Strix (LSE:KETL) - ISA Investment Long-termStrix (LSE:KETL)
Sector: - Industrials
How found: - Strix appeared in a steady dividend filter and momentum filter, it’s a steady away company no Star or YOYO – more a Clydesdale Horse. This is a long-term hold.
Company Background: - Incorporated July 2017 (though has been around as an organisation since the 1950’s), makes kettle controls (main market) and other products Aqua Optima (opportunities for this in China) and Tommee Tippee products. The kettle control section includes any sort of water and heat control in domestic and industrial settings. More here just Google – “Strix: the Super Stock mid cap with a moat” - This is a boring company with a long history in hot water and control and is a world leader in this area.
Ratios: - Market Cap £345M, PE 12, Div yield 4%, Relative market strength 1yr 19% - 6m 7.6% - 1m -2.%.
Rough Technical: - The share price has displayed steady growth over the last 5 years, but nothing outstanding. In the last 6 months it has traded between 158p to 200p – presently 185p. Presently the 10-day MA is trading just above the 50-day MA, I am looking for an entry at 175-178p.
Liquidity: - Average volume over 3 months is 550K, so good liquidity in the shares. 54% of the shares are held by investors below the 5% holding. The main investors above 5% (largest holding 6%) the major funds.
Brokers Opinion: - 5 Brokers have this share as a strong buy, with one as a buy. Price target is presently 216p (19% above price).
Spread: - spread 22bps, which is good.
Beta: - positive against the UK market performance for scopes of 5yr, 1yr, 6m, 3m. tracking market in last month. Last 5 days behind market, due to Coronovirus concerns affecting the new factory in China and hitting production. This makes a buying opportunity for this “boring company” that is entering the Chinese market.
Accounts: - Turnover has steadily grown at 4.5% annualised over the last 5 years (steady away). Operating profit has been static at £20-24M at an annualised margin of 29%. No real debt and a cash balance of £13M. It’s been cash generative, with investment in the new Chinese factory taking some cash in the last 2 years. Balance sheet is strong with 12% in cash.
Main Risks: - Chinese expansions and changing fluid rules in China, RMB exchange rates, IP security in China
Main Favourables: - Strong patent list, Chinese market opportunities, good track record for being boring steady away company.
Declaration: - No holding yet, looking at ISA investment and entry at 175-178p (but I think it will end up being 181p) with initial SL at 150p.
