Edison Issues Initiation on Polypipe (PLP)

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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