Tyman — Update 9 December 2016

Tyman (LN: TYMN)

Last close As at 25/04/2024

318.50

−4.50 (−1.39%)

Market capitalisation

625m

More on this equity

Research: Industrials

Tyman — Update 9 December 2016

Tyman

Analyst avatar placeholder

Written by

Industrials

Tyman

Focus on above market growth

Sector comment and trading update

Construction & materials

9 December 2016

Price

263.50p

Market cap

£469m

£/US$1.26

Net debt (£m) at end June 2016

143.5

Shares in issue

178.6m

Free float

91%

Code

TYMN

Primary exchange

LSE

Secondary exchange

N/A

Share price performance

%

1m

3m

12m

Abs

1.9

(6.7)

3.0

Rel (local)

0.6

(7.1)

(7.3)

52-week high/low

303.0p

225.5p

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 62%), ERA (UK 16%) and Schlegel International (RoW 22%) (percentages are pro forma FY15 revenue of c £439m, including acquisitions announced in 2016).

Next events

FY16 results announcement

8 March 2017

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

While market conditions are mixed, Tyman is focused on significant investment and footprint programmes in all three divisions, each also benefitting from acquisitions. This should provide relative resilience if markets remain sluggish and the rating and yield both have attractions given our expectations for progress.

Year end

Revenue (£m)

PBT*
(£m)

EPS*
(p)

DPS
(p)

P/E
(x)

Yield
(%)

12/14

350.9

41.6

18.4

8.0

14.3

3.0

12/15

353.4

44.9

19.2

8.8

13.7

3.3

12/16e

454.3

54.5

22.0

9.3

12.0

3.5

12/17e

533.9

64.3

25.3

10.3

10.4

3.9

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

Schlegel International – building opportunity

A management presentation highlighted progress in shaping the original Schlegel operations together with Giesse (acquired in March) but also significant sector opportunities from both existing portfolio products and prospective new ones. The task is now to capitalise on these by deepening divisional and group integration and driving cross-selling in the first instance but also building the offering. The international platform is already broad; consolidation and geographic expansion will both feature and footprint efficiency continues to evolve. The challenge will be focus and capital allocation balancing short-term opportunities and longer-term strategic moves. The scale of ambition is clear, aiming to double EBIT in five years (to 2021) and reaching mid-teen margins (vs our expected c 8% in FY16)

Mixed markets, positive FX and acquisition effects

An earlier trading update (8 November) pointed to mixed regional trading patterns in H2 with some improvement in Europe and Canada, and stable but sluggish conditions in the US, UK and Asia Pacific markets. Recent acquisitions Bilco and Giesse are bedding in well and the US footprint programme is well underway with benefits to come from 2017, as previously outlined. Weaker sterling has had a positive FX translation effect on overseas earnings but UK import costs are rising. We trimmed our underlying PBT/EPS estimates by c 2% across all forecast years, largely a US effect partly offset elsewhere. However, after updating FX rates (FY16 £/US$1.35; FY17/FY18 £/US$1.25) our current year estimates are effectively unchanged, with PBT/EPS increases of c 3% in the next two years.

Valuation: Scope for robust performance

Tyman’s share price has largely traded in a 240-300p range during 2016, being flat now YTD, underperforming the FT All Share Index by c 12%. At the current level, the closing year P/E is 12.0x and EV/EBITDA of 8.5x, which reduce to 10.1x and 7.2x respectively one year out. Tyman’s expected growth (our three-year EPS CAGR is c 12%) is partly driven by acquisitions and internal actions in markets that are likely to grow modestly. Consequently, we contend that there is scope for relatively robust performance from here.

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

454.3

533.9

547.9

Cost of Sales

 

 

(173.4)

(145.2)

(154.0)

(198.8)

(236.1)

(234.0)

(308.4)

(383.9)

(394.4)

Gross Profit

 

 

92.8

71.1

74.7

99.3

114.8

119.4

145.9

150.0

153.5

EBITDA

 

 

40.2

27.7

28.5

39.4

54.6

60.4

75.6

87.8

92.6

Operating Profit (Edison)

 

 

33.7

22.4

23.4

33.0

46.9

52.4

65.1

75.9

80.3

Net Interest

 

 

(8.9)

(5.9)

(3.3)

(3.4)

(4.5)

(6.0)

(9.2)

(10.3)

(10.0)

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)

