Norcros Plc (LON:NXR) has continued to deliver against our expectations and AGM comments reinforce expectations of progress. The strategy of building a larger complementary business portfolio has been executed well to date and the company retains the financial flexibility to continue this process. Such activity may provide a catalyst for a re-rating but there is already scope for this to happen in our view.
Good trading momentum at the start of FY18
Following FY17 results marginally ahead of our model – and a modest increase to estimates - more recent AGM comments (27 July) pointed to positive momentum in both divisions in the first quarter of the FY18 trading year. Specifically, LFL revenue growth in the UK and South Africa (before positive FX translation) were +10.9% and +3.5% respectively. This reflects both FY17 exit rates and H117 comparative periods; we believe that these growth rates will converge or possibly cross over as the year progresses with UK progress tapering down while South Africa increases. This is consistent with our post results view and no further estimate changes were made after the AGM.
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