Halma’s Impressive Full-Year Results Overshadowed by the Retirement of CEO; Shares Are Undervalued

Narrow-moat Halma’s full-year results met our expectations, delivering impressive organic revenue and profit before tax growth of 17% and 15%, respectively, to reach record levels for the group. Bolt-on acquisitions remain a key component of Halma’s strategy, adding a further 1.7% growth (net of disposals) to profits during the financial year, as the group continues to expand and improve its niche product offering through a combination of tuck-in acquisitions and R&D. Shares are trading lower on the news that Andrew Williams will be retiring as CEO after 18 years in the role, having been an outstanding steward of capital for shareholders. His successor will be Marc Ronchetti, Halma’s current CFO. We believe the appointment from within the group will see little change to Halma’s disciplined acquisition process, and thus we maintain our exemplary capital allocation rating. We reiterate our GBX 2,310 fair value estimate and view shares as undervalued at current levels.