0R15 9025.0 0.0% 0R1E 9410.0 0.0% 0M69 None None% 0R2V 247.99 9682.643% 0QYR 1567.5 0.0% 0QYP 439.3701 -2.9016% 0RUK None None% 0RYA 1597.0 1.2682% 0RIH 195.55 0.0% 0RIH 191.4 -2.1222% 0R1O 225.5 9683.0803% 0R1O None None% 0QFP 10475.8496 107.8542% 0M2Z 252.573 0.2373% 0VSO 33.0 -7.3164% 0R1I None None% 0QZI 622.0 0.0% 0QZ0 220.0 0.0% 0NZF None None% 0YXG 222.05 -4.1318%
James Halstead PLC (LON: JHD) – Consistently solid demand brings confidence for H1 FY2021
James Halstead PLC is an FTSE AIM All-Share Index listed Company founded in 1914 and headquartered in Manchester, the United Kingdom. The Company manufactures and supplies flooring products for both domestic as well as commercial purposes. Geographically, it operates in the United Kingdom, the European Union, Scandinavia, Australasia, and the Rest of the World. JHD’s portfolio of brands includes Polyflor. It has several subsidiaries such as Polyflor Ltd, Polyflor Australia Pty Ltd, Polyflor Canada Inc., Polyflor New Zealand Ltd, Riverside Flooring Ltd, Karndean International GmbH, Fack Design AB, etc. JHD strives to achieve repeat business by always focussing on enhancing goodwill and customer satisfaction. The Company has dedicated salespeople to deliver products to end-users. For regional and local delivery, JHD has supplied in bulk to distributors. The Company continuously invests in process improvement and product development.
Recent Trend of dividend payments – JHD declared an interim dividend of GBX 4.25 per share for H1 FY2021 on 31 May 2021 with an ex-dividend date of 6 May 2021. Previously, the Company had paid a final dividend of GBX 10.00 per share for FY2020.
Growth Prospects and Risk Assessment
Key Risks
After understanding growth prospects and risk assessments, we will analyze some key fundamental and shareholders statistics of James Halstead PLC.
Financial and Operational Highlights (for the six months ended 31 December 2021 as of 31 March 2021)
(Source: LSE Website)
Financial Ratios (H1 FY21)
Share Price Performance Analysis
(Research done by Kalkine Group)
On 1 June 2021, at 8:40 AM GMT, JHD’s shares were trading at GBX 497.90, down by 0.40% against the previous day closing price. Stock 52-week High and Low were GBX 538.00 and GBX 426.00, respectively.
On a daily chart, JHD's price is trading above an upward sloping trend line for more than a year and currently trading around the trend support level GBX 490, indicating the probability of an upside reversal. On the weekly chart. The momentum indicator RSI (14-period) is trading in positive territory at ~49 levels. The trend-following indicator 21-period SMA and 50-period SMA sustaining around the current market price and supporting a positive direction for the stock.
In the last five years, JHD’s stock price has delivered a decent positive return of ~21.66%. However, and it has underperformed the FTSE All-Share Construction and Materials index with a return of around 60.16% and the FTSE AIM All-Share index with a return of about 70.39%.
Valuation Methodology: Price/Earnings Approach (NTM) (Illustrative)
Peers used in the valuation methodology (Price/NTM Earnings)
Business Outlook Scenario
JHD has delivered a decent result for H1 FY2021 with record sales. Profit before tax also achieved an unprecedented level in H1 FY2021. There are new projects which provide further confidence for H2 FY2021 and beyond. The Company has a diversity of projects, consistently solid demand, strategy to enhance brand identity, dedicated sales personnel to end-users and continual investment in process improvement and product development going into H2 FY2021. JHD has very low leverage, with a debt/equity ratio of 0.06x, indicating financial flexibility to raise further debt, if required, at a cheaper cost. It will help JHD to significantly invest in its new projects, product development, brand identity enhancement and customer satisfaction. The management also strives to continue its key performance across turnover, profit before tax and cash generation.
The board expects future production will be able to fulfil all confirmed orders. On the technical chart, the next important support level is at GBX 426.00.
Considering the decent prospects of the Company, its solid demand, its brand identity and customer satisfaction, decent profitability and leverage profile of the business, its continual process improvement, and support from the valuation as done using the above method, we have given a “Speculative Buy” recommendation on James Halstead Plc at the current price of GBX 497.90 (as on 1 June 2021 at 8:40 AM GMT), with lower-double digit upside potential based on 30.67x Price/NTM Earnings (approx.) on FY22E earnings per share (approx.).
*Depending upon the risk tolerance, investors may consider unwinding their positions in a respective stock once the estimated target price is reached or if the price closes below the support level (indicative stop-loss price).
*All forecasted figures and Peer information have been taken from Refinitiv, Thomson Reuters.
*The dividend yield is subject to change as per the stock price movement.
*The reference data in this report has been partly sourced from REFINITIV
Disclaimer
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