Is it Trilogy International’s time to shine?

Similar to BWX, Trilogy makes home fragrance and natural skincare products under the Trilogy and Ecoya brands. Trilogy has a market cap of about NZD 110m after its shares shot up almost 170% over the last twelve months. 

The company upgraded guidance for half-year revenue and earnings in September, only six weeks after issuing previous guidance.  The business is recording rapid growth, with a 104% increase in full year revenue and more than double last year’s net profit expected for F16. These numbers exclude the recent acquisition of CS Company, which is earnings accretive.

Despite such impressive underlying growth, Trilogy is trading on a forward P/E of less than 10x. At this value, we believe the company looks cheap and deserves some multiple expansion. 

Pie Funds has owned Trilogy for a while and recently increased its weighting significantly. The company is flying under the radar, with no broker coverage and not yet widely owned by institutions. With plans to add Trilogy to the MSCI Micro Cap Index at the end of the month, we believe it’s only a matter of time.