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Solid Strix is in rude financial health


Gain to date: 14.9%

Original entry point: Buy at 140p, 26 April 2018

Headline revenue growth of just 1.5% in the first six months of this year looks a little on the light side for Strix (KETL:AIM) but exchange rates skew those numbers. Strip out currency effects and the company posted a decent 4% rise.

IPO costs and finance charges also drag on headline pre-tax profits but the underlying picture suggest there is a robust and steady business here.

Maintaining a rough 38% international market share in the kettle controls business is encouraging while it is also worth noting that more than 100% of the £14.8m earnings before interest, tax, depreciation and amortisation (EBITDA) converted into £15.2m cash.

EBITDA margins adjusted for one-off costs also rose 900 basis points to 34.5% while gross profit margins also improved (from 37.2% to 37.9%).

Net debt has also been reduced, another encouraging sign of disciplined financial management, now running at about 1.1-times EBITDA.

Analysts see the shares hitting 210p over the coming months.

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