What's going on ? Now we have Petra on the case as...

What's going on ?  Now we have Petra on the case as well....stocks been under the radar now everyone is all over it. Too funny...

Shriro Holdings Limited (SHM) - Creating value through brand building

Shriro Holdings Limited (SHM) listed in June 2015. Since then, the threat of a housing construction cycle collapse, and a poorly communicated attempt to execute a management sell-down has seen the share price wallowing. In our opinion, this has created a buying opportunity, with the housing cycle impact to earnings to be far more muted than the share price reaction implies. Moreover, we believe SHM’s corporate culture of innovation, collaboration and product extension places it in good stead for future growth. With an FY17E PE multiple of 7.2x and a dividend yield of 9.7% (fully franked), we believe that SHM provides inherent value at these levels.
FY17E Investment metrics

• PE – 7.2x (peer group 13.0x)
• Dividend yield – 9.7% (fully franked) (peers 5.2%)
• Net debt – A$9.4m (@ 31 December 2015)

Value creation through innovation and collaboration

• SHM has a history of brand value creation through innovation and brand extension. The Everdure brand is a good example of this culture, having organically grown from humble beginnings as a hot water heater company, to now offer a stable of well recognised products, including a range of BBQ’s, gas and electric heaters, and kitchen appliances. Moreover, it will soon launch a new range of quick start BBQ’s in collaboration with Heston Blumenthal for the international market.
• SHM is replicating Everdure’s success with other acquired and distributed brands including Omega, Omega Altise, Robinhood and Blanco. The recently launched Neil Perry Kitchen by Omega brand, a high-end, commercial kitchen concept in collaboration with Neil Perry is testament to this strategy.

Strong partnership with Casio

• Casio provides a strong, successful name for SHM’s portfolio of brands. In the five years to FY16, Casio Computer Co. has grown sales (ex-Japan) at 11% per annum and continues to report record profits.
• SHM’s relationship as a distributor of Casio products goes back to 1978. Like SHM, Casio prides itself on innovation, with its mantra of “Creativity and Contribution – inventing new ways to make life better”.

Strong balance sheet & cashflow conversion

• At 31 December 2015, SHM had a net debt balance of $9.4m and debt coverage ratio of 0.4 times, with current debt headroom of around $35m.
• Over the last four years the Company has generated a strong, 109% cash conversion ratio on reported profits.