GB : Luceco - Quality credentials at a discount

With FY21 in-line, as pre-announced on 20th January, Luceco has doubled its profits in two years despite Brexit, a global pandemic and unprecedented supply-side disruption. Brand strength provides a solid platform for new product launches and pricing power, both key to growth. Despite inflation, we see FY22-23e adj. EBIT margins comfortably towards the mid-point of the group’s 15-20% through-cycle target and growth potential within new EV and Nexus categories not reflected in consensus. With shares down 52% from peak, Luceco trades on just 11x FY2 PE, in our view an attractive and unwarranted discount. We reiterate BUY, rebasing our TP from 520p to 400p to reflect the market’s recent broad reappraisal of equity valuations. Our new 19x FY2 PE TP still leaves >70% upside.