Thrace Plastics (PLAT): Initiation – Demonstrable core growth as COVID-19 subsides

London, UK, 18 April 2023

Thrace Plastics (PLAT): Initiation – Demonstrable core growth as COVID-19 subsides

Thrace Plastics’ FY22e core product PBT (excluding the c €5m pandemic-related personal protective equipment (PPE) boost and one-off financial income of €4.6m) should be well ahead of pre-COVID levels. Future growth from the more sustainable core products should be driven by the 2020–22 €102m reinvestment of the temporary boost to cash flow during that period from the high-margin PPE sales. While Thrace faces challenges in FY23 in terms of demand and costs, we expect to see accelerating growth and positive cash flows as it moves into FY24. We value Thrace at €8.59/share using peer-based EV/EBITDA multiples, which implies substantial upside potential, as does our DCF valuation of €7.86/share.

Much has changed since our last note in December 2021, and we now reset our forecasts to reflect the less favourable current macroeconomic environment. As earnings normalise following the COVID-19 distortions, we use a combination of peer multiples and cash valuations to calculate a fair value. Using the average of our 2023e and 2024e peer-based EV/EBITDA multiples values Thrace at €8.59/share, compared to our DCF valuation of €7.86/share. The average of the two valuations is €8.23/share. The FY24e P/E of 9.5x is clearly undemanding and should improve as renewed growth is verified.

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