Deutsche Bank starts Polypipe at 'hold', highlights competitive advantages

Analysts at Deutsche Bank kicked off coverage of Polypipe with a recommendation to 'hold' and 445.0p target price, highlighting the company's dominant position in the space.

Polypipe had roughly 26.0% of the UK market for plastic piping systems, versus rivals Wavin and Alliaxis at 18.0% and 12.0%, respectively.

But it also had the widest product range and, unlike its peers, it derived a higher proportion of its business from value-added products.

Hence, its "structurally" higher operating margins, Deutsche Bank explained.

Whereas its rivals' margins at the earnings before interest, taxes, depreciation and amortisation level were at 12.0-13.0%, Polypipe sported margins of approximately 20.0%.