XP Power's (XPP) transformation from distributor into fully-fledged manufacturer continues to pay off. Products designed in-house contributed a record £67.2m of the power converter specialist's revenues. Sourcing less from third parties also helped drive gross margins up 50 basis points to a fresh high of 49.6 per cent.
A new factory in Vietnam also played a key role in widening XP's margin. This new plant provides additional manufacturing capacity at a lower cost than the existing Chinese facility, the efficiency of which has been impacted by the country's escalating labour costs.
XP's drive to offer a complete service helped it gobble up market share and finish the year with a record order book of £105m. About half of these orders come from the US, where management says there are plenty of large, prestigious accounts up for grabs. Chief executive Duncan Penny plans to invest in additional sales and engineering resources to tap into the country's improving economy. Bolt-on acquisitions could also be on the horizon for debt-light XP, as Mr Penny looks to broaden the group's product offering and engineering capabilities.
Broker Investec Securities expects adjusted pre-tax profit of £26.6m this year, giving EPS of 106p (from £24.3m and 101p in 2014).
| XP POWER (XPP) | ||||
|---|---|---|---|---|
| ORD PRICE: | 1,582p | MARKET VALUE: | £304m | |
| TOUCH: | 1,526-1,582p | 12-MONTH HIGH: | 1,775p | LOW: 1,350p |
| DIVIDEND YIELD: | 3.9% | PE RATIO: | 15 | |
| NET ASSET VALUE: | 418p* | NET CASH: | £1.3m | |
| Year to 31 Dec | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2010 | 92 | 18.6 | 84 | 33 |
| 2011 | 104 | 24.3 | 107 | 45 |
| 2012 | 94 | 20.2 | 82 | 50 |
| 2013 | 101 | 22.9 | 96 | 55 |
| 2014 | 101 | 24.3 | 102 | 61 |
| % change | +0 | +6 | +6 | +11 |
Ex-div: 12 Mar Payment: 9 Apr *Includes intangible assets of £40.5m, or 211p a share | ||||
