Electrical systems specialist
The sluggish state of the technology sector accounted for the majority of the revenue decline. Indeed, semiconductor companies have struggled with oversupply issues and falling computer demand and XP's sales into this segment fell 20 per cent in the year to £24.1m. The least affected sector proved to be healthcare - sales here fell 2 per cent to £26m - and management expects the most sustained demand to come from healthcare technology companies in the coming year. Europe proved to be an especially tough region for the company and sales here slipped 10 per cent to £40.8m.
But chief executive Duncan Penny said the company will continue to invest in its own production capacity, which should boost profit margins this year. He also pointed out that the depreciation that companies are currently embedding into their balance sheets will need to be reversed at some point. "The last time this happened, in 2010, our sales rose 36 per cent," he added.
Broker Investec Securities expects pre-tax profit for 2013 of £22.4m, giving EPS of 91p (from £20.2m and 81.3p in 2012).
| XP POWER (XPP) | ||||
|---|---|---|---|---|
| ORD PRICE: | 1,080p | MARKET VALUE: | £207m | |
| TOUCH: | 1,073p-1,092p | 12-MONTH HIGH: | 1,283p | LOW: 873p |
| DIVIDEND YIELD: | 4.6% | PE RATIO: | 13 | |
| NET ASSET VALUE: | 318p* | NET DEBT: | 17% | |
LAST IC VIEW
Admittedly, XP hasn't had an easy year. But the yield looks tasty and the shares, trading on 12 times forecast earnings, are rated at a discount to the UK electronic and electricals sector. That rating doesn't appear to factor in a likely recovery in future corporate spending. Buy.
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