Creighton PLC (CRL)

About the company

Established in 1954, we are a multi Award Winning British Company who design, create and manufacture a wide-range of skincare, haircare and wellbeing products. The company offers 100% cruelty-free and where possible some products are vegan friendly.


Industry: Personal Products
Sector: Household
Market Cap: £77M (MICRO CAP)
Exchange: LSE

Quick Stats




  • Revenue growth >10% 
  • Operating Margins increasing to 10%
  • EPS - steady growth >20%
  • Outstanding shares - slightly yearly increase
  • ROI - increasing towards 25%
  • ROE - increasing towards 24%
  • Dividend 0.5 p/share

All positive except for the increase on outstanding shares, although not too negative as it is a small company. 

Annual Report

Business Model

  • The principal activity of the Group is the development, marketing and manufacture of toiletries and fragrances, which includes the development of brands. 
  • It offers haircare, skincare, bath and body, wellbeing, and male grooming products.
  • Consumers purchase their products through a range of retail and internet outlets, from high quality department stores to value driven discounters, with the high street supermarkets and drug stores in the middle. 
  • A significant amount of the Group’s products are sold in the UK, although increasing amounts are sold overseas, either direct to retailers or through distributors.
  • The market is relatively mature although it is constantly evolving as brands seek to differentiate their offering in order to generate sales opportunities. 

Strategy

  • expand sales and product offering
  • Invest in Business to Consumer (improve forecast purchasing patterns)

Risks

  • Strong balance sheet 
  • Competitive market
  • Brexit (minimal impact in the long term on costs of administration)
  • Increase in supplier & distribution costs (due to increase prices in raw materials and increase in usage of air freight)
  • COVID-19
    • increased sales (hygiene products)
    • reduced sales on contract customers (due to shutdowns)

KPI (Key Performance Indicators)

Executives

Salaries vs Shares (value in shares x salary)

  • McIlroy (Chairman & CEO) - 60x
  • Johnson (Managing Director) - 24x
  • Clark (Deputy Managing Director) - 5.6x
  • Stevens (Deputy Managing Director) - 8.4x
  • Forster (Non-executive Director - formerly F&C Director) - 15x

The share options were awarded to the directors as part of the Company’s ongoing compensation and remunerations plans as a motivation for continuing to deliver success to the Group, its shareholders and employees.

Main Shareholders


Global Market 

(European Market growth forecast is CAGR 2.6%)

Valuation

We can consider two different possible scenarios taking into account:
  • Revenue Growth: 20%
  • Operating Margin: 10%

  • Revenue Growth of 10%
  • Operating margin of 9%


The following table is an estimation of the multiples for the last 5 years:


A continuous decrease in the PE ratio its a good sign as it indicates a continuous growing EPS

Conclusion

  • Growing company in a mature and competitive market
  • Insiders own >30%
  • Strong balance sheet
  • Companies in this sector should not be affected by an upcoming crisis
  • Executives have great incentives (bonuses + shares' ownership)

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