Selling to emerging markets helped testing and decontamination specialist Bioquell return to profitability during 2011 after spending much of the past few years dealing with a drop-off in spending by defence customers. Moreover, management continues to shift the group's business away from being reliant on capital equipment sales and towards recurring service revenues, leaving the shares looking like an interesting turnaround play.
Key to this turnaround were product launches in the specialist testing regulatory compliance division, where sales rose 10 per cent in 2011 to £13.6m. By contrast, the decontamination Bio division was more exposed to sluggish markets in developed economies and sales there were largely flat at £27.7m. However, that looks set to change this year as management has spent £2m on developing services and consumable products for the division that are designed to generate recurring revenues in international markets. Still, management thinks this shift in business model will take time and investment – largely because Bioquell's entry into new markets has been through the establishment of wholly-owned subsidiaries rather than by relying on local distributors. Meanwhile, group orders remained flat in the year at £44.5m.
Broker Investec Securities expects adjusted pre-tax profit of £5.7m for 2012, giving EPS of 8.8p.
BIOQUELL (BQE) | ||||
|---|---|---|---|---|
| ORD PRICE: | 119p | MARKET VALUE: | £49.5m | |
| TOUCH: | 118-120p | 12-MONTH HIGH: | 125p | LOW: 99p |
| DIVIDEND YIELD: | 2.4% | PE RATIO: | 13 | |
| NET ASSET VALUE: | 66p* | NET CASH: | £4m | |
| Year to 31 Dec | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2007 | 34.1 | 4.17 | 8.9 | 2.00 |
| 2008 | 34.4 | 5.00 | 9.0 | 2.20 |
| 2009 | 39.2 | 5.86 | 10.3 | 2.42 |
| 2010 | 39.4 | 3.26 | 5.8 | 2.62 |
| 2011 | 41.2 | 5.00 | 9.3 | 2.83 |
| % change | +5 | +53 | +60 | +8 |
Ex-div: 6 Jun Payment: 2 Jul *Includes intangible assets of £9.8m, or 24p a share | ||||
