Interactive Investor

FTSE 250 led higher by windows firm

1st September 2021 15:52

Graeme Evans from interactive investor

Our stocks writer has the details on a windows and doors specialist which has been the star of the market today. 


Another impressive session for the FTSE 250 index was today led by one of its lesser-known names after a big surge in value for window and door parts specialist Tyman (LSE:TYMN).

Enthusiasm among mid-cap investors was triggered by analysts at Berenberg bolstering their target price by a third to 500p, compared with 415p at last night's close of trading.

It came as the FTSE 250 index kept up its recent momentum to rise 0.5% to 24,231, having jumped by 18% so far this year to a record high.

Tyman shares lifted 9% or 37.5p to 452.5p as the London-based company continues to benefit from robust demand in residential construction, which accounts for about 80% of its revenues.

Tyman was previously known as Lupus Capital, changing its name in 2013 when it was still listed on AIM. It switched to the main market later that year before securing promotion to the FTSE 250 index earlier this summer.

Shares have come off the boil since securing second-tier status, but Berenberg believes the pullback of 20% over recent months now represents an “attractive entry point”.  

Its backing comes after Tyman's results at the end of July exceeded expectations, with like-for-like revenues up 10% over the same period in 2019 and leading to adjusted earnings higher than the previous two years at 17.1p a share.

The outlook is clouded by inflationary pressures and supply chain challenges, but based on current trading momentum Tyman was able to nudge up the City's full-year profit forecasts and also reinstate dividends with a payment 4% higher than 2019 at 4p a share.

The group, which employs about 4,300 people at facilities in 17 countries, supplies its hardware and seals through three divisions.

The North American arm is comfortably the biggest, with favourable trends in the US and Canadian housing markets recently helping half-year revenues to lift 10% on 2019 at £191.6 million.

The UK and Ireland arm grew by 7% to £54.3 million, despite some impact from project delays in the commercial sector.

Tyman's growth in previous years has been driven by M&A activity, but Berenberg notes a shift in strategy as management prioritises organic growth and greater capital expenditure.

The operating margin has expanded from 12.3% to 15.3% but the broker believes a target of 17% by 2023/24 remains achievable.

Tyman trades on a price of 12 times 2022 earnings, which Berenberg says represents a 20% premium on historical trends but is still well below peers.

Its analysts added that conditions were favourable: “Residential construction is booming, while new-build housing and RMI (repair, maintenance, improvement) activity are outperforming the broad economic recovery driven by pent-up savings, cheap mortgages and the 'race for space'.

“Longer-term, the structural undersupply of housing (and ageing stock that has been underinvested in the US) should underpin growth forecasts.”

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