We've developed something of an attachment to Scapa (SCPA) since tipping the company's shares at 48p in November 2011. The tapes and adhesives group has delivered on its turnaround and cost-cutting strategy - boosting profits and restoring confidence after a bruising financial crisis - and the share price, at 79p, recently reached a 11-year high. The company has reinstated a modest annual dividend, too. But is it time to bank profits?
There's certainly an argument there. Nearly half of Scapa's sales are still derived from Europe, where difficult operating conditions are expected to continue this year and probably next. Can further cost-cutting be as effective? Certainly, Scapa's management seems committed to keep on delivering the 'self help' that has driven the recent share price gains. Post the March year-end, the group tidied up its balance sheet by ridding itself of asbestos litigation issues and a legacy pension deficit, while the fast-growing healthcare segment is seeing encouraging margin and sales growth. Chief executive Heejae Chae remains on the hunt for acquisitions to scale-up the burgeoning electronics segment, too.
Brokerage N+1 Singer forecasts adjusted EPS of 5p in the 12 months to March 2014 (from 5.3p in 2013), as earnings are impacted by new pension accounting rules.
SCAPA (SCPA) | ||||
---|---|---|---|---|
ORD PRICE: | 79p | MARKET VALUE: | £116m | |
TOUCH: | 78-80p | 12-MONTH HIGH: | 80p | LOW: 53p |
DIVIDEND YIELD: | 0.6% | PE RATIO: | 29 | |
NET ASSET VALUE: | 42p* | NET CASH: | £2.2m |
Year to 31 Mar | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
---|---|---|---|---|
2009 | 174 | -9.3 | 7.5 | nil |
2010 | 177 | -5.2 | -1.9 | nil |
2011 | 192 | 6.1 | 2.4 | nil |
2012 | 196 | 10.5 | 4.5 | nil |
2013 | 209 | 12.3 | 2.7 | 0.5 |
% change | +7 | +17 | -40 | - |
Ex-div:v24 Jul Payment:v23 Aug *Includes goodwill and intangible assets of £31.7m, or 22p a share |