Polypipe Group (LON:PLP) is benefiting from its leading position as a supplier into the new housebuilders who are expecting further growth. Other sectors are seeing different conditions but activity levels – including price increases – appear to be holding up reasonably well here also. Our estimates are unchanged and we retain the view that a sector premium rating is warranted.
Residential leading the way
Overall, group like-for-like (LFL) 10-month revenue growth was +7.1% (including +7.3% in H2 to date), enhanced to 8.2% with FX effects. Against H1, divisional LFL revenue growth in the latest four months (to October) is tracking slightly higher in UK Residential and Commercial & Infrastructure (C&I) Europe and lower in C&I UK Market comments are similar to before with residential newbuild still the standout sector; as Polypipe addresses the full build cycle from below ground through to internal fixes, it offers a good read on activity here. A sluggish road-building programme is continuing to limit volume progress in UK C&I, though price increases have contributed to some revenue growth. This sub-division will also feel some y-o-y drag from reduced business in the Middle East. Polypipe’s ventilation products – supplied into both UK divisions – are understood to be growing at least in line with and probably ahead of divisional trends. C&I Europe serves a competitive end customer base and supply chain, but demand conditions are clearly favourable currently.
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