Norcros plc (LON:NXR) was the topic of conversation when DirectorsTalk interviewed Gervais Williams, Co-Fund Manager of Diverse Income Trust plc (LON:DIVI)
DirectorsTalk asked: Norcros delivered a resilient first-half performance in a weak market. It exited capital-intensive tile manufacturing and completed the acquisition of Fibo. How do you assess Norcros’ transition towards a higher-growth, capital-light business?
Gervais noted: Norcros supplies lots of building products, it’s got showers and other products which it produces. It’s got a very strong market position and actually, over the years, it has improved its market position by bringing in specific small acquisitions which have helped them to widen their product range and deepen their product range. That’s really why they have actually grown the company really quite well, even at a time when actually demand has been a bit mixed.
What’s been interesting recently is that they‘ve bought another acquisition which has obviously enhanced their opportunity. Specifically, their synergy benefits as they improve the efficiency of the business has meant that they’re actually able to generate not just good growth but actually ongoing growth even at a time when, as I say, demand isn’t that strong.
Its valuation remains low. Its dividend is reasonable but most particularly, it’s very overlooked market capitalisation, it’s just over £300 million market cap and as such, we think it is overlooked. As it gets more recognition, we think the share price and the valuation can move up quite considerably from here.
