It's our 19th anniversary!

Build capital at the construction site without having to roll up your sleeves

Investment from 4,900 USD

Expires: 15/03/2019

Expected
yearly returns
79%

Simpson Manufacturing is the world leader in the design, development, and production of connectors and construction materials for wooden (84% of revenue) and concrete (16% of revenue) structures. The company was founded in 1956 in California and has 1,800 employees. The distribution of revenue by country is as follows:

  • United States — 77.6%;
  • Canada — 4.4%;
  • France — 3.8%;
  • Great Britain — 2.4%;
  • Germany — 2.2%;
  • Poland — 2.1%;
  • Sweden — 1.7%;
  • Switzerland — 0.6%;
  • New Zealand — 0.3%;
  • Other countries — 4.9%.
The company's largest shareholders include: BlackRock (12.94%); Bank of New York Mellon (3.79%); Rockefeller Capital Management LP (0.77%); Goldman Sachs (0.71%).

Drivers of growth:

  • Successful continuation of the implementation of the strategy in the following key areas:
    • growth in production and sales of most marginal products (primarily building materials for concrete structures);
    • cessation of investment in the development of low-margin products;
    • increased presence on European markets;
    • increased investment in the development of specialised software for consumers from the construction sector (mobile apps, etc.);
    • cost reduction through the introduction of new technologies.
  • The company continues to show steady growth:
    • revenue growth was 13.5% in 2017, in 2016 and 2015 — 8.4% and 5.6%, respectively.
    • in 1Q2018 — 11.3% (YoY), and in 2Q2018 — 17.1% (YoY).
  • Profitability continues to grow, and the return on equity is as follows:
    • in 2015 — 7.92%;
    • in 2016 — 10.46%;
    • in 2017 — 10.58%.
    In the current year, this indicator reached 10.75% and 12.29% (in 1Q and 2Q, respectively), and the return on assets is as follows:
    • in 2015 — 7.02%;
    • in 2016 — 9.24%;
    • in 2017 — 9.18%.
    The company's return on assets in the current year amounts to 9.22% and 10.42% (in 1Q and 2Q, respectively). The ratio of net profit to revenue in 2017 was 9.3%, and this year, this figure rose to 10.0% in 1Q, and 14.3% in 2Q.
  • Simpson Manufacturing's shares are traded with the following discounts to peers:
    • EV/Revenue (16%);
    • P/E (5%).
  • Low risks to financial stability: the total debt to asset ratio is only 0.3, and the total debt to EBITDA ratio is 0.02. The net debt to EBITDA ratio is (-0.75%) due to a significant supply of free liquidity. The cash ratio, or absolute liquidity ratio, amounts to 0.92, which is a fairly high value.
  • It should be noted that the Sino-US trade war has had a limited impact on the company, since Simpson Manufacturing's primary sales are in the US (77.6% of revenue), while China accounts for less than 0.1% of revenue. Thanks to the introduction of reciprocal duties, (US and China), the company will be able to increase domestic sales by reducing the share of Chinese manufacturers in the US. A possible decline in Simpson Manufacturing shares in China will slightly affect its total revenue.

Investment period ends:
15/03/2019

Expected yield is calculated according to 88% capital protection and the price of the base asset at expiry, equal to 71 USD.

Technical Analysis:

The company's share price is near the lower boundary of the long-term upward trend and is poised to go up from the Ichimoku cloud. The following are significant technical levels: 77.99 USD; 74.31 USD; 71.73 USD; 67.49 USD; 65.00 USD; 63.15 USD; 60.44 USD; 55.28 USD; 54.71 USD.

Invest

Three simple steps to invest

  • Register for myAlpari, to receive access to the Alpari's services
  • Select an investment idea or create your own investment product!
  • Make a deposit to your transitory account using the means that suit you best and invest your money!

Didn't find the idea for you?

There are more opportunities to create your own product than you think

Create Your Own Product
Back to top