Howden Joinery Group PLC

The housing market will drag Britain’s biggest kitchen supplier down with it. But through the turmoil, the firm will...

The housing market will drag Britain’s biggest kitchen supplier down with it. But through the turmoil, the firm will expand its market share and prove more resilient than analysts expect. I rate it a Buy as traders have baked maximum pessimism into the price, offering us a 13% internal rate of return (IRR) with a 50% upside.

Summary

• Company name: Howden Joinery Group

• Ticker: HWDN

• 52-week range: £4.70–9.50

• Market cap: £3.3bn

• Price: £6.00

• Target: £7.60–10.40

• Upside: +50%

• Recommendation: Buy

I) Story

Business model

The Howden Joinery Group (Howden’s) is a trade supplier that sells kitchen cabinets, joinery, fittings and appliances to tradespeople from warehouse-like shops. The company gets 98% of its revenue from the United Kingdom. The rest comes from France, Belgium and Ireland.

It’s the 11th largest trading company distributor in Europe by market capitalisation and the 12th biggest by revenue. According to Mintel, a London-based research firm, Howden’s has a 27% market share in Britain.