A gradual recovery after the summer helped XP Power (XPP) do better than analysts expected in 2013. Customers are spending more, but XP's power convertors are also winning market share. The margins are so good that a decent slug of any top-line growth drops straight through to earnings.
Chief executive Duncan Penny expects an even bigger slice of the pie in 2014. One reason is that selling direct to the customer rather than through distributors gives XP an edge over its rivals. Another is that the company is crucial in the design process and makes a lot of the products itself, which customers like. XP also boasts a broader range of kit than its competitors.
Sales of high-efficiency 'green' products grew rapidly. This helps explain why healthcare sales grew fastest, up 16 per cent in 2013 to £30.2m. Green power convertors generate less heat, so do not need a fan, allowing them to be concealed and protecting them from liquids, dirt and dust. Industrial sales grew 8 per cent, and while XP's technology revenue fell slightly, there were clear signs of recovery in the second half.
Broker Investec Securities expects adjusted pre-tax profit of £24.7m in 2014, giving adjusted EPS of 101p (from £22.9m and 95.1p in 2013).
XP POWER (XPP) | ||||
|---|---|---|---|---|
| ORD PRICE: | 1,767p | MARKET VALUE: | £339m | |
| TOUCH: | 1,760-1,767p | 12-MONTH HIGH: | 1,785p | LOW: 1,078p |
| DIVIDEND YIELD: | 3.1% | PE RATIO: | 18 | |
| NET ASSET VALUE: | 360p* | NET DEBT: | 5% | |
| Year to 31 Dec | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2009 | 67 | 8.4 | 39 | 22 |
| 2010 | 92 | 18.6 | 84 | 33 |
| 2011 | 104 | 24.3 | 107 | 45 |
| 2012 | 94 | 20.2 | 82 | 50 |
| 2013 | 101 | 22.9 | 96 | 55 |
| % change | +8 | +13 | +17 | +10 |
Ex-div: 12 Mar Payment: 10 Apr *Includes intangible assets of £39.1m, or 204p a share | ||||
