Tyman — Update 13 May 2016

Tyman (LN: TYMN)

Last close As at 04/11/2024

318.50

−4.50 (−1.39%)

Market capitalisation

625m

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Research: Industrials

Tyman — Update 13 May 2016

Tyman

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Industrials

Tyman

FY16 starts in line with expectations

AGM update

Construction & materials

13 May 2016

Price

274.00p

Market cap

£465m

£/US$1.44

Net debt (£m) at end December 2015

81.6

Shares in issue

169.6m

Free float

91%

Code

TYMN

Primary exchange

LSE

Secondary exchange

N/A

Share price performance

%

1m

3m

12m

Abs

(7.3)

9.3

(8.7)

Rel (local)

(5.5)

1.9

2.3

52-week high/low

332.25p

225.75p

Business description

Tyman’s product portfolio now solely addresses the residential RMI and building markets. It manufactures and sources window and door hardware and seals, reporting in three divisions – AmesburyTruth (North America 59%), ERA (UK 17%) and Schlegel International (RoW 24%). (Percentages are pro forma FY15 revenue of c £403m, including acquisitions announced in March 2016.)

Next events

End H116

June 2016

H116 results

26 July 2016

Analysts

Toby Thorrington

+44 (0)20 3077 5721

Roger Johnston

+44 (0)20 3077 5722

Tyman is a research client of Edison Investment Research Limited

An AGM update indicated that year to date trading has been in line with management expectations. Regional trends and outlooks also appear to be consistent with those outlined at the time of the FY15 results in March and estimates are unchanged. The rating is consistent with a mid-cycle position, but we believe that Tyman offers an extended earnings growth profile derived from internal initiatives that are underway.

Year end

Revenue (£m)

PBT*
(£m)

EPS*
(p)

DPS
(p)

P/E
(x)

Yield
(%)

12/14

350.9

41.6

18.4

8.0

14.9

2.9

12/15

353.4

44.9

19.2

8.8

14.3

3.2

12/16e

415.5

51.1

21.1

9.3

13.0

3.4

12/17e

441.5

56.2

23.3

10.3

11.8

3.8

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

Positive start to FY16

Management reports a positive start to FY16 with group revenue growth of c 14% (c 5% on a l-f-l basis) for the first four months of the year. Around the regions, this comprises encouraging trading in North America, driven by the US, and more modest underlying progress in Europe and the UK. The latter two regions will also benefit from acquisitions (ie Schlegel/Giesse and ERA/Response Electronics) made earlier in the year. Sterling weakness against the US dollar and euro suggests a favourable c 6% translation movement in the year to date compared to H115, although weaker sterling may also be putting upward pressure on ERA input costs.

H2 bias, estimates unchanged

AmesburyTruth (c 60% of group revenue) has reported a c 40:60 H1:H2 EBIT split in US$ terms in each of the last two years. This seasonal bias may be magnified by the timing of project benefits coming through in due course, although this effect will not affect FY16. ERA should also have an H2 bias, but this was not apparent in FY15 due to softer trading conditions in UK in the second half. Giesse (acquired at the beginning of March) will also increase the group’s H2 weighting in the current year, possibly including some synergy gains from the initial integration phase. The US footprint transformation and integration of Giesse in Europe are both understood to be progressing as planned, although no further details were given. As the end of H1 approaches, market conditions in North America are described as robust, the UK remains subdued and Europe is improving slowly. Taking all of these factors into account, we see no reason to change estimates at this stage.

Valuation: Extended earnings growth profile expected

Tyman’s share price is at a similar level to our last published note at the end of April. Consequently, our valuation metrics are little changed, with an FY16e P/E of 13.0x falling to 11.8x one year out, while the corresponding EV/EBITDA multiples are 8.9x and 8.0x respectively. Flagged gains from the US and UK footprint reorganisations largely come later and barely affect these multiples, so group earnings growth is expected to continue beyond this year and next.

