Growing vehicle safety legislation and competition between carmakers to innovate has yielded plenty of opportunities for companies serving the automotive research and development sector. AB Dynamics (ABDP), a testing and measurement specialist for suspension, brakes and steering, has taken full advantage. Revenue for the year to August rose 19 per cent, sending operating profit up 41 per cent.
The group's core 'track testing systems' unit, which makes products such as driving robots and soft crash vehicles, grew revenue by 21 per cent. European legislation was largely credited for spurring demand. Boss Tim Rogers told us that the European car-safety agency had moved beyond safety-belt and airbag concerns to focus on adding sensor content to cars. Appetite was particularly high for the group's 'guided soft target' technology, designed to test vehicle collision detection and crash mitigation systems.
Rampant demand for these higher-margin products also boosted the bottom line, with the group's operating profit margin rising 3.5 percentage points to 22.6 per cent. Mr Rogers expects margins to continue widening, too, as AB Dynamics prepares to move into a new factory in early 2017.
Broker Panmure Gordon reacted to these results "easily" beating its prior expectations by nudging up its adjusted EPS forecast by 11 per cent to 20.8p for the current financial year to August 2016.
| AB DYNAMICS (ABDP) | ||||
|---|---|---|---|---|
| ORD PRICE: | 308p | MARKET VALUE: | £53m | |
| TOUCH: | 305-310p | 12-MONTH HIGH: | 314p | LOW: 152p |
| DIVIDEND YIELD: | 0.9% | PE RATIO: | 16 | |
| NET ASSET VALUE: | 79p | NET CASH: | £7.97m | |
| Year to 31 Aug | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2011 | 6.5 | 0.7 | - | nil |
| 2012 | 8.9 | 1.9 | - | nil |
| 2013† | 12.2 | 1.9 | 9.5 | nil |
| 2014 | 13.8 | 2.7 | 13.1 | 2.50 |
| 2015 | 16.5 | 3.8 | 19.2 | 2.75 |
| % change | +19 | +43 | +46 | - |
Ex-div: 19 Nov Payment: 16 Dec †AB Dynamics listed on Aim in May 2013 | ||||
