Eyewear frames and optically advanced spectacle lenses maker Inspecs (SPEC:AIM) joined the stock market in February 2020 and its shares have since risen by 40%. We see a lot more upside at the Bath-based company which is still in the early stages of its global growth journey.

The eyewear industry has bounced back from Covid-enforced closures with opticians operating safely, Inspecs’ end-October order book was 25% above that of 2019, while the recent acquisition of Germany’s Eschenbach provides a further platform for growth.

Guided by founder and chief executive Robin Totterman, Inspecs’ broad range of frames covers optical, sunglasses and safety and are either branded or private label. July’s purchase of lens maker Norville from the administrators also significantly increased Inspecs’ lens expertise and manufacturing capability.

Vertically integrated and with factories in Vietnam, China and Italy, Inspecs is one of few companies that can offer a one-stop-shop solution to global retail chains. This leaves it well positioned to continue taking market share in the expanding international eyewear market. Customers include global optical and non-optical retailers, global distributors and independent opticians.

Key brands produced under licence include Superdry (SDRY), O’Neill, Caterpillar and Radley, while major customers include opticians such as Specsavers, Boots, Vision Express and National Vision, as well as retailers such as WalMart, ASOS (ASC:AIM) and TK Maxx.

Broker Peel Hunt upgraded its earnings estimates following the recent acquisition of German-headquartered eyewear supplier Eschenbach, a deal which dramatically increases Inspecs’ global distribution.

Greater scale is expected to yield opportunities to acquire bigger global licences and make acquisitions to increase the enlarged group’s brand portfolio.

Enhancing Inspecs’ presence in key eyewear markets including Germany, the US and France, Eschenbach also gives the new owner a presence in the independent opticians channel, complementing its existing focus on retail chains.

And whereas Inspecs is currently focused on more affordable eyewear, Eschenbach takes the business into the premium and luxury segment. As if that weren’t enough, Eschenbach’s Optics division provides Inspecs with an entry into the low vision technology market, which serves people with severe visual impairment.

Peel Hunt’s updated forecasts point to a jump in sales from 2020’s estimated $45 million to $241 million in 2021, sending adjusted pre-tax profit up from $3.6 million to $19.5 million next year, ahead of an estimated $24.9 million of profit from $256.5 million of sales in 2022.

We think those forecasts will look conservative given the upside to come from purchasing, operational and revenue synergies post-Eschenbach.

Income-seekers should also note the broker sees Inspecs initiating a dividend next year.

‹ Previous2020-12-23Next ›