Exhibit 1: Financial summary

£'m

2010

2011

2012

2013

2014

2015

2016e

2017e

2018e

December

IFRS

IFRS

IFRS

IFRS

IFRS

IFRS

IFRS

IFRS

IFRS

PROFIT & LOSS

 

 

Group

Continuing

Continuing

 

 

 

 

 

 

Revenue

 

 

266.2

216.3

228.8

298.1

350.9

353.4

415.5

441.5

452.3

Cost of Sales

 

 

(173.4)

(145.2)

(154.0)

(198.8)

(236.1)

(234.0)

(269.6)

(290.6)

(297.6)

Gross Profit

 

 

92.8

71.1

74.7

99.3

114.8

119.4

145.9

151.0

154.7

EBITDA

 

 

40.2

27.7

28.5

39.4

54.6

60.4

70.0

76.4

80.6

Operating Profit (Edison)

 

 

33.7

22.4

23.4

33.0

46.9

52.4

60.0

65.6

69.3

Net Interest

 

 

(8.9)

(5.9)

(3.3)

(3.4)

(4.5)

(6.0)

(7.5)

(8.0)

(7.8)

Other Finance

 

 

(2.9)

(3.6)

(0.9)

0.2

(2.2)

(0.6)

(0.5)

(0.5)

(0.5)

Share Based Payments

 

 

(0.1)

(0.2)

(0.5)

(0.7)

(0.9)

(1.0)

(1.0)

(1.0)

(1.0)

Intangible Amortisation

 

 

(11.7)

(10.6)

(10.8)

(16.6)

(17.8)

(19.6)

(19.6)

(19.6)

(19.6)

Exceptionals

 

 

(0.4)

0.7

(33.4)

(11.4)

(9.3)

(9.4)

(10.1)

(3.3)

(3.3)

Other

 

 

(0.3)

(0.1)

(0.4)

(0.4)

(0.3)

(0.4)

(0.4)

(0.4)

(0.4)

Profit Before Tax (Edison norm)

 

21.9

12.7

18.7

29.2

39.3

44.9

51.0

56.1

60.1

Profit Before Tax (Company norm)

 

24.8

17.4

21.3

28.6

41.6

44.9

51.1

56.2

60.2

Profit Before Tax (FRS 3)

 

 

9.5

2.6

(25.8)

0.8

11.9

15.6

21.0

32.9

36.9

Tax

 

 

(2.5)

6.4

3.7

0.2

(2.6)

(7.9)

(9.4)

(11.0)

(12.2)

Profit After Tax (norm)

 

 

19.4

19.1

22.4

29.4

36.8

37.0

41.6

45.2

47.9

Profit After Tax (FRS 3)

 

 

7.0

9.1

(22.1)

1.0

9.3

7.7

11.6

22.0

24.8

 

 

 

 

 

 

 

 

 

 

 

 

Average Number of Shares Outstanding (m)

 

129.8

129.7

129.7

152.8

167.8

168.2

168.5

168.5

168.5

EPS - Edison normalised (p) FD

 

 

10.7

6.7

9.6

13.9

17.1

19.1

21.1

23.2

24.8

EPS - Company normalised (p) FD

 

 

11.4

9.4

10.2

13.5

18.4

19.2

21.1

23.3

24.9

EPS - FRS 3 (p)

 

 

5.3

6.8

(16.7)

0.6

5.6

4.6

6.9

13.0

14.7

Dividend per share (p)

 

 

2.0

3.4

4.5

6.0

8.0

8.8

9.3

10.3

11.0

 

 

 

 

 

 

 

 

 

 

 

 

Gross Margin (%)

 

 

34.9

32.9

32.7

33.3

32.7

33.8

35.1

34.2

34.2

EBITDA Margin (%)

 

 

15.1

12.8

12.5

13.2

15.6

17.1

16.9

17.3

17.8

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

12.7

10.4

10.2

11.1

13.4

14.8

14.4

14.9

15.3

 

 

 

 

 

 

 

 

 

 

 

 

BALANCE SHEET

 

 

 

 

 

 

 

 

Fixed Assets

 

 

367.4

352.8

298.1

404.2

410.6

398.4

443.3

435.9

427.9

Intangible Assets

 

 

328.2

312.7

258.7

354.4

355.7

340.5

360.5

343.9

327.2

Tangible Assets

 

 

31.5

30.5

29.8

39.9

42.9

42.8

69.8

79.0

87.7

Investments

 

 

7.7

9.6

9.5

9.8

12.1

15.0

12.9

12.9

12.9

Current Assets

 

 

86.7

96.361

90.7

118.9

124.0

111.0

132.7

152.6

172.5

Stocks

 

 

26.0

26.6

27.6

40.7

47.6

46.0

66.0

71.1

72.8

Debtors

 

 

28.2

24.1

23.7

29.9

31.5

31.7

46.3

49.2

50.4

Cash

 

 

27.7

20.4

35.9

43.6

39.3

30.0

17.1

29.0

45.9

Current Liabilities

 

