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Highlights

  • CHH's H1 FY24 revenue fell 7.7% due to UK sales pressure and mix effects
  • Profit after tax rose 2.9% in H1 FY24, driven by improved factory productivity
  • CHH plans a 4.5% increase in interim dividend to GBX 11.5 per share for H1 FY24

Churchill China PLC (LSE:CHH) is a UK-based manufacturer specializing in performance ceramics and has a market capitalization of 104.89mn.  It is a constituent of the FTSE AIM All-Share index.

In H1 FY24, the company's revenue fell by 7.7% compared to the previous year, largely due to pressure on UK sales values from mix effects and a substantial portion of turnover derived from national sales. On a constant currency basis, turnover fell by 6.4% for the period. Net cash and deposits also declined by 21.2%, driven by planned increases in finished goods inventory and higher accounts receivable related to the seasonal working capital cycle. However, there was a positive development as profit after tax rose slightly by 2.9%. This improvement was attributed to enhanced factory productivity, which led to better yields and a higher value-added product mix, supported by ongoing process enhancements and elevated skill levels.

Further, in FY23, the company had a net margin of 9.4% and asset turnover of 1.05x, compared to 7.1% and 0.65x, respectively of the industry median.

Recent Business Update

CHH has declared a final dividend of GBP 2.8 million for 2023 and will distribute an interim dividend of GBX 11.5 per share for H1 FY24, marking a 4.5% increase from the GBX 11.0 per share issued in H1 FY23.

Company Outlook

As per the company, factory performance is on the rise due to improved staff training and increased automation. There is robust demand in the UK's Nationals sector. The investment strategy emphasizes automation, innovation, and energy efficiency to drive sustainable growth. The board is confident that the company is well-positioned for a market rebound, though it faces weakened activity in key European markets. Meeting full-year targets will rely on a surge in demand typically observed in the final four months of the year.

Top 10 Shareholders

The top 10 shareholders of CHH together account for approximately 66.69% of the total shares. Investec Wealth & Investment Limited holds the largest stake with about 10.79%, followed by Roper (James Andrew) with approximately 8.40%, as shown in the chart below.

Price Performance

CHH's stock price has dropped approximately 17.39% over the past month and around 19.14% over the last six months. It has reached a 52-week low of GBX 900.00 and a 52-week high of GBX 1,495.00 and is currently trading below the average of these 52-week highs and lows.

Note 1: Past performance is not a reliable indicator of future performance.
Note 2: The reference data for all price data, currency, technical indicators, support, and resistance levels is 09 September 2024. The reference data in this report has been partly sourced from EODHD/Others.