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Industrial fastenings group Trifast posted earnings in line with reduced expectations following a profit warning last February. Customer site closures and a planned withdrawal from a low margin business hit revenues, but tighter control of costs meant pre-tax profits improved.
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Meanwhile, investment in a new European sales force saw order enquiries climb to their highest level for six years. A similar initiative is planned in Asia, while the booming construction sector in the Middle East is also expected to provide good opportunities.
But worries persist over the group's Malaysian-quoted joint venture, Techfast. Trifast paid £2.8m for a 25 per cent stake in the business - which contributed sales of just £140,000 this year. Its value has been written down to just £0.5m after shares plummeted in value, and that meant an impairment charge of £2.2m impacted reported profits.
Cash generation remains strong, though, which enabled the group to reduce net debt by £4.5m to £8.2m, and increase the dividend by 15 per cent. Brokers Arden Partners expect 2009 earnings per share of 7.4p (2008: 7.2p), rising to 8p in 2010.
TRIFAST (TRI) |
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|---|---|---|---|---|
| ORD PRICE: | 54p | MARKET VALUE: | £ 47m | |
| TOUCH: | 53-55p | 12-MONTH HIGH: | 88p | LOW: 51p |
| DIVIDEND YIELD: | 5.1% | PE RATIO: | 13 | |
| NET ASSET VALUE: | 62p* | NET DEBT: | 16% | |
| Year to 31 Mar | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2005 | 103.8 | 5.56 | 5.22 | 2.09 |
| 2006 | 117.3 | 2.55 | 1.86 | 2.21 |
| 2007 | 132.0 | 5.43 | 4.70 | 2.43 |
| 2008 | 122.4 | 6.00 | 4.23 | 2.80 |
| % change | -7 | +13 | -10 | +15 |
Ex-div: 25 Jun Payment: 15 Oct * Includes intangible assets of £23.8m, or 28p per share |
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Click here for a guide to the terms used in IC results tables.
Shares in Trifast have continued to slide since its profit warning and now trade on a modest PE ratio of 7 times 2009 forecasts. And with a yield of 5.1 per cent, shares look good value.
Last IC View: Buy, 62.5p, 26 November 2007
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-IC-1.5.4a-prod - 31/10/2008 13:11:34 - carlos.princz