 

(51.8)

(55.1)

(44.2)

(60.8)

(52.3)

(44.4)

(59.7)

(67.2)

(73.1)

Creditors

 

 

(46.6)

(42.2)

(36.7)

(54.0)

(52.3)

(44.4)

(59.7)

(67.2)

(73.1)

Short term borrowings

 

 

(5.2)

(12.9)

(7.5)

(6.8)

0.0

0.0

0.0

0.0

0.0

Long Term Liabilities

 

 

(163.7)

(144.8)

(96.9)

(161.7)

(176.2)

(156.7)

(217.7)

(216.8)

(215.9)

Long term borrowings

 

 

(114.3)

(100.2)

(63.6)

(115.5)

(128.0)

(111.6)

(173.6)

(173.6)

(173.6)

Other long term liabilities

 

 

(49.4)

(44.6)

(33.3)

(46.2)

(48.2)

(45.1)

(44.2)

(43.2)

(42.3)

Net Assets

 

 

238.6

249.2

247.7

300.6

306.1

308.3

298.6

304.5

311.4

 

 

 

 

0.000

 

 

 

 

 

 

 

CASH FLOW

 

 

 

 

 

 

 

Operating Cash Flow

 

 

38.6

32.6

23.6

38.9

40.1

48.9

51.7

68.4

76.1

Net Interest

 

 

(9.3)

(6.7)

(4.2)

(2.6)

(4.6)

(6.2)

(7.5)

(8.0)

(7.8)

Tax

 

 

(2.3)

(1.9)

(4.9)

(6.2)

(6.3)

(8.9)

(7.9)

(9.5)

(10.7)

Capex

 

 

(3.5)

(4.9)

(6.8)

(8.1)

(10.2)

(10.9)

(29.9)

(22.9)

(22.9)

Acquisitions/disposals

 

 

0.0

(10.3)

51.2

(131.2)

(6.5)

6.8

(62.0)

0.0

0.0

Financing

 

 

0.0

(0.3)

(1.1)

68.1

(4.3)

(2.6)

(4.0)

0.0

0.0

Dividends

 

 

0.0

(2.6)

(5.8)

(7.0)

(10.9)

(14.6)

(15.2)

(16.1)

(17.9)

Net Cash Flow

 

 

23.5

6.0

51.9

(48.2)

(2.8)

12.5

(74.8)

11.9

16.9

Opening net debt/(cash)

 

 

111.0

91.7

92.7

35.2

78.7

88.7

81.6

156.4

144.5

HP finance leases initiated

 

 

(0.0)

(2.7)

0.0

0.0

0.0

0.0

0.0

0.0

0.0

Other

 

 

(4.2)

(4.4)

5.6

4.7

(7.2)

(5.4)

0.0

0.0

0.0

Closing net debt/(cash)

 

 

91.7

92.7

35.2

78.7

88.7

81.6

156.4

144.5

127.6

Source: Tyman accounts, Edison Investment Research

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DISCLAIMER
Copyright 2016 Edison Investment Research Limited. All rights reserved. This report has been commissioned by Tyman and prepared and issued by Edison for publication globally. 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. Opinions contained in this report represent those of the research department of Edison at the time of publication. The securities described in the Investment Research may not be eligible for sale in all jurisdictions or to certain categories of investors. This research is issued in Australia by Edison Aus and any access to it, is intended only for "wholesale clients" within the meaning of the Australian Corporations Act. The Investment Research is distributed in the United States by Edison US to major US institutional investors only. Edison US is registered as an investment adviser with the Securities and Exchange Commission. Edison US 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. As such, Edison does not offer or provide personalised advice. We publish information about companies in which we believe our readers may be interested and this information reflects our sincere opinions. The information that we provide or that is derived from our website is not intended to be, and should not be construed in any manner whatsoever as, personalised advice. Also, our website and 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 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. This document is provided 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.
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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

245 Park Avenue, 39th Floor

10167, New York

US

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Level 25, Aurora Place

88 Phillip St, Sydney

NSW 2000, Australia

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Level 15, 171 Featherston St

Wellington 6011

New Zealand

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

245 Park Avenue, 39th Floor

10167, New York

US

Sydney +61 (0)2 9258 1161

Level 25, Aurora Place

88 Phillip St, Sydney

NSW 2000, Australia

Wellington +64 (0)48 948 555

Level 15, 171 Featherston St

Wellington 6011

New Zealand

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