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20 July, 2017 - 11:06 By Tony Quested

Brokers back Tristel to pile on the growth

Brokers have been lining up to praise infection control company Tristel and predict great things for the stock, especially given the prospect of a spike in global sales.

The company, based in the horseracing town of Newmarket, is rated a thoroughbred worth backing by analysts at finnCap and Equity Development. Under chief executive Paul Swinney, Tristel has been mapping significant growth in new territories as hospitals and other healthcare facilities warm to its bug-busting prducts.

The analysts lifted their heads above the parapet after Tristel posted an upbeat trading update for the year to June 30.

Tristel told the UK’s London Stock Exchange that it will record turnover in excess of £20 million (2016: £17.1m) and pre-tax profit (before share-based payments) of at least £4m (£3.3m). Both turnover and pre-tax profit are ahead of market expectations.

In the second half, revenue from overseas markets contributed 50 per cent of the group total compared to 43 per cent in the first half, and for the full year overseas revenue represented 47 per cent of group revenue – a record level.

Tristel has continued to generate significant levels of cash and at the end of June cash balances were £5.1 million. The company has no debt. The board is currently considering its dividend policy and the ongoing cash requirements of the business as it continues its global expansion.

Chairman Francisco Soler said: “The company enjoyed a very strong second half with overseas sales continuing to drive progress. The Australian acquisition that we announced at the Open Day event in July last year made a significant contribution to this growth and we consider it as having been a success. 

“We are pleased that overseas sales in the year represented almost half of the total and we anticipate that our overseas operations will continue to expand.”  

finnCap immediately raised its target price to 225p. Equity Development said there was sometimes a danger of being too conservative when assessing the value of a stock – “especially when, in Tristel’s case, the opportunity of accessing the world’s biggest healthcare market (the US) is now almost within striking distance.” 

It lifted its base case valuation 36 per cent to 211p per share – “even ignoring any upside from North America. On top, assuming EPA/FDA approval is granted over the next couple of years, then the United States alone could contribute more than 25 per cent of group revenues, say by FY25 – possibly adding another 100p+/share.”

Tristel’s stock has already ballooned 10 times its value four years ago.

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