22.01.2025
Ahead of announcing its Interim Results to end-December 2024 on Tuesday 25th February, McBride (LON:MCB) last Friday issued a Trading Update which has really helped to move its shares.
And the further rise has only just started, despite its shares having risen over five times since our first mention.
We featured the group, which is the leading European manufacturer and supplier of private label and contract manufactured products for the domestic household and professional cleaning and hygiene markets, two weeks ago on Monday 6th January, when the shares were trading at just 105p.
That makes a near 18% uplift in just 13 trading days.
On Friday, after the announcement, the shares hit 140p and closed the day some 23% better at 124.50p, up 23p on the day on the back of some 1.55m shares traded, which was seven times the daily average.
After hitting 139.50p at one time yesterday, the shares closed nearly 8% lower at 122.50p following some light profit-taking.
However, this group’s undervalued shares are extremely attractive at this price, and I reckon that there is a heck of a lot more to come from the £236m capitalised group.
The Business
Based in Manchester, McBride is a manufacturer and supplier of private label and contract manufactured products for the domestic household and professional cleaning/hygiene markets.
The company segments include Liquids, Unit Dosing, Powders, Aerosols, and Asia Pacific.
The Liquids segment produces a range of household cleaning products sold in a bottle or pouch, including laundry detergent, dishwasher liquids and surface cleaners.
The group’s Unit Dosing segment produces cleaning products in individually packaged single dose measures, including dishwasher tablets and laundry capsules.
Its Powders segment produces powdered cleaning products, primarily for laundry but also dishwashers.
The Aerosols segment produces a range of household, personal care, and professional cleaning products.
The company supports its customers across the supply chain from sourcing and formulating, to production, packing and delivery.
Its own brands include Surcare, Oven Pride, Hospec, Actiff and Clean n Fresh.
Trading Update
The group expects to for its report first-half an adjusted operating profit some 8% ahead of the same period last year.
The group’s full-year adjusted operating profit is expected to be in line with internal expectations.
Group revenue was 2.9% higher than the prior year period, with volumes up 5.9%.
Private label volumes grew by 2.4% and contract manufacturing volumes increased by 69.0%, driven mostly by the successful launch of two new multi-year contracts with large FMCG clients over the past six months.
Customer service levels have continued to improve, delivering the increased volumes and supporting further opportunities for strategic partnerships with key customers.
The recent, new, long-term financing facilities have allowed the normalisation of the group's capital allocation options.
As a result of this and the ongoing strong trading performance, the Board intends to re-instate annual dividends in relation to the current financial year.
The details will be announced at the time of the Final Results in September 2025.
Analyst’s View
Nick Spoliar and Charlie Cullen, at Zeus Capital, upgraded their estimates after the update.
They also upped their Buy rating, with a 180p a share Price Objective, while their DCF target is 192p.
For the current year they are now going for revenues of £952.1m (£934.8m), with adjusted pre-tax profits of £49.0m (£53.1m), earnings of 20.8p (21.7p) and paying a brokers look for 180p2.5p (nil) per share dividend.
The 2026 year could see £971.1m sales, £52.4m profits, 22.2p earnings and a 2.8p dividend.
Further out the brokers go for 2027 to report some £990.6m in sales, £53.3m profits, earnings of 22.6p and a dividend of 3.0p per share.
In My View
As the European market leader in own-label cleaning products such as liquids, unit dosing and powders, there is a fair bet that we all have some of its own brand or multiple retailer branded products in our homes.
At the current 123.50p the group’s shares are trading on an extremely low current year multiple of less than 6 times – despite the strong price rise over the last year, having doubled, they still have a lot further to rise, with the 150p to 160p range being perhaps an early trading area.
Comments