Edison Investment Research Limited: Edison issues outlook on Polypipe (PLP)

London, UK, 2 April 2019

Edison issues outlook on Polypipe (PLP)

Polypipe's rating is currently slightly ahead of its sector, but this overlooks the company's positioning in long-term growth segments, in our view. The FY18 trading performance was noticeably stronger in H2, though margin progression was constrained by short-term production inefficiencies in certain areas. Management provide a clear and consistent message regarding business focus under a refreshed, growth-oriented strategy.

After a weak close to 2018, Polypipe's share price has rebounded strongly (being up x15% ytd and also c 8% over the last 12 months) though is now off the 432.60p high seen just before the FY18 results announcement. We note that some but not all of the quoted UK housebuilders have also had a strong start to the year in share price terms and the long-term structural UK housing shortage theme is intact. Polypipe's modest P/E premium compared to UK listed peers does not reflect its leading market share positions and strategic positioning to develop further in our view.

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