Interim results from Wincanton PLC (LSE:WIN) yesterday were "robust" and analysts at HSBC are optimistic about shareholder returns from the supply chain solutions group, reiterating their 'buy' recommendation.
Results for the half-year to 30 September showed revenues of £754mln, up 6.9% on a like-for-like basis compared to a year ago, with pre-tax profit up 2.6% £28mln.
Management expectations for the full year were unchanged, with the group expecting “to deliver revenue and profit in line with market expectations”.
The HSBC analysts said the "twin challenge" is managing cost inflation and volume volatility, particularly in closed-book-contract end markets, and made no changes to their forecasts or valuation.
"That said, each division continues to deliver organic top-line growth and we remain optimistic that the March-23 triennial valuation should result in materially lower cash payments to the pension, thereby increasing capital for reinvestment in the business."
With a 500p share price target, which implies 35.7% upside, the 'buy' rating is partly predicated on such "positive pension progress".
Broker Liberum, which has a higher target price of 535p, said the results were "a little light" of its forecasts, amid headwinds for both revenues and costs.
"Some customer sectors are seeing softer levels of activity, and there is inflationary pressure, especially on labour. However, management remains confident on the FY outlook.
"The breadth of Wincanton’s customer base, and its strong underpinning from open book contracts, should see it remain resilient against an increasingly challenging macro backdrop, with long-term growth prospects intact," Liberum said, restating its 'buy' recommendation.