The Lemon Fool

Strong Trading - Profits Expected To Materially Exceed Market Consensus

https://www.investegate.co.uk/treatt-pl ... 00085318M/

Can't really put it better than the headline!

Another Trading Update today

https://www.investegate.co.uk/treatt-pl ... 00060398V/

"Following the trading update announced in January 2021, the Board is pleased to confirm that momentum has continued across the business."

"During the Period the Group has won significant new business ..."

and for me most importantly

"Work on our new UK facility continues apace and we are now a significant way through the operational fit out. We will begin transitioning colleagues across in late April 2021 and will start the commissioning of the new plant and machinery later this calendar year as planned, to enable production to relocate. We believe this site, along with our recently expanded US facility, will provide Treatt with a much stronger platform to support its growth ambitions."

We are now close to the point where production gets ramped up. Will be interesting to see if as a result the "full" valuation appears less so with that potential meaningful growth.

(I hold).

Full Year Results

https://www.investegate.co.uk/treatt-pl ... 00049570T/

Profit before tax and exceptional items up 41.3% to £20.9m - substantially exceeding Board's initial expectations*

*Those initial expectations had already been guided upwards, so no meaningful difference today.

Still impressed by this growth company (and long). For many this might be the typical growth stock that never looks cheap but always seems to grow and (more than) justify its price and lack of visible cheapness. I'm sure many have never bought it as a result.

Trading Update today

https://www.investegate.co.uk/treatt-pl ... 00069405V/

and not good news, at least in the short term, and a share price fall (from a price already way off highs) of some 30%.

Revenues are growing strongly, and past investment in capacity suggest this can continue, however margins are down. Blame is placed on inflation in inputs and an inability to pass this on fully (suggests some customers on long term price contracts), and FX exposure with a strong dollar boosting commodity input costs relative to the 90 or so countries its products are bought that aren't $ based.

Still looks a successful business underneath and the now much cheaper entry price should make it more attractive for those that see these setbacks as temporary.

dealtn wrote:Trading Update today

https://www.investegate.co.uk/treatt-pl ... 00069405V/

and not good news, at least in the short term, and a share price fall (from a price already way off highs) of some 30%.

Revenues are growing strongly, and past investment in capacity suggest this can continue, however margins are down. Blame is placed on inflation in inputs and an inability to pass this on fully (suggests some customers on long term price contracts), and FX exposure with a strong dollar boosting commodity input costs relative to the 90 or so countries its products are bought that aren't $ based.

Still looks a successful business underneath and the now much cheaper entry price should make it more attractive for those that see these setbacks as temporary.

As I have written elsewhere, I've never understood the valuation. Gross Margin has always been poor (sub 40%) and operating margins just about average for a "quality" company on a high PER. I know they have been investing in new manufacturing, which bodes well for the future, but it would have to be substantially cheaper than currently to get me interested. I'd need to take a good look at the cashflow statement as well because the numbers shown on Stockopedia for cash conversion look dreadful and so I suspect there is something wrong with them.

All the best, Si