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Scapa in rude health

RESULTS: Scapa's transition from self-help to growth is still not priced in
November 26, 2013

Scapa (SCPA) has been a self-help story for some years, but the business is beginning to deliver strong organic growth, too. Operating profit before one-off costs grew 14 per cent to £7.4m, and the margin of 6.6 per cent is rapidly approaching Scapa's long-held target of 8 per cent.

IC TIP: Buy at 90p

A 38 per cent surge in profit to £4.7m made Scapa's higher-margin healthcare division the biggest profit generator for the first time. A deal for plasters with less painful silicon adhesive is currently ramping up, driving sales at the wound-care business and offsetting a drop in demand on the consumer side. Expect further growth here as Scapa begins shipping a new product for vacuum systems in the US.

Profit at the industrial division jumped 8 per cent to £4.1m, helped by double-digit growth at Scapa's automotive and cable operations. And there's more to come: Scapa's products are embedded on 18 automotive platforms and one of America's Big Three is using its tape to stick seat heaters to its top models. The smaller electronics division made another small loss, but a new finance facility should give up to £60m of firepower for acquisitions.

Broker Arden Partners expects full-year adjusted pre-tax profit of £14.5m, giving adjusted EPS of 6.3p (from £12.8m and 5.7p in 2013).

SCAPA (SCPA)

ORD PRICE:90pMARKET VALUE:£132m
TOUCH:89-92p12-MONTH HIGH:98pLow: 61p
DIVIDEND YIELD:0.6%PE RATIO:75
NET ASSET VALUE:44p*NET CASH:£3.9m

Half-year to 30 SepTurnover (£m)Pre-tax profit (£m)Earnings per share (p)Dividend per share (p)
20121034.81.6nil
20131125.82.0nil
% change+8+21+25-

*Includes intangible assets of £29m, or 20p a share