Tristel develops proprietary infection, hygiene and contamination control products used by 1) Healthcare (branded Tristel); 2) Pharmaceutical and personal care (Crystel), and 3) Animal care (Anistel) organisations.
Tristel develops proprietary infection, hygiene and contamination control products used by: 1) Human Healthcare (89% of sales); 2) Contamination Control (branded Crystel, 6%), and 3) Animal care (Anistel. 5%) organisations. Its core chlorine dioxide (ClO2) chemistry is protected by 156 patents and deployed in c.400 UK hospitals.
In this morning’s pre-close trading statement, the company said it had beaten our FY17 estimates – posting adjusted PBT (pre share-based payments) of at least £4m (vs ED £3.8m) on turnover up +16.9% to >£20m (ED £19.6m) - estimated 10% LFL/constant currency. Overseas healthcare was the standout performer, up around +47% to £8.95m (est +28% LFL) - thanks to buoyant conditions in China/Hong Kong, Germany and Australia - and UK Health rose a creditable 4.4% LFL to £8.9m.
Shifting to M&A, in Aug’16 Tristel purchased its Australian distributor for £1.1m in cash, which has subsequently been integrated within the group, and provides a launch-pad from which to extend its proprietary Clo2 technology across the whole of Australasian region. Better still, just prior the period close the Board invested $750k for a 3.27% stake in MobileODT (MODT), an Israeli firm (valued at $23m) combining smartphone expertise with hand-held, point-of-care diagnostics.
We have always taken a prudent stance when modelling Tristel’s application to the EPA/FDA to launch chlorine dioxide (ClO2) based infection, hygiene and contamination control products in the US. but as each major milestone is hit, then the overall project risk declines. Therefore, we’ve re-cut and extended our forecasts to FY25, alongside running a 4 key sensitivities test – together reconfirming our positive view on the stock.
On today's update we have moved up our FY18 PBT forecast to £4.25m (from £3.83m) on revenues of £22.2m (vs £21.8m) - climbing to £31.2m and £7.3m respectively (margin 23.3%) by FY21. Moreover, the Board are on track to achieve its medium-term goal of lifting turnover to between £22.8m-£26.0m by FY19, equivalent to a CAGR of 10%-15% pa on FY16 (£17.1m).
Despite climbing 10-fold from a low of 21p four years ago, an updated analysis suggests the business is worth 211p/share (from 155p), even ignoring any upside from North America. Indeed, should the EPA/FDA grant approval over the next couple of years, then the States alone could contribute >25% of group revenues, say by FY25. In turn, possibly adding another 100p+/share to the current valuation.
You can now hear Paul Swinney, Chief Executive, and Liz Dixon, Finance Director, present the record interim results for the half year ended 31 December 2016 on behalf of Tristel plc.
Tristel develops proprietary infection, hygiene and contamination control products used by organisations involved in: Human Healthcare (branded Tristel, 85% of sales); Contamination Control (Crystel, 9%); and Animal care (Anistel. 6%).
Instead of over-paying for unexciting behemoths, in today’s markets investors might think of looking at faster expanding small caps, trading at sensible valuations; like infection control expert, Tristel. Indeed, thanks to >95% of revenues being generated from everyday consumables, the company’s execution is almost metronomic - delivering once again outstanding interim results this morning that were ahead of December’s PBT guidance of £1.6m.
Adjusted H1’17 PBTA came in at a healthy £1.7m on turnover up 22% (+16% constant currency) to £9.75m, partly driven by a 38% jump in Wipes to £5.45m. Geographically, the UK climbed 9% to £5.56m, after a one-off £150k NHS bulk purchase, while Overseas leapt an impressive 45% (+29% constant currency) to £4.19m, reflecting continued buoyant demand from China/Hong Kong (+34%), Germany (92%) and Australia (+169%). International accounted for 43% of the group revs (vs 36% LY), and is on track to deliver >50% of sales by June 2019.
Profit margins were still in line with strategic targets of 17.5%, thanks to positive operating leverage and efficient capital allocation (Est ROaCE 32%+) – leading to EBITDA drop-through rates of circa 40%. Cash conversion of 100% pushed net funds up to £3.9m as at 31st December, leaving plenty of capacity to lift the dividend 23% to 1.4p (payable 13th April).
