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Victrex is the only major producer of a high-performance thermoplastic - PEEK - and, while the group is facing currency headwinds, the group reported a solid enough performance. Dollar weakness meant a £2m hit in the period, but Victrex still grew underlying revenues 7 per cent.
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That sales progress was helped by demand in the industrial unit, where sales volumes grew 16 per cent on the back of increased demand for PEEK from the oil and gas and chemical processing sectors. Transport-related sales grew 6 per cent, principally reflecting increased commercial aerospace sales. Sales to the electronics industry slipped by 2 per cent as demand fell from European customers. Still Victrex ’s medical materials business, Invibio, managed to grow sales 25 per cent in the year - the unit entered into 44 additional supply assurances agreements with implantable medical device manufacturers.
Since the year-end, Victrex says that sales volumes have been sustained at levels that are similar to those seen in August and September. But broker Citi is forecasting flat EPS of 44.4p for 2008, rising to 46.9p in the following year.
| VICTREX (VCT) | ||||
|---|---|---|---|---|
| ORD PRICE: | 608p | MARKET VALUE: | £500m | |
| TOUCH: | 606-608p | 12-MONTH HIGH: | 842p | LOW: 572p |
| DIVIDEND YIELD: | 2.8% | PE RATIO: | 14 | |
| NET ASSET VALUE: | 172p | NET CASH: | £13.7m | |
| Year to 30 Sep | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2003 | 72.0 | 22.6 | 19.1 | 7.50 |
| 2004 | 87.0 | 28.5 | 23.9 | 8.60 |
| 2005 | 101 | 35.3 | 29.9 | 12.0 |
| 2006 | 123 | 46.1 | 39.4 | 14.4 |
| 2007 | 131 | 52.0 | 44.9 | 17.3 |
| % change | +7 | +13 | +14 | +20 |
Ex-div: 6 Feb Payment: 3 Mar |
||||
Dollar weakness is an issue, Victrex remains a one-product operation and brokers say there's poor patent protection for PEEK - hardly an ideal backdrop. The shares are down on our sell tip (741p, 27 October 2006) but, trading on 14 times 2008's expected earnings, still look pricey. High enough.
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-IC-1.5.4a-prod - 31/10/2008 13:11:34 - carlos.princz
