Berenberg lower target price on Trifast amid 'tough' end-markets

Analysts at Berenberg lowered their target price on industrial fastenings manufacturer Trifast on Monday, but praised the group's solid progress despite "tough end-markets".

Berenberg stated that given continued weakness in its end-markets, it was unsurprising that Trifast experienced a challenging first half to 2020 - with automotive volumes down 7.3% year-on-year, tariffs imposed on electronics customers, low consumer confidence in Europe and Brexit-related uncertainty leading the analysts to reduce their earnings per share expectations by roughly 20%.

However, despite this tough external environment, Trifast exercised disciplined cost control and maintained market shares, and with a strong balance sheet, Berenberg expects the group to be "well placed" once the market picks up again.

The German bank also stated that with shares trading on a full-year 2021 price-to-earnings ratio of 15.0x, and near-term headwinds expected to persist, it remained at 'hold' on the group but reduced its price target to 200p from 235p.

"Notwithstanding the current challenges across the group's end-markets, we firmly believe in Trifast's differentiated offering in a highly fragmented market," said Berenberg.

Berenberg also highlighted that throughout the tough environment, the group had not lost a customer, its balance sheet was in good shape and the longer-term story remained unchanged.

"Management has done well to offset much of the weakness, particularly at the EBIT margin level, and we believe the group is well placed to benefit when the condition of its end-markets turn more favourable."