Directors’ Deals: Travis Perkins manager works on home improvement

The momentum for home improvement that began during the lockout – when people had few other things to spend their time and money on – seems to be calming down.

Slower growth in the housing market, higher labor and materials costs and lower disposable income levels led the Building Products Association to lower its growth forecasts for the Repair, Maintenance and Improvement (RMI) market last month. After meeting 2021 led to more than 20% growth in the sector, RMI of private housing is expected to fall by about 3% this year and 4% thereafter, the CPA said. Annual building material inflation stood at 22.5 percent in May, well ahead of consumer price inflation.

However, one couple that is doing their part for the sector are Robin and Sarah Miller. Robin is the legal counsel and company secretary of the building dealer Travis Perkins and Sarah, a man closely related to him. It sold shares worth just over £ 240,000 on June 8 “to fund construction work on their home”, the company’s exposure said.

The softer outlook for the market has hurt Travis Perkins shares – they have fallen 32% so far this year. It’s not alone – the roofing and insulation distributor SIG and the flooring merchant Marshalls have experienced similar declines.

Travis Perkins continued to trade well – revenue last year rose 24% and its adjusted operating profit more than doubled to £ 353 million. Sales in the first quarter of the year rose 14% year-on-year, partly driven by rising prices The materials.

However, analysts disagree about its prospects. The fall in the stock price pushed its valuation below five-year averages in some indices. Peel Hunt says they are now “cheap” at 10 times profits, and that its strong cash production gives it options regarding shareholder returns.

However, the company’s high exposure to the RMI market – from which it draws 70% of its sales – means it faces “negative profit risk”, according to Shore Capital.

The Calnex boss is raising a return on stock sales

The money poured into the cloud computing market and new 5G networks has strengthened the forecast of Calnex Solutions, which manufactures equipment for testing telecom and IT infrastructures.

Linlithgow’s equipment is used in 68 countries by customers such as BT, China Mobile, Ericsson, Nokia, Intel and IBM. Recurring orders make up about 80% of its revenue.

Calnex was founded by CEO Tommy Cook in 2006 and launched in 2020, raising an initial £ 6 million in a deal that valued the company at £ 42 million. Everyone who bought at the time made a tidy profit – since then Tripled its value and had a market capitalization of just under £ 149 million last weekend.

It operates in a sector that is growing at a complex rate of 11.5 percent per year, according to Frost & Sullivan, but has achieved better performance. Revenue for the year to 31 March grew by 23% to £ 22 million while pre-tax profit increased by 64% to £ 6 million.

After the end of the year, it also made its first acquisition as a public company, acquiring Stevenage-based iTrinegy for up to £ 3.5 million in April. .

Home broker Cenkos Securities thinks the deal will add around £ 1.3m to revenue this year and £ 200,000 to the bottom line. It expects a 22% increase in revenue and a 21% increase in earnings per share to 6.3p, meaning the company is currently trading at about 27 times earnings.

Cook took the opportunity to redeem some of his chips, selling 1% of the company for almost £ 1.6 million earlier this month. However, he remained the largest shareholder, with a share of just under 20%.

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