Halma’s Full-Year Trading Update Is in Line With Expectations; Shares Are Fairly Valued

Following narrow-moat Halma’s record first-half performance, which saw management raise guidance, Halma revealed in a brief trading update that full-year performance is tracking in line with their expectations. Further sequential improvement in revenue during the second half is expected, following the impressive 23% organic growth achieved during the first half. As anticipated, profitability has reverted to more normalized levels following the return of discretionary costs and investments to support growth. Management expects profit before tax to be between GBP 301 million and GBP 313 million, which implies a second-half margin of roughly 20%, the midrange of the group’s target, compared with 21% achieved during the first half. We reiterate our GBX 2,310 fair value estimate. Shares have converged with our fair value estimate and are fairly valued.