Shares in parts maker Trifast up by 150% as it gets nuts and bolts of business right
NUTS and bolts specialist
Trifast is proof of just how well a business can do when the management knows what it is doing, the company has a clear strategy and there is a real determination to succeed.
In February 2009, as the financial crisis hit home, Trifast shares sank to below 10p. Former chief executive Malcolm Diamond came out of retirement to become executive chairman and, with the help of then finance director Mark Belton, restored the business to health.
Midas last recommended the stock almost three years ago, in March 2014, when the shares had recovered to 80p. They have risen by 150 per cent to 200p since then and should deliver further growth over the next few years.
To many outside observers, one group of nuts and bolts is very much like another. However, Trifast is different. The group derives more than 70 per cent of sales from three sectors: automotive, electronics and domestic appliances.
In each area, Trifast will often work with its customers – car makers, computer manufacturers, white goods firms – to create products that solve specific problems. One car maker was having issues with a fold-back seat on a people carrier. Trifast designed a widget that enabled the seat to recline properly.
And a washing machine needs fasteners inside the drum to make sure it stays in place en route from the factory to the home. Trifast created a single product to fix the drum in place, rather than several fiddly fasteners.
The company is headquartered in Uckfield, East Sussex, but it works in more than 60 countries, delivering 150million components every day to customers ranging from individual workshops to large multinationals.
Having disappointed shareholders so brutally after the financial crisis, Trifast does not want to repeat the same mistakes, so it is known for taking a cautious stance over the future.
Nonetheless, Diamond admitted earlier this month that results for the year to March 31 are likely to be ahead of expectations and that the company is well positioned for long-term growth.
In 2014, Trifast profits were £9.16million. This year, the company is expected to produce about £19.5million, so the figures will have more than doubled in the past three years. Sterling weakness will have boosted the results by about £1million, but even stripping out currency effects, the increase is impressive.
A dividend of 3.15p is forecast for 2017, an increase of 12.5 per cent over last year. Steady increases in both profits and dividends are expected in 2018 and beyond.
Diamond, now 68, spent 18 years as chief executive of Trifast, retired in 2002 and has now spent a further eight years as executive chairman. In April, he is stepping down to nonexecutive chairman – not relinquishing the reins entirely, but taking a more part-time role. There are no concerns about succession planning, however. Belton, another Trifast lifer, was promoted to chief executive in 2015 and has proved himself eminently capable.
Midas verdict: Trifast has gone from strength to strength over the past three years, growing organically and through well-placed acquisitions. The next three years should produce more of the same. Economic worries are growing in the UK but less than 30 per cent of Trifast sales are generated in this country.
Existing shareholders should hold. Long-term investors could also derive value from this stock.
Traded on: Main market Ticker: TRI Contact: trifast.com or 01825 747366
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