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%
Victoria Plc (LON: VCP) – Track record of robust growth and margin improvement.
Victoria PLC (LON: VCP) is an FTSE AIM All-Share listed United Kingdom-based multinational household goods company. The Company designs, manufactures, and distributes innovative flooring products, including carpets, ceramic and porcelain tiles, flooring accessories, artificial grass and luxury vinyl tile (LVT). It was founded in 1895 and is headquartered in Kidderminster, United Kingdom. The Company offers its products geographically, mainly in the UK, Italy, Spain, the rest of Europe, and Australia. It has several subsidiaries such as Avalon BV, Abingdon Flooring Limited, Victoria Bidco BV, Whitestone Carpets Holdings Limited, Tacktrim Limited, Munster Carpets Limited, Saloni UK Limited, Quest Flooring Pty Ltd, etc.
The UK Manufacturing Purchasing Managers Index (PMI)
In the latest release on 2 August 2021, the UK Purchasing Managers Index (PMI) for manufacturing had a reading of 60.4, which indicates expansion in the sector. Hence, it implies a positive momentum for Victoria as well as a positive momentum for the house builders in the UK. There is currently a resilient demand for new homes in the UK, which means more demand for household goods. Hence, VCP could utilise this opportunity to drive its growth.
Growth Prospects
Key Risks
Now we will analyse some key fundamental and shareholders statistics of Victoria Plc.
Recent Development
Acquisition: On 23 June 2021, the Company announced the acquisition of Cali Bamboo Holdings Inc. It would expand VCP’s North American distribution business further.
Financial and Operational Highlight (for the year ended 3 April 2021, as of 20 July 2021)
(Source: LSE Website)
Financial Ratios (H2 FY2021)
Share Price Performance Analysis
(Source: Refinitiv, Research done by Kalkine Group)
On 3 August 2021, at 7:05 AM GMT, VCP’s shares were trading at GBX 1,050.00, at par against the previous day closing price. Stock 52-week High and Low were GBX 1,204.75 and GBX 266.00, respectively.
On a daily chart, VCP’s price is sustaining above 200-day EMA of about GBX 837.00 and 200-day SMA of about GBX 807.00, indicating the possibility of an upward movement. The stock price is sustaining between the middle and lower Bollinger bands. Hence, there could be an uptick in the stock price in the near term.
In the last six months, VCP’s stock has delivered a decent positive return of ~44.63%. Also, it has outperformed the FTSE All-Share Household Goods and Home Construction index with a return of about 5.62% and the FTSE AIM All-Share index with a return of about 5.77%.
Valuation Methodology: Price/Earnings Approach (NTM) (Illustrative)
Business Outlook Scenario
VCP delivered a robust performance in FY2021, despite Covid-19 induced disruption in Q1 FY2021. It has increased its revenue by 6.6% YoY, underlying EBITDA 7.9% YoY and underlying profit before tax 4.4% YoY. The Company has also made several value-enhancing acquisitions and is looking for further opportunities. The Company could benefit from its portfolio of acquisitions, resilient residential renovation market, rebounded house sales and its development of new brands and enhanced product range in FY2022. The management believes that the rising consumer confidence in the household goods market would be sustained in the years ahead.
Considering the Company’s solid growth opportunity, its portfolio of value-enhancing acquisitions, solid demand from the customers, the better liquidity of the business than the industry, and support from the valuation as done using the above method, we have given a “Speculative Buy” recommendation on Victoria Plc at the current price of GBX 1,050.00 (as of 3 August 2021 at 7:05 AM GMT), with lower-double digit upside potential based on 31.20x 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.
*All forecasted figures and Peer information have been taken from Refinitiv.
*The reference data in this report has been partly sourced from Refinitiv.
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