{"id":266,"date":"2021-04-13T01:01:00","date_gmt":"2021-04-13T01:01:00","guid":{"rendered":"https:\/\/bluegemresearch.co.za\/?p=266"},"modified":"2021-04-13T05:53:06","modified_gmt":"2021-04-13T05:53:06","slug":"trellidor-holdings-compounder-with-yield-tailwinds","status":"publish","type":"post","link":"https:\/\/v7l6z8c7j6p.c.updraftclone.com\/?p=266","title":{"rendered":"Trellidor &#8211; Initiation of Coverage &#8211; Compounder with Yield &#038; Tailwinds"},"content":{"rendered":"\n<p class=\"wp-block-paragraph\"><em>Share Code: TRL \u2013 Market Cap: R333m \u2013 PE: 18.4x \u2013 DY: 2.3%<\/em><\/p>\n\n\n\n<div class=\"wp-block-file\"><a href=\"http:\/\/v7l6z8c7j6p.c.updraftclone.com\/wp-content\/uploads\/2021\/04\/Trellidor-Holdings_Initiation-of-Coverage-1.pdf\">Trellidor Holdings Initiation of Coverage<\/a><a href=\"http:\/\/v7l6z8c7j6p.c.updraftclone.com\/wp-content\/uploads\/2021\/04\/Trellidor-Holdings_Initiation-of-Coverage-1.pdf\" class=\"wp-block-file__button\" download>Download<\/a><\/div>\n\n\n\n<p class=\"wp-block-paragraph\"><strong>Business Overview: Leveraging Product, Route-to-Market &amp; Returns<\/strong><\/p>\n\n\n\n<ul class=\"wp-block-list\"><li>Trellidor\u2019s traditional business of customized manufacturing of security gates for a national, African and export network of franchisees remains strong while management\u2019s addition of innovative &amp; complementary products (including Taylor blinds and shutters, and NMC) is logical and steadily gaining traction.<\/li><li>The Group is cash generative and management\u2019s careful capital allocation into the acquisition of (some) the main regional franchisee, share buy-backs below fair value &amp; degearing the Group\u2019s balance sheet while paying dividends should all add to the Group\u2019s financial performance and shareholder returns.<\/li><\/ul>\n\n\n\n<p class=\"wp-block-paragraph\"><strong>Macro Environment: Home Improvement Tailwinds<\/strong><\/p>\n\n\n\n<ul class=\"wp-block-list\"><li>While high domestic real rates had depressed residential property and home improvement markets, the South African Reserve Bank\u2019s strongly accommodative monetary response to COVID-19 has reversed this trend with exciting implications.<\/li><li>Building materials, home improvement sales and the residential property markets have all positively responded to this and, in many instances, are trading at-or-above their pre-COVID levels.<\/li><li>Despite numerous domestic &amp; global macro risks remaining, Trellidor should be a beneficiary of these home improvement &amp; residential property market tailwinds.<\/li><\/ul>\n\n\n\n<p class=\"wp-block-paragraph\"><strong>Forecast, Valuation and Implied Return: Undervalued &amp; Yielding<\/strong><\/p>\n\n\n\n<ul class=\"wp-block-list\"><li>Given a reasonableness check against our implied EV\/EBITDA regression, our DCF Model indicates that Trellidor is worth c.442cps or a c.8.8x PE and c.4.4x EV\/EBITDA against our expected FY 21E earnings. These valuation metrics appear quite undemanding of a Group with a 5-year average ROE of &gt;20% and a Free Cash Flow\/EV Yield just shy of 18%.<\/li><li>Rolling 442cps forward by our CoE, we arrive at a 12m TP of 532cps implying a 54% return from the current share price.<\/li><li>Even if the market never fully reflects this valuation, it is worth noting that the share\u2019s attractive c.6.0~7.0% Dividend Yield also makes this compounder a good yield play.