Project deferrals and cancellations in the struggling oil and gas sector sapped original equipment orders at Hayward Tyler (HAYT). Investors reacted by sending the shares down 6 per cent on results day, even though the Aim-traded maker of motors and pumps had previously warned of weaker demand in the first half.
The tough market conditions sent underlying operating profits down 13 per cent to £2m. But there were positives, including growing appetite from the nuclear sector for higher-margin spare parts and the near-completion of a new centre of excellence. This project is expected to reduce lead times and working capital and enable Hayward to double its capacity in Luton when it becomes fully operational next summer.
A post-period agency agreement to supply boiler circulating pumps to a leading Japanese company -at a time when Shinzo Abe's government plans to build over 40 coal-fired power stations - offers further encouragement. Deals like this, coupled with a stronger nuclear spares market in the US, give management confidence that they can make up for the difficult first half. And there's also plenty of optimism surrounding the recent acquisition of Peter Brotherhood. Chief executive Ewan Lloyd-Baker told us this "underinvested, unloved, orphan asset" should generate an extra £30m of turnover for the group.
Broker finnCap expects adjusted pre-tax profit of £5.1m in the year to March 2016, giving adjusted EPS of 8.5p (7.5p in FY2015).
| HAYWARD TYLER (HAYT) | ||||
|---|---|---|---|---|
| ORD PRICE: | 88p | MARKET VALUE: | £40m | |
| TOUCH: | 87-89p | 12-MONTH HIGH: | 100p | LOW: 63p |
| DIVIDEND YIELD: | 1.5% | PE RATIO: | 13 | |
| NET ASSET VALUE: | 36p* | NET DEBT: | 63% | |
| Half-year to 30 Sep | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2014 | 24.0 | 1.8 | 3.3 | 0.525 |
| 2015 | 21.8 | 1.6 | 3.3 | 0.552 |
| % change | -9 | -15 | +2 | +5 |
Ex-div: 14 Jan Payment: 25 Feb *Includes intangible assets of £3.2m, or 7p a share | ||||
