treatt

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Treatt

Reassuring confidence

Update | Basic Industries | 05 Apr 2018

Following the exceptional results Treatt posted in FY17, momentum has continued in the business and revenues were up c 10% in H1. The core categories of citrus, tea and sugar reduction continue to drive the business, demonstrating that the company is well placed to capitalise on current trends in the food and beverage space: management's outlook for FY18 remains unchanged. H1 will suffer from slightly negative FX effects, but US tax reform should lead to a significantly lower tax rate in future. We leave our forecasts unchanged at this stage, but see upside to our EPS forecasts from the lower tax rate, which remains unquantified at present.

Treatt

Growth continues apace

Update | Basic Industries | 30 Nov 2017

Treatt has posted yet another year of excellent growth, with revenues up 25% and adjusted PBT up c 45%. The company has reached its FY20 financial objectives three years early, and the management has therefore updated its strategy to take the company through to the next phase. A new facility is being built in the UK, and the US site is being expanded. Both projects are on track and Treatt has now announced a share placing to fund these projects. This was always flagged as a possibility. We update our forecasts to reflect the FY17 results and the share placement. Our fair value is 515p (from 522p previously).

Treatt

New strategy playing out

Update | Basic Industries | 17 May 2016

Treatt has yet again reported a strong set of results. The strategy to improve the quality of earnings is coming through, as proven by these results: the move from commoditised sales to more value-added products has caused sales to be marginally down, and yet margins are up. We leave our forecasts unchanged as we believe the new strategy will continue to play out.

Treatt

A full year Treat(t)

Update | Basic Industries | 03 Oct 2017

Treatt has had yet another outstanding year, continuously exceeding expectations and meeting its 2020 strategic objectives three years early. The board has already approved a plan to drive the business through to 2022 that seeks to build on this success. We raise our EPS forecasts by 3% in FY17 to reflect the strong performance, though our FY18 and FY19 EPS estimates fall by 1-7% due to higher interest costs. Our DCF-derived fair value increases to 522p from 438p, which represents c 10% upside.

Treatt

A brilliant half

Update | Basic Industries | 09 May 2017

Treatt has delivered yet another strong set of results. The business continues to perform very well and the constant stream of upgrades demonstrates the strength of momentum as the company moves further up the value chain. The pipeline is looking increasingly strong and recent growth means capacity expansion costing $11-14m is required at Treatt USA and is independent of the UK site relocation. We upgrade our FY18 and FY19 earnings estimates by c 2% and c 4%, respectively.

Treatt

Another upward surprise

Update | Basic Industries | 07 Apr 2017

Despite the surprise trading statement of 23 February, which led us to raise our sales forecasts by c 10% and PBT and EPS by c 20-30%, Treatt has yet again upgraded its outlook for FY17, which leads us to raise our EPS forecasts again by c 6-9%. Our fair value increases to 401p (from 350p) as a result. The constant stream of upgrades demonstrates the strength of momentum in the business as the company moves further up the value chain.

Treatt

Keep Treat(t)ing

Update | Basic Industries | 27 Feb 2017

Treatt has yet again beaten expectations by delivering an exceptionally strong start to FY17 despite Q1 typically being a seasonally weak quarter. The success is across the board and has led to a surprise trading statement (23 February). We upgrade our forecasts to reflect the strong sales growth and also the margin improvement as Treatt moves further up the value chain. Our fair value increases to 350p (from 293p) as a result.

Treatt

What a Treatt

Outlook | Basic Industries | 18 Jan 2017

Treatt is steadily transforming itself from a seller of flavour and fragrance-based commodities to a value-added ingredients supplier. The strategy of deep customer knowledge is paying off, leading to stronger relationships, a real competitive advantage and greater profitability, with EBIT margins increasing from 9.6% in 2014 to 10.8% in 2016. Management has delivered four consecutive years of earnings above expectations and the momentum remains strong. Our DCF analysis calculates a fair value of 293p, supported by benchmark analysis that places the stock at a c 30% discount to its peer group.

Treatt

Staying sweet

Update | Basic Industries | 30 Nov 2016

Results have yet again beaten our forecasts and the management has now delivered the fourth consecutive year of earnings above expectations. The share price is up 41% over the last three months, and Treatt is steadily moving from commoditised sales to more value-added products. Its strategy of deep customer relationships is paying off, giving it a real competitive advantage and improving margins. The year finished strongly and momentum is due to continue in the traditionally seasonally weaker Q117. Our P&L forecasts are broadly maintained, but our fair value moves to 272p (from 240p) as a result of stronger cash flow.

Treatt

Treat(t)ing investors

Update | Basic Industries | 11 Oct 2016

Treatt has had an outstanding year as the positive trends in its markets continue to play out. We believe the company is building a strong platform for the longer term and the performance continues to improve as the strategy progresses under the stewardship of Daemmon Reeve. Following the pre-close trading update, we upgrade our forecasts by c 10% at the EPS level to reflect the improved outlook. Our DCF-derived fair value increases to 240p (from 204p), which represents c 10% upside.

Treatt

A great recipe

Outlook | Basic Industries | 06 Jan 2016

Treatt's portfolio of natural, organic and fair-trade ingredients lies in the sweet spot of global food and beverage industry growth. Its strategy to deliver consistent growth by developing value-added ingredient solutions, coupled with strict cost control, is being achieved. Our DCF analysis calculates a 190p share price, 13% upside, supported by benchmark analysis showing the stock at a c 40% discount to its peer group.

Treatt

Steady as she goes

Update | Basic Industries | 12 Oct 2015

Treatt is on track to deliver another period of growth as the positive trends o in the beverages market in particular o continue to play out. We believe the company is building a strong platform for the longer term. Despite the slow start to the year, momentum built steadily, culminating in a strong Q4. Our DCF-derived fair value is 198p, which represents c 20% upside.