The sigh of relief that accompanied
Indeed, growing demand from the mining sector for diggers and dumper trucks helped steer revenue at the early cycle precision business back to pre-recession levels, up 53 per cent to £36.7m, and more than double operating profits to £3m. Supplying weight-saving components used in engines and transmission systems to firms like Caterpillar - its largest customer accounting for 16 per cent of sales - means that exports now account for 20 per cent of revenue.
Chief executive Paul Hooper is keen to sell more overseas, especially at the building products unit where a £0.5m bad debt and sharp reduction in operating margins meant profit fell 30 per cent to £3.4m on rising sales. Cuts in government spending on construction have hurt Alumasc and signs are the industry won't recover until 2013 at the earliest.
Broker finnCap expects current year EPS of 10.7p (8.3p in 2011).
|ORD PRICE:||140p||MARKET VALUE:||£51m|
|TOUCH:||135-145p||12-MONTH HIGH:||182p||LOW: 102p|
|DIVIDEND YIELD:||7.1%||PE RATIO:||13|
|NET ASSET VALUE||88p*||NET DEBT:||33%|
This year's spectacular growth at the precision business will not be repeated in 2012, and much depends on export growth and the success of new products. So, despite the tempting yield, on 13 times earnings forecasts, the shares are fairly priced.
Last IC view: Fairly priced, 145p, 4 February 2011