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Resilient XP Power still plugging away

XP Power's solid first-half performance and progressive dividend underscore its attractions despite a backdrop of uncertainty in the global economy.
July 26, 2016

Power control component specialist XP Power (XPP) is not immune to uncertainties facing the global economy. And following the UK's vote to leave the EU, those economic uncertainties are as pertinent as ever. But XP Power has a reputation for resilience, as its encouraging first-half performance attests.

IC TIP: Buy at 1620p

Reported revenues and order intake hit a record in the first half, helped by a stronger US dollar and the acquisition last year of high-voltage specialist EMCO. Stripping out currency effects and the EMCO contribution, revenues still managed to edge forward by 2 per cent year on year. And a steadying in the North American industrial sector helped lift the order backlog to £50m, up from £48m at the end of 2015.

Chief executive Duncan Penny says these orders underpin hopes for a decent second half too. He puts the group's resilience down to its diversification: "If one sector is not firing on all cylinders, the other ones are making it up," he says. XP Power's revenue is spread across more than 100 different programmes with even its largest customer accounting for just 5 per cent of revenue.

Analysts at Investec nudged their FY2016 EPS forecast up by 1.5 per cent to 109.4p following these results with 113.9p expected in the year to December 2017.

XP POWER (XPP)
ORD PRICE:1,620pMARKET VALUE:£311m
TOUCH:1,588p-1,640p12-MONTH HIGH:1,750pLOW: 1,410p
DIVIDEND YIELD:4.2%PE RATIO:15
NET ASSET VALUE:508p*NET DEBT:6%

Half-year to 30 JuneTurnover (£m)Pre-tax profit (£m)Earnings per share (p)Dividend per share (p)
201553.912.650.527.0
201660.312.951.629.0
% change+12+2+2+7

Ex-div: 15 Sep

Payment: 13 Oct

*Includes intangible assets of £51.9m, or 270p a share