The CEO updates: ‘We are progressing satisfactorily with our planned entry into the North American hospital market’ so for now our forecasts and 155p/share valuation remain unchanged. But we note that, with continued forex tailwinds heading into H2, our FY17 numbers appear derisked – thus teeing up the possibility of upgrades in due course.
Tristel develops proprietary infection, hygiene and contamination control products used by: Human Healthcare (branded Tristel, 85% of sales); Contamination Control (Crystel, 9%), and Animal Care (Anistel. 6%) organisations. Its core chlorine dioxide chemistry is protected by 156 patents and deployed in c.400 UK hospitals.
These days shareholder value is being built and protected by intellectual property, brands, networking benefits and such like. The big question for investors is naturally: 'what price to pay' for these type of high quality business? Tristel is a case in point. At 177p yesterday, the stock traded on adjusted FY17 EV/EBIT and PER multiples of 19.6x and 26.1x respectively, or circa 20-30% above the broader healthcare sector.
Traditionally this would look mildly expensive, yet to us it seems that a large part of the premium is down to the firm’s strong patent protection (or ‘economic moat’), low profit volatility (95% of sales are derived from every-day consumables), forex tailwinds, absorption of one-off regulatory costs and superior LFL revenue growth.
Importantly too (and not presently included in our forecasts), is the ‘optionality’ that its proprietary chlorine dioxide chemistry either attracts predatory interest and/or is granted approval in North America (by US FDA/EPA and Canada’s HPB), hopefully sometime over the next 12-18 months.
The Board are targeting top line expansion of 10% to 15% annually for the next 3 years, in turn delivering pre-tax profit margins of 17.5%+, along with a progressive dividend (yield 1.9%). In light of the firm’s attractive risk-reward profile, we have lifted our own DCF calculation from 140p to 155p/share, based on a blend of FY19 exit multiples, discounted back at 12% and adjusted for cash.
You can now hear Paul Swinney, Chief Executive, and Liz Dixon, Finance Director, present the preliminary results for Tristel plc (TSTL) and answer audience questions.
Tristel develops proprietary infection, hygiene and contamination control products used by: Human Healthcare (branded Tristel, 85% of sales); Contamination Control (Crystel, 9%); and Animal care (Anistel. 6%) organisations. For many years now management have communicated what they’re planning to do - and like clockwork successfully delivered against it, as illustrated again in this morning’s better than expected prelims for the year ending June 2016.
FY16 turnover climbed 11.5% LFL to £17.1m (H1:H2 split 8.1%:14.8%), with 95% derived from every-day consumables and 39% from overseas territories (vs 36% LY), up an impressive 22% LFL. UK healthcare posted 4% organic growth, which we think was creditable, especially given its greater hospital penetration, the current squeeze on NHS budgets and after a flat H1 (-1.8%).
Adjusted PBT (before SBPs of £674k) and EPS came in at £3.2m (+27%) and 6.62p (+20%) respectively, with cash conversion (OCF/EBIT) strong at 148% vs 113% LY; in turn helping to lift net funds to £5.7m (vs £4.0) by the period close. There could even be more one-off distributions in due course, since we suspect the business only needs liquid reserves of up to £3m to adequately fund its internal operations.
Going forward, one of several possible positive catalysts could come from the firm’s application to sell Clo2 products in North America – where the Board has made encouraging progress to date in its discussions with the US FDA and EPA.
We have upgraded our forecasts again – although only marginally this time with adjusted FY17 PBT now pitched at £3.6m vs £3.5m before. Accordingly our price target rises from 135p to 140p/share, with scope for future appreciation in line with hopefully more positive newsflow.
Tristel develops proprietary infection, hygiene and contamination control products used by organisations active in: Human Healthcare (branded Tristel, 84% of sales); Contamination Control (Crystel, 10%),; and Animal Care (Anistel. 6%).
Despite fears over the global economy, NHS budgetary constraints and BREXIT, the company today said that it had enjoyed a "very strong" 2nd half - reporting H2 revenues of >£9m, up 13.5% YoY.
As a result, a 3p/share special dividend is to be paid from surplus funds on 5th August (ex div date 28th July) - which, when added to the normal annual payment (estimated at 3p based on 2x cover), represents a generous 6.0p return for the year, equivalent to a 5.2% yield.
