

(30.1)

33.9

40.6

47.9

Opening net debt/(cash)

 

 

78.7

88.7

81.6

175.6

162.9

208.8

182.1

147.4

Finance leases initiated

 

 

0.0

0.0

0.0

0.0

(2.0)

0.0

0.0

0.0

Other

 

 

(7.2)

(5.9)

(44.0)

7.6

(13.9)

(7.2)

(5.9)

(5.9)

Closing net debt/(cash)*

 

 

88.7

81.6

175.6

162.9

208.8

182.1

147.4

105.4

Lease finance (under IFRS 16)

 

 

 

 

 

59.1

53.2

47.3

Source: Company accounts, Edison Investment Research. Note: *EBITDA and net debt both shown on a pre-IFRS 16 basis.

General disclaimer and copyright

This report has been commissioned by Tyman and prepared and issued by Edison, in consideration of a fee payable by Tyman. Edison Investment Research standard fees are £49,500 pa for the production and broad dissemination of a detailed note (Outlook) following by regular (typically quarterly) update notes. Fees are paid upfront in cash without recourse. Edison may seek additional fees for the provision of roadshows and related IR services for the client but does not get remunerated for any investment banking services. We never take payment in stock, options or warrants for any of our services.

Accuracy of content: All information used in the publication of this report has been compiled from publicly available sources that are believed to be reliable, however we do not guarantee the accuracy or completeness of this report and have not sought for this information to be independently verified. Opinions contained in this report represent those of the research department of Edison at the time of publication. Forward-looking information or statements in this report contain information that is based on assumptions, forecasts of future results, estimates of amounts not yet determinable, and therefore involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of their subject matter to be materially different from current expectations.

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New Zealand

The research in this document is intended for New Zealand resident professional financial advisers or brokers (for use in their roles as financial advisers or brokers) and habitual investors who are “wholesale clients” for the purpose of the Financial Advisers Act 2008 (FAA) (as described in sections 5(c) (1)(a), (b) and (c) of the FAA). This is not a solicitation or inducement to buy, sell, subscribe, or underwrite any securities mentioned or in the topic of this document. For the purpose of the FAA, the content of this report is of a general nature, is intended as a source of general information only and is not intended to constitute a recommendation or opinion in relation to acquiring or disposing (including refraining from acquiring or disposing) of securities. The distribution of this document is not a “personalised service” and, to the extent that it contains any financial advice, is intended only as a “class service” provided by Edison within the meaning of the FAA (i.e. without taking into account the particular financial situation or goals of any person). As such, it should not be relied upon in making an investment decision.

United Kingdom

This document is prepared and provided by Edison for information purposes only and should not be construed as an offer or solicitation for investment in any securities mentioned or in the topic of this document. A marketing communication under FCA Rules, this document has not been prepared in accordance with the legal requirements designed to promote the independence of investment research and is not subject to any prohibition on dealing ahead of the dissemination of investment research.

This Communication is being distributed in the United Kingdom and is directed only at (i) persons having professional experience in matters relating to investments, i.e. investment professionals within the meaning of Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005, as amended (the "FPO") (ii) high net-worth companies, unincorporated associations or other bodies within the meaning of Article 49 of the FPO and (iii) persons to whom it is otherwise lawful to distribute it. The investment or investment activity to which this document relates is available only to such persons. It is not intended that this document be distributed or passed on, directly or indirectly, to any other class of persons and in any event and under no circumstances should persons of any other description rely on or act upon the contents of this document.

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The Investment Research is a publication distributed in the United States by Edison Investment Research, Inc. Edison Investment Research, Inc. is registered as an investment adviser with the Securities and Exchange Commission. Edison relies upon the "publishers' exclusion" from the definition of investment adviser under Section 202(a)(11) of the Investment Advisers Act of 1940 and corresponding state securities laws. This report is a bona fide publication of general and regular circulation offering impersonal investment-related advice, not tailored to a specific investment portfolio or the needs of current and/or prospective subscribers. As such, Edison does not offer or provide personal advice and the research provided is for informational purposes only. No mention of a particular security in this report constitutes a recommendation to buy, sell or hold that or any security, or that any particular security, portfolio of securities, transaction or investment strategy is suitable for any specific person.

Frankfurt +49 (0)69 78 8076 960

Schumannstrasse 34b

60325 Frankfurt

Germany

London +44 (0)20 3077 5700

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London, WC1V 7EE

United Kingdom

New York +1 646 653 7026

1,185 Avenue of the Americas

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United States of America

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Level 4, Office 1205

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General disclaimer and copyright

This report has been commissioned by Tyman and prepared and issued by Edison, in consideration of a fee payable by Tyman. Edison Investment Research standard fees are £49,500 pa for the production and broad dissemination of a detailed note (Outlook) following by regular (typically quarterly) update notes. Fees are paid upfront in cash without recourse. Edison may seek additional fees for the provision of roadshows and related IR services for the client but does not get remunerated for any investment banking services. We never take payment in stock, options or warrants for any of our services.

Accuracy of content: All information used in the publication of this report has been compiled from publicly available sources that are believed to be reliable, however we do not guarantee the accuracy or completeness of this report and have not sought for this information to be independently verified. Opinions contained in this report represent those of the research department of Edison at the time of publication. Forward-looking information or statements in this report contain information that is based on assumptions, forecasts of future results, estimates of amounts not yet determinable, and therefore involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of their subject matter to be materially different from current expectations.

