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Edison Issues Initiation on Polypipe (PLP)

[PRESSWIRE] LONDON, March 15, 2017 -- We expect forthcoming FY16 results (30 March) to highlight the strength of Polypipe's model with a strong y-o-y uplift in earnings and good cash generation. The company is well positioned and aligned with long-term UK government policy direction and we expect greater clarity to benefit this industry leader. Translating this to earnings growth above the peer average will be key to sustaining a premium rating.

 

Since IPO, Polypipe's share price has risen by c 36% although the path has been somewhat more variable than the underlying trading performance. Sentiment was affected by the Brexit outcome in June last year but has recovered well from a share price low of 227p in July. On our initial estimates, the company is trading on FY16 13.5x P/E and 9.8x EV/EBITDA multiples, which compress to 11.7x and 8.2x respectively by FY18. Faster earnings growth rates sustaining the current premium rating and putting it in line with sector peer Marshalls would generate a share price towards or in excess of 400p. The expected FY16 dividend yield is 3.0%.


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Toby Thorrington Edison Investment Research, +44-(0)20-3077-5721 Roger Johnston Edison Investment Research +44-(0)20-3077-5722 industrials@edisongroup.com

Category: 
Business and Finance
Date: 
Wednesday, March 15, 2017
Categories: 
Construction