Plastics Capital (LON:PLA) released a trading update on March 1st, for the year ending March 31st. The company reports that trading remains broadly in line with market expectations. Revenue growth has remained strong in the second half, particularly in the Films division, reflecting the company’s programme of investments in expansion.
In terms of profitability, the EBITDA margin is still expected to increase versus H1, but at a lesser level than previously expected. This is due to a slower growth rate in the higher margin Industrials division, compared with the lower margin Films business.
We have previously described FY Mar2018e as a transitional year for Plastics Capital (LON:PLA), with the new investments pointing the way to accelerating revenue growth. On the revenue front results so far are encouraging, and we believe that earnings will follow in the next few years. Given these dynamics, we argue that the current share price represents an interesting entry point.
Full report is available via Capital Network website