Hayward Holdings (HAYW), mcap=$1.9bn, price $8.73 vs $10.70

$HAYW pitch:
– Manufacturer of pool equipment for residential consumers with 30%+ market share.
– Was a clear Covid beneficiary and 3Q will be rough, however, the aftermarket represents 78% of sales and this is effectively non-discretionary.
– The industry is an oligopoly with good pricing power, high returns on capital, and solid cash generation.
– The installed pool base continues to increase and pool installations are still far below prior peaks in 2005.
– Trades at a reasonable multiple on run-rate earnings with good long-term growth prospects from the increasing installed base, mix improvements, and pricing power.

$HAYW valuation:
– At estimated run-rate 2023 EBITDA of $250m trades at 13x EBITDA and 17x FCF.
– Consensus 2023 EBITDA guidance of $350m, resulting in 9x EBITDA and 11x FCF valuations.

Exp. gain: Not specified.

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