Skellerup Holdings Limited

Section 1: Company Overview and Fundamentals

1.1 Company Overview:

Skellerup Holdings Limited (NZX: SKL) is a New Zealand-based company, engaged in designing, manufacturing, and selling engineered polymer products and vacuum systems for customers in dairy rubber ware, water, and related infrastructure. The operations of the group are spread across the USA, Europe, Australia, and New Zealand.

1.2 The Key Positives, Negatives, Investment Highlights and Risks

1.3 Top 10 Shareholders: The top 10 shareholders have been highlighted in the chart, which together form ~22.61% of the total shareholding.

1.4 Key Metrics:

The company reported decent profitability metrics such as EBITDA margin of 22.8%, net margin of 13.9% in 1H FY23, which is higher as compared to the industry median. Further, the company demonstrated higher liquidity which could be inferred from the current ratio of 3.40x in 1H FY23 as compared to the industry median of 1.43x.

Section 2: Business Updates and Financial Highlights

2.1 Recent Updates:

2.2 Financial Highlights:

Section 3: Key Risks and Outlook:

3.1 Dividend History: Considering the H1 result as well as expectations for the full year, the company declared the 7% rise in the interim dividend to 8.0 cents per share, imputed 50%. The dividend will be payable on 16 March 2023.

Section 4: Stock Recommendation Summary:

The stock has witnessed a fall of ~7.36% in six months and over the last one year, it has decreased by ~12.8%. The stock has a 52-week high and 52-week low of NZD 6.09 and NZD 4.40, respectively, and is currently trading below the above the average of 52-week high-low average.

4.1 Recommendation

Markets are trading in a highly volatile zone currently due to certain macro-economic issues and geopolitical tensions prevailing. Therefore, it is prudent to follow a cautious approach while investing.

Note 1: Past performance is neither an indicator nor a guarantee of future performance.

Note 2: The reference date for all price data, currency, technical indicators, support, and resistance levels is February 27, 2023. The reference data in this report has been partly sourced from REFINITIV.

Note 3: Investment decisions should be made depending on an individual's appetite for upside potential, risks, holding duration, and any previous holdings. An 'Exit' from the stock can be considered if the Target Price mentioned as per the Valuation and or the technical levels provided has been achieved and is subject to the factors discussed above.

Technical Indicators Defined: -

Support: A level at which the stock prices tend to find support if they are falling, and a downtrend may take a pause backed by demand or buying interest. Support 1 refers to the nearby support level for the stock and if the price breaches the level, then Support 2 may act as the crucial support level for the stock.

 Resistance: A level at which the stock prices tend to find resistance when they are rising, and an uptrend may take a pause due to profit booking or selling interest. Resistance 1 refers to the nearby resistance level for the stock and if the price surpasses the level, then Resistance 2 may act as the crucial resistance level for the stock.

Stop-loss: It is a level to protect further losses in case of unfavorable movement in the stock prices.

Disclaimer 

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