Fenner PLC - Capital Network: Flash Report

Written by Ed Stacey

Fenner’s (FENR.LON) share price has gained 200% from its 2016 trough level. But it’s worth remembering that the trough-to-peak share price move from 2009-2012 was 1,280%.  The company makes polymer conveyor belts for mining and heavy industries as well as specialised polymer components for a range of applications from specialised industrial to oil and gas to medical devices. Some of these markets have been depressed in recent years, particularly the mining and  energy resources segments. However, we believe that a recovery is now beginning which, like the company’s conveyor belts, will keep going and going.

Optically the shares do not appear cheap on 22.3x PE for 2017e, or 15.4x EV/EBIT. However, we believe the earnings recovery could bring the operating profit level to £100m on a 3-5 year view. Assuming net debt and pension reduced to £125m, and applying an exit multiple of 10x EV/EBIT, this would take the share price to 450p, 58% upside from the current level.


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