Exclusion of Liability: To the fullest extent allowed by law, Edison shall not be liable for any direct, indirect or consequential losses, loss of profits, damages, costs or expenses incurred or suffered by you arising out or in connection with the access to, use of or reliance on any information contained on this note.

No personalised advice: The information that we provide should not be construed in any manner whatsoever as, personalised advice. Also, the information provided by us should not be construed by any subscriber or prospective subscriber as Edison’s solicitation to effect, or attempt to effect, any transaction in a security. The securities described in the report may not be eligible for sale in all jurisdictions or to certain categories of investors.

Investment in securities mentioned: Edison has a restrictive policy relating to personal dealing and conflicts of interest. Edison Group does not conduct any investment business and, accordingly, does not itself hold any positions in the securities mentioned in this report. However, the respective directors, officers, employees and contractors of Edison may have a position in any or related securities mentioned in this report, subject to Edison's policies on personal dealing and conflicts of interest.

Copyright: Copyright 2019 Edison Investment Research Limited (Edison). All rights reserved FTSE International Limited (“FTSE”) © FTSE 2019. “FTSE®” is a trade mark of the London Stock Exchange Group companies and is used by FTSE International Limited under license. All rights in the FTSE indices and/or FTSE ratings vest in FTSE and/or its licensors. Neither FTSE nor its licensors accept any liability for any errors or omissions in the FTSE indices and/or FTSE ratings or underlying data. No further distribution of FTSE Data is permitted without FTSE’s express written consent.

Australia

Edison Investment Research Pty Ltd (Edison AU) is the Australian subsidiary of Edison. Edison AU is a Corporate Authorised Representative (1252501) of Crown Wealth Group Pty Ltd who holds an Australian Financial Services Licence (Number: 494274). This research is issued in Australia by Edison AU and any access to it, is intended only for "wholesale clients" within the meaning of the Corporations Act 2001 of Australia. Any advice given by Edison AU is general advice only and does not take into account your personal circumstances, needs or objectives. You should, before acting on this advice, consider the appropriateness of the advice, having regard to your objectives, financial situation and needs. If our advice relates to the acquisition, or possible acquisition, of a particular financial product you should read any relevant Product Disclosure Statement or like instrument.

New Zealand

The research in this document is intended for New Zealand resident professional financial advisers or brokers (for use in their roles as financial advisers or brokers) and habitual investors who are “wholesale clients” for the purpose of the Financial Advisers Act 2008 (FAA) (as described in sections 5(c) (1)(a), (b) and (c) of the FAA). This is not a solicitation or inducement to buy, sell, subscribe, or underwrite any securities mentioned or in the topic of this document. For the purpose of the FAA, the content of this report is of a general nature, is intended as a source of general information only and is not intended to constitute a recommendation or opinion in relation to acquiring or disposing (including refraining from acquiring or disposing) of securities. The distribution of this document is not a “personalised service” and, to the extent that it contains any financial advice, is intended only as a “class service” provided by Edison within the meaning of the FAA (i.e. without taking into account the particular financial situation or goals of any person). As such, it should not be relied upon in making an investment decision.

United Kingdom

This document is prepared and provided by Edison for information purposes only and should not be construed as an offer or solicitation for investment in any securities mentioned or in the topic of this document. A marketing communication under FCA Rules, this document has not been prepared in accordance with the legal requirements designed to promote the independence of investment research and is not subject to any prohibition on dealing ahead of the dissemination of investment research.

This Communication is being distributed in the United Kingdom and is directed only at (i) persons having professional experience in matters relating to investments, i.e. investment professionals within the meaning of Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005, as amended (the "FPO") (ii) high net-worth companies, unincorporated associations or other bodies within the meaning of Article 49 of the FPO and (iii) persons to whom it is otherwise lawful to distribute it. The investment or investment activity to which this document relates is available only to such persons. It is not intended that this document be distributed or passed on, directly or indirectly, to any other class of persons and in any event and under no circumstances should persons of any other description rely on or act upon the contents of this document.

This Communication is being supplied to you solely for your information and may not be reproduced by, further distributed to or published in whole or in part by, any other person.

United States

The Investment Research is a publication distributed in the United States by Edison Investment Research, Inc. Edison Investment Research, Inc. is registered as an investment adviser with the Securities and Exchange Commission. Edison relies upon the "publishers' exclusion" from the definition of investment adviser under Section 202(a)(11) of the Investment Advisers Act of 1940 and corresponding state securities laws. This report is a bona fide publication of general and regular circulation offering impersonal investment-related advice, not tailored to a specific investment portfolio or the needs of current and/or prospective subscribers. As such, Edison does not offer or provide personal advice and the research provided is for informational purposes only. No mention of a particular security in this report constitutes a recommendation to buy, sell or hold that or any security, or that any particular security, portfolio of securities, transaction or investment strategy is suitable for any specific person.

Frankfurt +49 (0)69 78 8076 960

Schumannstrasse 34b

60325 Frankfurt

Germany

London +44 (0)20 3077 5700

280 High Holborn

London, WC1V 7EE

United Kingdom

New York +1 646 653 7026

1,185 Avenue of the Americas

3rd Floor, New York, NY 10036

United States of America

Sydney+61 (0)2 8249 8342

Level 4, Office 1205

95 Pitt Street, Sydney

NSW 2000, Australia

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