Elsewhere, the firm has bought the assets and business (including people, customers, stock, etc) of Ashmed Pty Ltd, its Australian distributor, for Au$1.35m plus certain compensation payments for the re-purchase of inventory. In the US the process of seeking product authorisation from the FDA and EPA carries on at pace, and is on track to (hopefully) obtain approval in 12 months' time.
We have duly upgraded our FY17 turnover and PBTA forecasts by +9% and +7%, to £19.5m and £3.54m respectively. Likewise, our fair value share price target climbs 8% to 135p.
You can now hear Paul Swinney, Chief Executive, and Liz Dixon, Finance Director, present the interim results for Tristel plc (TSTL) and answer audience questions.
Tristel is the UK's undisputed number 1 provider of decontamination products for small heat sensitive instruments within hospital ENT (ear, nose & throat), Ultrasound and Cardiology departments. More than 95% of its revenues are derived from high margin consumables (eg wipes, sprays, etc), where demand is being driven by increasing numbers of patients requiring diagnostic and/or non-critical care procedures.
Today's interim results to end Dec 2015 show the group's resilience as it weathers the current economic wobbles concerning slower global GDP, a Chinese hard landing and geopolitical instability - with its proprietary infection, hygiene and contamination control products generating H1'16 turnover of £8.0m, up 8.1% like-for-like.
Overseas Health was the standout performer, posting revenues up 23.5% to £2.59m. Going forward, the strategy is to maintain this pace of expansion whilst at the same time launch innovative new products to compensate for the inevitable deceleration in the more mature UK region where H1'16 domestic healthcare sales declined -1.8% to £4.15m.
More positively, adjusted H1'16 PBT (before stock based payments - 'SBPs') came in 34.5% higher at £1.48m, thanks to strict cost control, 150% cash conversion and greater operational leverage. That boosted gross margins to 71.4% (69.0%), adjusted EPS to 2.89p (+40% vs 2.07p) and closing net funds to £4.3m (£4.0m in June 2015).
We have reset our divisional projections, and now anticipate that Tristel will deliver blended revenue expansion of 7%-9% pa over the next few years. Nonetheless, despite our rebased growth outlook, FY16 and FY17 adjusted PBT (pre SBPs) targets remain unchanged at £2.9m and £3.3m respectively. Closing June 2016 net cash forecast is also lifted to £4.5m, from £4.0m before.
Our financials still do not include any upside from potential US regulatory approval. If ultimately successful, we believe this opportunity could add >100p per share to our new 125p price target - which has been trimmed from 140p reflecting the more conservative sales trajectory.
'Running winners' is a successful strategy for generating wealth. The difficult part of course is buying those high potential stocks at the right price, and then being prepared to stick with them over the long term.
One good hunting ground is in Healthcare - especially for those companies that are globally scalable, deliver double digit top line growth and enjoy strong patent protection. Tristel possesses all three, along with high recurring revenues and predictable cashflows.
Granted the price has already risen nearly 7-fold to 145p, but given the size of the addressable market and pent-up demand for its proprietary infection, hygiene and contamination control products, we think there is plenty more to come. The latest deadly strain doing the rounds being 'MCR-1', which if not controlled properly could cause a "global epidemic of untreatable infections".
This is where Tristel's chlorine dioxide (Clo2) chemistry fits in. Clo2 is one of the quickest, safest and most effective ways of killing such microbes and other harmful bacteria like Clostridium difficile. In fact its superior efficacy versus other leading hospital disinfectants was once again demonstrated in a recent clinical trial in France.
In terms of trading, the group is reporting an excellent start to FY16 at its AGM today, with H1 PBT set to be "no less than £1.4m (+27% on £1.1m LY)" and on track to hit full year expectations of £2.9m. And for the huge US market they intend to submit an application to the FDA by June 2016, hopefully securing access 12 months later.
Clearly this is still early days, but just doing some simple maths we believe that, if the US application was granted, this could add >100p per share to our 140p price target - up from 135p thanks to the natural roll-forward of our DCF calculations.
You can now hear Paul Swinney, Chief Executive, and Liz Dixon, Finance Director, discuss the full year results for Tristel plc (TSTL) and address audience questions.
Tristel, a developer of infection control products based its own proprietary chlorine dioxide (Clo2) chemistry (>75% sales). Its wipes, foams, gels, liquids and surface disinfectants are considered to be the 'gold standard' in the UK for decontaminating small medical instruments in out-patient departments and for surface cleaning in hospitals.
