The long lead times in the industrial printing market continue to weigh on Xaar 's shares, whose high-teens PE multiple belies projected earnings growth of over 20 per cent for at least the next two years. Two printer companies have announced products based on Xaar's latest Platform 3 inkjet products. May's Drupa, a four-yearly printing trade show, should see three to five more launches, according to Xaar chief executive Ian Dinwoodie, with up to 10 commercially available digital presses released using his products during 2008.
However, Platform 3 won't be "material" to Xaar's revenues until 2009, when a more significant second wave of products is launched. Until then, Platform 1 sales are expected to grow at "robust" single-digit rates, making up "90-odd per cent" of the business. Platform 2, developed with Agfa two years before Platform 3, has seen slower implementation than expected, although low margins minimise the financial impact. While inferior to Platform 3, it demonstrates how hard it is to predict uptake in Xaar's market.
Landsbanki analyst Dan Ridsdale says the Platform 3 business "could grow to a scale matching Platform 1 within seven or eight years". But uncertainty about timing keeps his EPS forecasts more conservative at 10.4p for 2008 and 13p for 2009 (8.4p in 2007).
Xaar (XAR) | ||||
|---|---|---|---|---|
| ORD PRICE: | 182p | MARKET VALUE: | £114m | |
| TOUCH: | 179-184p | 12-MONTH HIGH: | 266p | LOW: 142p |
| DIVIDEND YIELD: | 1.4% | PE RATIO: | 21 | |
| NET ASSET VALUE: | 59p | NET CASH: | £13m | |
| Year to 31 Dec | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2003 | 29.2 | 0.45 | 1.6 | nil |
| 2004 | 34.8 | 6.27 | 7.7 | 1.0 |
| 2005 | 42.8 | 10.02 | 11.6 | 1.5 |
| 2006 | 42.2 | 6.91 | 7.9 | 2.0 |
| 2007 | 47.9 | 7.32 | 8.6 | 2.5 |
| % change | +13 | +6 | +9 | +25 |
Ex-div:14 May Payment:12 Jun | ||||
Click for a guide to the terms used in IC results tables.