<\/li><\/ul>\n\n\n\n<figure class=\"wp-block-image size-large\"><a href=\"http:\/\/v7l6z8c7j6p.c.updraftclone.com\/wp-content\/uploads\/2021\/03\/Trellidor_Relative-Chart.png\" target=\"_blank\" rel=\"noopener\"><img loading=\"lazy\" decoding=\"async\" width=\"1024\" height=\"497\" src=\"http:\/\/v7l6z8c7j6p.c.updraftclone.com\/wp-content\/uploads\/2021\/03\/Trellidor_Relative-Chart-1024x497.png\" alt=\"\" class=\"wp-image-268\" srcset=\"https:\/\/v7l6z8c7j6p.c.updraftclone.com\/wp-content\/uploads\/2021\/03\/Trellidor_Relative-Chart-1024x497.png 1024w, https:\/\/v7l6z8c7j6p.c.updraftclone.com\/wp-content\/uploads\/2021\/03\/Trellidor_Relative-Chart-300x145.png 300w, https:\/\/v7l6z8c7j6p.c.updraftclone.com\/wp-content\/uploads\/2021\/03\/Trellidor_Relative-Chart-768x372.png 768w, https:\/\/v7l6z8c7j6p.c.updraftclone.com\/wp-content\/uploads\/2021\/03\/Trellidor_Relative-Chart-624x303.png 624w, https:\/\/v7l6z8c7j6p.c.updraftclone.com\/wp-content\/uploads\/2021\/03\/Trellidor_Relative-Chart.png 1196w\" sizes=\"auto, (max-width: 1024px) 100vw, 1024px\" \/><\/a><\/figure>\n\n\n\n<div class=\"wp-block-file\"><a href=\"http:\/\/v7l6z8c7j6p.c.updraftclone.com\/wp-content\/uploads\/2021\/04\/Trellidor-Holdings_Initiation-of-Coverage-1.pdf\" target=\"_blank\" rel=\"noreferrer noopener\">Trellidor Holdings &#8211; Initiation of Coverage<\/a><a href=\"http:\/\/v7l6z8c7j6p.c.updraftclone.com\/wp-content\/uploads\/2021\/04\/Trellidor-Holdings_Initiation-of-Coverage-1.pdf\" class=\"wp-block-file__button\" download>Download<\/a><\/div>\n","protected":false},"excerpt":{"rendered":"<p>Share Code: TRL \u2013 Market Cap: R333m \u2013 PE: 18.4x \u2013 DY: 2.3% Business Overview: Leveraging Product, Route-to-Market &amp; Returns Trellidor\u2019s traditional business of customized manufacturing of security gates for a national, African and export network of franchisees remains strong while management\u2019s addition of innovative &amp; complementary products (including Taylor blinds and shutters, and NMC) [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[111],"tags":[58,116,114,113,65,112,115],"class_list":["post-266","post","type-post","status-publish","format-standard","hentry","category-trellidor-trl","tag-building-materials","tag-dividends","tag-home-improvement","tag-security-gates","tag-small-cap-research","tag-trellidor","tag-yield"],"jetpack_featured_media_url":"","_links":{"self":[{"href":"https:\/\/v7l6z8c7j6p.c.updraftclone.com\/index.php?rest_route=\/wp\/v2\/posts\/266","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/v7l6z8c7j6p.c.updraftclone.com\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/v7l6z8c7j6p.c.updraftclone.com\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/v7l6z8c7j6p.c.updraftclone.com\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/v7l6z8c7j6p.c.updraftclone.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=266"}],"version-history":[{"count":7,"href":"https:\/\/v7l6z8c7j6p.c.updraftclone.com\/index.php?rest_route=\/wp\/v2\/posts\/266\/revisions"}],"predecessor-version":[{"id":286,"href":"https:\/\/v7l6z8c7j6p.c.updraftclone.com\/index.php?rest_route=\/wp\/v2\/posts\/266\/revisions\/286"}],"wp:attachment":[{"href":"https:\/\/v7l6z8c7j6p.c.updraftclone.com\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=266"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/v7l6z8c7j6p.c.updraftclone.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=266"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/v7l6z8c7j6p.c.updraftclone.com\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=266"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}