Reasons why it is becoming interesting

Capral remains a high risk investment.
However, 2 main interesting point :
- the risk is already well discounted in the valuation with a free cash flow yield of 18 % (excluding job keeper impact) and an EV/trading EBITDA of 3.7,
- an underlying business which shows clear signs of improvement and explain the company's positive update for FY20 (as well as for 2021).

2 interesting elements regarding their underlying business :
- good volume since the beginning of the calendar year : solid Q1, negative April and May and significant rebound this June, driven by a bottoming of residential building (41 % of their volume, with low exposure to high rise) and steady volume for their industrial business (46 % of their volumes) driven by defence and solar businesses,
- gain of market shares vs imports (mainly Chinese). The company estimates that it gained 2 ppt of market share during H1.

The key question is probably to wonder if their gain of market share vs imports is sustainable.
The answer is not obvious, but we have some elements of answer :
- anti-dumping measures expected to remain ("application made to extend Chinese duties for a further 5 years past October 2020 expiry"),
- quality criteria may become more important, as we have seen it in the case of cladding,
- need to be an approved supplier for defence.