Underlying pre-tax profit grew 9 per cent to £4.9m and a lower tax rate helped underlying EPS jump almost a fifth to 21.8p. Canaccord now expects a profit of £5.3m this year, giving EPS of 22p. Despite difficulty squeezing orders out of European customers, the packaging division is expected to do well again. Tobacco machinery should, too. Sales there fell 9 per cent to £31.1m last year after an order worth almost £3m was held back, yet a 10 per cent increase in sales of spare parts, mostly to cigarette makers in the Philippines and Africa, meant underlying operating profit remained at £2.2m.
But it's the Scientific Services unit that's set to excite. A new lab and lumpy work from the US Food & Drug Administration may have cut profit at its Arista Laboratories tobacco testing business by over a third to £1.2m, but Molins, with nearly two-thirds of the market, should make a fortune when a new stricter testing regime is introduced in the US. Expect an announcement in April.
|ORD PRICE:||171p||MARKET VALUE:||£34.5m|
|TOUCH:||169-173p||12-MONTH HIGH:||174p||LOW: 106p|
|DIVIDEND YIELD:||3.2%||PE RATIO:||4|
|NET ASSET VALUE:||151p*||NET CASH:||£7.4m|
SHARE TIP UPDATE:
Molins' shares are up by more than 60 per cent from their summer lows, yet still trade on less than eight times forward earnings. There's net cash equivalent to 37p a share, too, and the prospect of a big payday in the US. Buy.
Last IC view: Buy, 125p, 29 Oct 2012