Today the company has posted like-for-like top line growth of 13.8% to £15.3m for the 12 months ending June 2015 (FY15) - driven by the launch of innovative new products, greater adoption in the UK and excellent growth abroad.
Tristel has logical ambitions regarding the vast US market, but even if the FDA there were to thwart their application, we still think this science rich stock represents good value at 107p, trading on an underlying PEG ratio of only 1.0x that is 45% below the peer group average.
In fact, not only is the stock good value on an absolute basis versus our upgraded price target of 135p/share (from 110p), but it is also cheap relative to the wider healthcare ecosystem - trading below peer group averages with regards to EV/sales, EV/EBITA and PE multiples, despite offering much better prospects.
Tristel develops proprietary infection, hygiene and contamination control products used by: Human Healthcare, Contamination Control, and Animal Care organisations.
Tristel has this morning announced a special dividend of 3p per share payable on 6 August 2015, to shareholders on the register on 26 June 2015. This is in line with the company's philosophy that the business should return cash to shareholders which is not required for future earnings enhancing investments, and it stated that "returning cash to shareholders at this juncture will not be at the expense of investment in the business". Going forward the prevailing dividend policy has been set at 2x times cover, split 25:75 for interim and final.
At 95p, despite the strong price performance over the past two years, we still believe the stock is cheap, trading on a FY15 PEG of less than 0.7, compared to many Pharma companies which are seeing EPS reductions this year due to patent expiries.
Tristel's Chairman stated today that "the business is making excellent progress in all of its markets and we view the future with confidence." Preliminary results for the year to 30 June are due on 12 October. We envisage FY15 revenues to come in at £15.5m (up 15% yoy), and forecast adjusted EBIT of £2.5m (up 37% yoy), giving a 16.1% margin. We reiterate our 110p/share target price.
Investors were today once again reminded of the resilience, strength and underlying momentum behind the Tristel business. Management said that both revenues and profit were ahead of budget for the 10 months to 30 April 2015; and raised adjusted FY15 PBTA expectations to at least £2.5m (£1.4m H2 vs £1.1m H1), or +39% up on last year's £1.8m.
We estimate this represents LFL top line growth of 15%, driven by favourable performances from UK, German and Australasian direct sales. Additionally, as operational best practise is rolled out across its 3rd party channel partners, we reckon it is only a matter of time before distributor volumes also catch-up.
Therefore we have increased our FY15 sales and adjusted EBITA forecasts to £15.5m (from £15.3m) and £2.5m (£2.3m) respectively. We also upgrade our price target from 100p to 110p/share, reiterating that the stock looks cheap at 84p compared to industry EV/sales and EV/EBIT benchmarks.
Watch Paul Swinney, CEO and Liz Dixon, Finance Director, present the interim results for Tristel (AIM: TSTL), the manufacturer of infection control, contamination control and hygiene products.
Tristel develops proprietary infection, hygiene and contamination control products used by organisations involved in Human Healthcare (branded Tristel) Contamination Control (Crystel), and Animal Care (Anistel).
Encouragingly, demand continues to climb for Tristel's wipes, sprays, gels, foams, liquids and other disinfectants, as evidenced by today's interims for the half year ending December 2014. Growth came across all areas of the business with the UK up 11.5% and International 26% higher, driven by strong direct and distributor volumes.
We have nudged up our FY15 turnover estimate to £15.3m (from £15m) and reiterate our 100p/share price target. Currently the shares are 76p and trade on attractive EV/sales, EV/EBIT and PEG multiples of 1.8x, 12.1x and 0.8x respectively.
The size and complexity of the NHS is quite staggering and we think the only realistic option to manage its finances is to do more for less - such as implementing innovative technologies like Tristel's patented chlorine dioxide based products (eg wipes, sprays, gels, foams, liquids and disinfectants).
Today the company released another excellent trading statement, saying that adjusted PBT for the 6 months ending Dec'14 would be in excess of £1m (+38% YoY) on turnover up at least +9% to £7m.
As yet we make no changes to our FY15 sales (£15m) and EBITA (£2.3m) forecasts on the back of normal strong seasonality in H2. However, given the firm's near 70% gross margins, we believe there is possible upside with regards to earnings.