(12.0)

(4.0)

(4.0)

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

54.4

64.2

68.8

Profit Before Tax (Company norm)

 

24.8

17.4

21.3

28.6

41.6

44.9

54.5

64.3

68.9

Profit Before Tax (FRS 3)

 

 

9.5

2.6

(25.8)

0.8

11.9

15.6

22.5

40.4

44.9

Tax

 

 

(2.5)

6.4

3.7

0.2

(2.6)

(7.9)

(10.4)

(13.4)

(14.8)

Profit After Tax (norm)

 

 

19.4

19.1

22.4

29.4

36.8

37.0

43.9

50.8

54.0

Profit After Tax (FRS 3)

 

 

7.0

9.1

(22.1)

1.0

9.3

7.7

12.0

27.0

30.1

 

 

 

 

 

 

 

 

 

 

 

 

Average Number of Shares Outstanding (m)

 

129.8

129.7

129.7

152.8

167.8

168.2

172.7

177.0

177.0

EPS - Edison normalised (p) FD

 

 

10.7

6.7

9.6

13.9

17.1

19.1

21.9

25.3

27.1

EPS - Company normalised (p) FD

 

 

11.4

9.4

10.2

13.5

18.4

19.2

22.0

25.3

27.1

EPS - FRS 3 (p)

 

 

5.3

6.8

(16.7)

0.6

5.6

4.6

7.0

15.2

17.0

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

32.1

28.1

28.0

EBITDA Margin (%)

 

 

15.1

12.8

12.5

13.2

15.6

17.1

16.6

16.4

16.9

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

12.7

10.4

10.2

11.1

13.4

14.8

14.3

14.2

14.6

 

 

 

 

 

 

 

 

 

 

 

 

BALANCE SHEET

 

 

Group

Continuing

Continuing

 

 

 

 

 

 

Fixed Assets

 

 

367.4

352.8

298.1

404.2

410.6

398.4

540.9

535.7

527.2

Intangible Assets

 

 

328.2

312.7

258.7

354.4

355.7

340.5

450.7

434.1

417.4

Tangible Assets

 

 

31.5

30.5

29.8

39.9

42.9

42.8

77.2

85.9

94.1

Investments

 

 

7.7

9.6

9.5

9.8

12.1

15.0

12.9

15.7

15.7

Current Assets

 

 

86.7

96.361

90.7

118.9

124.0

111.0

180.0

211.1

236.4

Stocks

 

 

26.0

26.6

27.6

40.7

47.6

46.0

73.1

85.0

87.3

Debtors

 

 

28.2

24.1

23.7

29.9

31.5

31.7

53.2

62.5

64.2

Cash

 

 

27.7

20.4

35.9

43.6

39.3

30.0

50.3

60.3

81.5

Current Liabilities

 

 

(51.8)

(55.1)

(44.2)

(60.8)

(52.3)

(44.4)

(64.5)

(78.5)

(84.8)

Creditors

 

 

(46.6)

(42.2)

(36.7)

(54.0)

(52.3)

(44.4)

(64.5)

(78.5)

(84.8)

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)

(314.2)

(313.2)

(312.3)

Long term borrowings

 

 

(114.3)

(100.2)

(63.6)

(115.5)

(128.0)

(111.6)

(248.5)

(248.5)

(248.5)

Other long term liabilities

 

 

(49.4)

(44.6)

(33.3)

(46.2)

(48.2)

(45.1)

(65.6)

(64.7)

(63.8)

Net Assets

 

 

238.6

249.2

247.7

300.6

306.1

308.3

342.2

355.1

366.4

 

 

 

 

0.000

 

 

 

 

 

 

 

CASH FLOW

 

 

Group

Continuing

Continuing

 

 

 

 

 

 

Operating Cash Flow

 

 

38.6

32.6

23.6

38.9

40.1

48.9

61.9

72.4

86.7

Net Interest

 

 

(9.3)

(6.7)

(4.2)

(2.6)

(4.6)

(6.2)

(9.2)

(10.3)

(10.0)

Tax

 

 

(2.3)

(1.9)

(4.9)

(6.2)

(6.3)

(8.9)

(8.9)

(11.9)

(13.3)

Capex

 

 

(3.5)

(4.9)

(6.8)

(8.1)

(10.2)

(10.9)

(22.4)

(23.4)

(23.4)

Acquisitions/disposals

 

