Investor perception can sometimes be at odds with reality. More often than not, the idea of something adverse happening in the future is often far worse than the final outcome.

One sector where this is currently playing out is across the UK building products industry, with many stocks down more than 40% from their 52 week peaks. Granted, the sector has historically proved cyclical. Yet equally, the vast majority of homebuilders, infrastructure groups and brick makers are still reporting record orderbooks.

Similarly, demand is holding up well for UK building materials distributor, Lords Group (LORD). Supported by resilient RMI activity - which accounts for 80% of turnover - and the need to upgrade ageing properties, including work to improve energy efficiency, alongside the government’s pledge to construct 300,000 new houses a year - against 200k today - and greater infrastructure and warehousing spend.

Additionally, Lords continues to attract new customers and is winning a greater share of wallet thanks to opening additional sites, expanding its digital presence, successful M&A and enhancing its decarbonisation product range, such as heating controls.

All told, that saw it deliver H1 2022 adjusted EBITDA up 33% to £14.0m on sales 19.9% higher at £214.7m. Ongoing cost control, improving boiler supply issues, the integration of five acquisitions so far this year has helped the positive momentum continue into the second half. That means FY 2022 guidance remains in line with consensus expectations for revenues, adjusted EBITDA and pre-tax profit of £435m, £26m &and £16m respectively.

Despite this the stock, at 80p, trades on a frugal PER of 10.4x for this year, falling to 9.3x next - with net debt (ex IFRS 16) set to close December 2022 at £21.6m, or 0.83x EBITDA. That's well below broker Cenkos' target price of 114p. 

CEO Shanker Patel commented: "I am delighted with our strategic progress in H1’22 - demonstrating that we are able to consistently grow revenues and profitability, despite ongoing macro-economic uncertainties." 

Further out, Lords also remains on track to hit £500m of turnover by 2024 at a 7.5% EBITDA margin over the medium term.

Interim results are scheduled for Tuesday 6th Sept.