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Continuing strong demand from the oil and gas, water treatment and power sectors for Rotork's valves and actuators has pushed the group's order book 29 per cent higher to £98m . With total cash of £38m and negligible bank debt, management has proposed a special 11.5p-a-share dividend - to be paid in July - on top of a 20 per cent increase its total dividend for 2007.
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Chief executive Bill Whiteley says that order intake is particularly strong at the group's North American and Chinese operations. While Chinese demand was previously driven by the construction of power plants and the oil and gas markets, Mr Whiteley says there is a growing focus on upgrading water facilities. The European water market, where Rotork previously had low levels of business, has also improved. To cope with demand, Rotork has increased capacity at its Bath facilities, while a new plant in Shanghai is making electric actuators for the Chinese market and gear boxes for export.
Following the dollar headwinds of last year, the strengthening euro is on Rotork's side this year as it will more than mitigate the effect of the weak US dollar on group earnings, according to finance director Bob Slater.
Numis Securities now expects profit before tax to rise to £67.4m in 2008 (£57.3m in 2007), with EPS of 54.2p (45.6p).
ROTORK (ROR) |
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|---|---|---|---|---|
| ORD PRICE: | 995p | MARKET VALUE: | £860m | |
| TOUCH: | 994-997p | 12-MONTH HIGH: | 1,107p | LOW: 771p |
| DIVIDEND YIELD: | 2.2% | PE RATIO: | 22 | |
| NET ASSET VALUE: | 118p* | NET CASH: | £37.9m | |
| Year to 31 Dec | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2003 | 136 | 28.1 | 21.7 | 14.75 |
| 2004 | 147 | 31.5 | 24.5 | 15.05 |
| 2005 | 175 | 36.7 | 28.6 | 15.80 |
| 2006 | 207 | 46.1 | 36.4 | 18.15 |
| 2007 | 236 | 57.3 | 45.6 | 21.70** |
| % change | +14 | +24 | +25 | +20 |
Ex-div: 16 Apr Payment: 9 May *Includes intangible assets of £23m, or 27p a share **Excludes proposed special dividend of 11.5p a share, to be paid on 18 Jul |
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The strong growth at Rotork should continue, driven by improvements to China's infrastructure and high levels of activity in the oil and gas markets. However, trading on 18 times expected earnings for 2008, this has already been factored into the share price. Fairly priced.
Last IC View: Fairly priced, 969p, 31 Jul 2007
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-IC-2.1.3g-prod - 17/03/2010 18:13:09 - ben.wheeler
