It’s ‘all systems go’ at specialist equipment rental/sales group Northbridge Industrial. Posting ‘electric’ H1’21 numbers today – with adjusted EBITDA (pre IRFS16) climbing +27% to
£4.0m on revenues 22% higher at £19.6m, and net debt closing June at comfortable £3.5m (or 0.4x EBITDA) vs £5.4m in Dec’20.
Here growth is being driven by the turbo-charged Crestchic division (Est +20% up on H1’19 & >40% YoY), which delivered a ‘stonking’ 1st half. Reflecting ‘vibrant’ data centre demand alongside numerous secular tailwinds – such as grid stability, renewables, geographic expansion, marine decarbonisation & new products. Indeed the pipeline is so strong that its Burton-on-Trent factory is having to expand capacity by 50%, which is set to come online mid-2022.
Sure there is some input cost inflation due to higher commodity prices, freight rates, labour & supply chain disruption. Yet equally I suspect this will ultimately be passed-through, reflecting NBI’s pricing power.
Elsewhere the ‘piecemeal’ disposal/restructuring of Tasman should be largely ‘done & dusted’ by yearend, generating another £4m-£5m of cash. Which when added to the estimated £4m that has already been realised via the retention/sale of written down equipment & working capital - would be a satisfactory overall result. Especially since NBI then becomes a more attractive L/T takeover target for future private equity &/or trade buyers.
So what does this all mean?
Well given the upgraded guidance, I’ve similarly lifted my forecasts (see attached) & nudged up the valuation to 200p/share vs 192p B4. Plus at 170p, the stock still trades on a modest 6x FY22 EV/EBITDA, whilst paying a 2% dividend yield.