0R15 8884.0068 1.4156% 0R1E 9171.0 0.0% 0M69 None None% 0R2V 255.5 0.3929% 0QYR 1619.0 0.0% 0QYP 434.5 -0.344% 0RUK None None% 0RYA 1600.0 4.5752% 0RIH 195.2 1.3763% 0RIH 195.2 1.3763% 0R1O 225.5 9877.8761% 0R1O None None% 0QFP None None% 0M2Z 255.0 0.2457% 0VSO 33.3 -6.4738% 0R1I None None% 0QZI 596.0 0.0% 0QZ0 220.0 0.0% 0NZF None None% 0YXG 236.3943 1.5483%
Vesuvius PLC (LON: VSVS) – Reported a stellar 43% growth in the trading profit during H1 FY21
Vesuvius PLC (LON: VSVS) is an FTSE 250 listed Company, which is the global leader in metal flow engineering. Moreover, the Company serves clients from the steel and foundry industries by providing end to end engineering services & solutions to customers worldwide. Furthermore, VSVS reports revenue under two broader categories – Steel & Foundry.
Recent Trend of Dividend Payments: The Company will pay an interim dividend of 6.2 pence per share on 17 September 2021, with an ex-dividend date of 05 August 2021. Moreover, the Company had shown a robust increase of approximately 100% in the interim dividend from the prior-year levels.
Growth Prospects
(Source: Company presentation)
Key Risks
Now, we will analyse the Key Fundamental Statistics & Shareholding Pattern of Vesuvius PLC.
Cevian Capital (UK) LLP is the most significant shareholder as it holds nearly 57.25 million shares as of 30 June 2021.
H1 FY21 Financial & Operational Highlights (for the six months ended 30 June 2021, as of 29 July 2021)
(Source: Company result)
Share Price Performance Analysis
(Source: Refinitiv; Analysis done by Kalkine Group)
On 09 August 2021, at 08:00 AM GMT, VSVS’s shares were trading at GBX 552.00, down by around 0.36% from the previous day closing price. Stock 52-week High and Low were GBX 595.00 and GBX 380.20, respectively.
From a technical perspective, VSVS is trading above the 20-days exponential moving average of GBX 538.60, indicating an upside potential in the stock price. Moreover, the MACD line remained above the signal line, indicating a bullish stance in the stock price.
Over the last one month, VSVS’s stock price has delivered a positive return of ~2.84%, and it has outperformed the FTSE 250 index (benchmark index) with a return of about 2.28% and FTSE All-Share Industrial Engineering index (benchmark sector) with a return of about 2.32%.
Valuation Methodology: Price/Earnings Approach (NTM) (Illustrative)
Business Outlook Scenario
The Company had shown decent improvements in end markets and gained significant market share in Steel & Foundry business segments. Thus, VSVS had delivered strong commercial performance during H1 FY21. However, the Company remained wary of the inflationary pressure on the raw materials. Nonetheless, VSVS remained confident that the increase in the selling price would offset the inflationary worries. Moreover, the Company had expected H2 FY21 trading profit to match the levels achieved during H1 FY21. The Company would continue to seek lucrative organic growth opportunities across both business segments. Overall, the Company remained confident of achieving long-term growth for the shareholders boosted by the optimised manufacturing footprint, new product pipeline, and ongoing R&D investment.
Considering the strong H1 FY21 commercial performance, 12 new product launch during H1 FY21, capacity augmentation, robust top-line & bottom-line business growth, strong dividend yield, and support from the valuation as done using the above method, we have given a “BUY” recommendation on Vesuvius PLC at the current price of GBX 552.00 (as on 09 August 2021 at 08:00 AM GMT), with lower-double digit upside potential based on 18.55x Price/NTM Earnings (approx.) on FY21E earnings per share (approx.).
*The reference data in this report has been partly sourced from REFINITIV.
*All forecasted figures and Peer information have been taken from REFINITIV.
*Dividend Yield may vary as per the stock price movement.
*Depending upon the risk tolerance, investors may consider unwinding their positions in a respective stock once the estimated target price is reached.
Disclaimer
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