PWR Holdings provides engineered cooling solutions to high-end auto and industrial customers and has become a world leader in these markets. In the 1HFY17 result, they delivered considerable organic growth but this was masked by the strong move of the AUD against the GBP as well as a ramp up in costs ahead of new Auto opportunities.
The net result was EBITDA down 37% compared to organic revenue growth in GBP of 24% (illustrated in the chart below). The bulk of this growth came from Formula One racing customers.
When forecasting, we look out several years and see a strong earnings recovery. We anticipate PWR using its pricing power to recover some of the FX losses as well as a generating a return on their new investments – these are underpinned by Auto contracts that were announced at the 1HFY17 result.
Thus we see that the sell-off in the stock since Brexit has created a unique situation where investors can get a true growth company, on value metrics.
Source: PWH 1HFY17 Presentation
Andrew commenced with Perennial Value in July 2008. Prior to joining Perennial Value, Andrew was Head of Research at Linwar Securities, a boutique broker specialising in smaller company research. Andrew joined Linwar in 2003 and during this...
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