We do nudge up the target price to 100p/share (from 92p) based on the natural roll-forward of our DCF analysis. At 79p, the stock trades on EV/EBITA and PEG multiples of 12.8x and 0.6x respectively: both representing steep discounts to sector averages of 14.9x and 2.1x.
CEO Paul Swinney concluded "I am very pleased to report that the strong trading highlighted at the time of our preliminary results has continued. Growth continues to come from all areas of the business, both within the UK and overseas."
Tristel Preliminary Results Webinar presented by Paul Swinney, CEO, and Liz Dixon, FD.
Tristel develops proprietary infection, hygiene and contamination control products used by: Human Healthcare (branded Tristel, 85% of sales); Contamination Control (Crystel, 9%), and Animal care (Anistel, 6%) organisations. Its patented chlorine dioxide chemistry is clinically proven and deployed in c.400 UK hospitals.
After upgrading our profit estimates 5 times in a row, today's FY14 results reflected the group's strong momentum. Adjusted PBT and EPS climbed +279% to £1.82m and +250% to 3.25p respectively, on turnover +27.6% higher at £13.47m.
Going forward we make no changes to our forecasts, but for the first time introduce FY17 figures. 96% of the business is derived from high margin consumables (ie non-discretionary everyday items) giving good forward visibility.
In terms of valuation, we retain our 92p/share target price but hope to upgrade as the year progresses, thanks to the high operational gearing and management's knack of beating consensus. At 75p, the stock trades on a PEG ratio of just 0.52x, compared to 1.9x for the wider sector, despite Tristel's superior growth prospects.
Tristel's trading update this morning is the 5th time it has upgraded profit expectations for the financial year to end June 2014. The latest announcement confirms that adjusted PBT will come in at £1.8 million, against an adjusted £0.48 million in the previous year.
This leaves our forecasts for the current year (to 30 June 2015) looking very conservative, leaving scope for further upgrades as the year progresses.
On the back of this very positive momentum we increase our target share price (again), moving it up to 92p per share.
Paul Swinney, CEO, and Liz Dixon, CFO, present the investment case for Tristel and their success in the infection control market.
Tristel develops proprietary infection, hygiene and contamination control products used by organisations involved in healthcare, pharmaceutical and personal care, and animal care.
On the back of another positive trading statement today, we have upgraded our adjusted FY14 PBT and EPS targets by 10% to £1.75m and 3.4p respectively. Increases of 270% and 188% year on year.
On valuation, we have raised our price target per share from 80p to 90p, and reiterate that there could be substantial further upside to come.
Tristel develops proprietary infection, hygiene and contamination control products.
This morning it released a very encouraging trading update for the year to 30th June 2014 - the key points being: the strong growth experienced in H1 has continued into H2, with FY14 turnover, profits and cash generation all expected to materially exceed our estimates; and this positive momentum has been experienced across all regions (ie both UK and overseas) and product categories, with standout performances once again coming from Wipes and Surface disinfectants.
As such we have significantly upgraded our numbers. In terms of run-rate, we believe Tristel will exit FY14 with H2 sales and adj PBT of £6.85m and £0.86m respectively. Thus providing good visibility and a high degree of confidence going forward - especially in light of the recurring nature of the consumerables business.
We raise our share price target 17% from 68p to 80p/share.
Tristel develops proprietary infection, hygiene and contamination control products used by organisations in Healthcare, Pharmaceutical / personal care, and Animal care. Its patented chlorine dioxide chemistry is clinically proven and deployed in c.400 UK hospitals.
Demand for these products soared in H1'14, with revenues in the Human Health division (86% of group) climbing +56.5% LFL to £5.5m, driven by Wipes up +79.3% to £2.9m.
72% revenue is also derived from proprietary products, with the main commercial patents enforceable until 2028/9.
Going forward we expect revenues and adjusted EPS to rise further, from £13.0m and 2.56p in FY14 to £15.7m and 3.88p by FY16, representing a 51% jump in earnings. The dividend has scope for expansion too, reflecting ample 2.5x cover, future margin progression and net cash of £1.5m.
This science-rich stock trades at a discount to its peers, which we believe is unjustified given Tristel's superior prospects. We initiate coverage with a share target price of 68p versus 45p today. However, we note that if the Board achieves its medium term target of 15% pa organic growth with an adjusted PBT margin of 15%, then the target share price increases to 85p.