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Halma heading higher

RESULTS: Engineer Halma has extended its record-breaking run and the shares look worth snapping-up - despite the high share price rating
November 19, 2013

Halma (HLMA) maintained its impressive run of record results and dividend growth during the first half. While a 9 per cent jump in underlying pre-tax profit to £65.1m wasn't just driven by the engineer's new markets in Asia - operations in the US and Europe performed well, too.

IC TIP: Buy at 571p

Indeed, US sales jumped 15 per cent during the period to £107.6m, cementing the country's position as chief revenue generator with 32 per cent of the business. Growth there was broad-based. Pressure relief devices are selling well into the fracking industry and demand from the non-residential property market for automatic door sensors and fire detectors is improving. Even the medical devices operation grew fast - despite a new tax and uncertainty from political pressure on the so-called Obamacare scheme. In fact, revenue from medical work surged 36 per cent to £81m, or by 11 per cent once acquisitions and currencies are stripped out. Eye healthcare and blood pressure monitoring equipment are in constant demand, and increasingly so in China. There, sales soared by almost one-third, helped partly by the acquisition of a syringe and gear pump maker in January, as well as the growing popularity of Halma's devices used during cataract surgery. Further growth here is inevitable given population expansion and tighter regulation.

Broker Numis Securities expects full-year adjusted pre-tax profit of £142m, giving adjusted EPS of 28.5p (from £130.7m and 26.2p in 2013).

HALMA (HLMA)

ORD PRICE:571pMARKET VALUE:£2.16bn
TOUCH:570-571p12-MONTH HIGH:587pLOW: 413p
DIVIDEND YIELD:1.9%PE RATIO:25
NET ASSET VALUE:120p*NET DEBT:24%

Half-year to 28 SepTurnover (£m)Pre-tax profit (£m)Earnings per share (p)Dividend per share (p)
201229861.112.94.06
201333355.911.34.35
% change+12-9-12+7

Ex-div: 31 Dec

Payment: 5 Feb

*Includes intangible assets of £464m, or 123p a share