 

0.0

(10.3)

51.2

(131.2)

(6.5)

6.8

(111.3)

0.0

0.0

Financing

 

 

0.0

(0.3)

(1.1)

68.1

(4.3)

(2.6)

16.7

0.0

0.0

Dividends

 

 

0.0

(2.6)

(5.8)

(7.0)

(10.9)

(14.6)

(15.6)

(16.9)

(18.8)

Net Cash Flow

 

 

23.5

6.0

51.9

(48.2)

(2.8)

12.5

(88.9)

9.9

21.3

Opening net debt/(cash)

 

 

111.0

91.7

92.7

35.2

78.7

88.7

81.6

198.2

188.3

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)

(27.8)

0.0

(0.0)

Closing net debt/(cash)

 

 

91.7

92.7

35.2

78.7

88.7

81.6

198.2

188.3

167.0

Source: Company accounts, Edison Investment Research

Edison, the investment intelligence firm, is the future of investor interaction with corporates. Our team of over 100 analysts and investment professionals work with leading companies, fund managers and investment banks worldwide to support their capital markets activity. We provide services to more than 400 retained corporate and investor clients from our offices in London, New York, Frankfurt, Sydney and Wellington. Edison is authorised and regulated by the Financial Conduct Authority. Edison Investment Research (NZ) Limited (Edison NZ) is the New Zealand subsidiary of Edison. Edison NZ is registered on the New Zealand Financial Service Providers Register (FSP number 247505) and is registered to provide wholesale and/or generic financial adviser services only. Edison Investment Research Inc (Edison US) is the US subsidiary of Edison and is regulated by the Securities and Exchange Commission. Edison Investment Research Limited (Edison Aus) [46085869] is the Australian subsidiary of Edison and is not regulated by the Australian Securities and Investment Commission. Edison Germany is a branch entity of Edison Investment Research Limited [4794244]. www.edisongroup.com

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.
Edison has a restrictive policy relating to personal dealing. 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. Edison or its affiliates may perform services or solicit business from any of the companies mentioned in this report. The value of securities mentioned in this report can fall as well as rise and are subject to large and sudden swings. In addition it may be difficult or not possible to buy, sell or obtain accurate information about the value of securities mentioned in this report. Past performance is not necessarily a guide to future performance. 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. 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 (ie 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. To the maximum extent permitted by law, Edison, its affiliates and contractors, and their respective directors, officers and employees will not be liable for any loss or damage arising as a result of reliance being placed on any of the information contained in this report and do not guarantee the returns on investments in the products discussed in this publication. FTSE International Limited (“FTSE”) © FTSE 2016. “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.

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

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

Edison, the investment intelligence firm, is the future of investor interaction with corporates. Our team of over 100 analysts and investment professionals work with leading companies, fund managers and investment banks worldwide to support their capital markets activity. We provide services to more than 400 retained corporate and investor clients from our offices in London, New York, Frankfurt, Sydney and Wellington. Edison is authorised and regulated by the Financial Conduct Authority. Edison Investment Research (NZ) Limited (Edison NZ) is the New Zealand subsidiary of Edison. Edison NZ is registered on the New Zealand Financial Service Providers Register (FSP number 247505) and is registered to provide wholesale and/or generic financial adviser services only. Edison Investment Research Inc (Edison US) is the US subsidiary of Edison and is regulated by the Securities and Exchange Commission. Edison Investment Research Limited (Edison Aus) [46085869] is the Australian subsidiary of Edison and is not regulated by the Australian Securities and Investment Commission. Edison Germany is a branch entity of Edison Investment Research Limited [4794244]. www.edisongroup.com

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.
Edison has a restrictive policy relating to personal dealing. 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. Edison or its affiliates may perform services or solicit business from any of the companies mentioned in this report. The value of securities mentioned in this report can fall as well as rise and are subject to large and sudden swings. In addition it may be difficult or not possible to buy, sell or obtain accurate information about the value of securities mentioned in this report. Past performance is not necessarily a guide to future performance. 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. 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 (ie 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. To the maximum extent permitted by law, Edison, its affiliates and contractors, and their respective directors, officers and employees will not be liable for any loss or damage arising as a result of reliance being placed on any of the information contained in this report and do not guarantee the returns on investments in the products discussed in this publication. FTSE International Limited (“FTSE”) © FTSE 2016. “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.

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

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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