What are the foundation stones laid by Tristel to resume revenue and profit growth from FY22?

Summary

  • TSTL expects FY21 global sales to remain around £31 million for the year ending on 30 June 2021.
  • The surface disinfectant product sales in the UK had witnessed a 47% growth to £2.3 million during Q3 FY21.
  • TSTL had anticipated showing profit and revenue growth from FY22.

Tristel PLC (LON: TSTL) is the LSE listed healthcare stock. TSTL’s shares have generated a return of around 14.14% in the last 12 months. The Company is listed on the FTSE AIM All-Share index.

Company Overview

Tristel PLC (LON: TSTL) is a manufacturer of contamination control and infection prevention products based out in the UK. The Company has three reportable business segments –

  • Human Healthcare
  • Animal Healthcare
  • Contamination Control

(Source: Company website)

A brief about Contamination Control Industry

The primary objective of the Contamination Control industry is to assure desired levels of cleanliness in controlled environments. With reference to the recent report from Grand View Research, the global infection control market would be expected to reach USD 258.3 billion by 2025. Moreover, the industry would be boosted by a significant rise in hospital-acquired infections worldwide. It would facilitate the increased scope of penetration for contaminated control products.

Trading Update (as of 26 April 2021)

The Company had reported a slow start to Q3 FY21 (three months ended on 31 March 2021), adversely impacted by the Covid-19 pandemic on patient examinations. Nonetheless, the surface disinfectant product sales in the UK had witnessed a 47% growth to £2.3 million during Q3 FY21 as compared to Q3 FY20, driven by increased activity levels in NHS (“National Health Service”). On an encouraging note, the revenue across 13 overseas subsidiaries and the international distributor network remained 7% higher during Q3 FY21 from an equivalent period of the prior year.

Regarding the balance sheet, the Company had a robust cash position of £8 million as of 31 March 2021. Moreover, the interim dividend of 2.62 pence per share would be disbursed by the end of April 2021.  TSTL expected the final FY21 dividend to remain around 3.93 pence per share, which would take the total FY21 dividend to 6.55 pence per share.

Share Price Performance Analysis of Tristel PLC

(Source: Refinitiv, Thomson Reuters)

TSTL shares were trading at GBX 569.00 and were down by close to 15.07% as of 26 April 2021 at 12:35 PM GMT. TSTL’s 52-week Low and High were GBX 390.00 and GBX 680.00, respectively. Tristel PLC had a market capitalization of around £315.29 million.

Business Outlook

The Company had anticipated FY21 global sales to remain around £31 million considering medical device and hospital surface disinfectants in both the home and overseas markets. However, the Company’s product sales had experienced several headwinds due to the long NHS waiting time. Furthermore, NHS had declared a £1.5 billion Elective Recovery fund to resume the services and the treatment.

The Company also pointed out that it would adopt a cautious approach to tackle several operational headwinds caused by the Covid-19 pandemic. Moreover, the Company had invested in lucrative market opportunities for expansion during FY21. Thus, the cost levels went up by 6% during FY21, excluding the investment in the North American regulatory programme. TSTL had expected to incur £750,000 in generating the scientific data required for FDA and EPA regulatory programme. TSTL had expected pre-tax profit to remain at least £5 million during FY21. Overall, the Company believed that the top line and bottom-line business would resume strong growth from FY22.


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