Activity in the US housing market is picking up and data suggests valuations have bottomed-out. Door and window parts supplier Lupus Capital’s latest results appear to bear that out, too. Indeed, North American profits grew more than a quarter during the first half, offsetting sluggish conditions in the UK and Europe, and management is so confident it's paying a first interim dividend since 2008.
A positive trend sparked by milder weather early this year has continued into the summer, which is why American unit Amesbury made an underlying operating profit of £5.9m, up from £4.7m in 2011, on constant currency like-for-like sales up 6 per cent. Lupus is seeing good quoting activity and expects this to continue through to the year-end. And expect acquisitions here given it's where the greatest cyclical upside is likely.
Lupus certainly has the cash to spend following the disposal a few months ago of oil services unit Gall Thomson for £75m in cash, even after paying £14m for Coventry-based door and window parts firm, Fab & Fix. Post the half year-end, Lupus has sold the loss-making composite doors business, too, increasing the chance of a turnaround over here. Remarkably, these two deals mean pro forma UK margins would have risen 350 basis points year-on-year.
Broker Canaccord has raised full-year adjusted pre-tax profit forecasts by 4 per cent to £19m, giving adjusted EPS of 10.38p (£12.7m and 9p in 2011).
LUPUS CAPITAL (LUP) | ||||
|---|---|---|---|---|
| ORD PRICE: | 137.5p | MARKET VALUE: | £177.8m | |
| TOUCH: | 137-139p | 12-MONTH HIGH: | 137.5p | Low: 87p |
| DIVIDEND YIELD: | 3.3% | PE RATIO: | 15 | |
| NET ASSET VALUE: | 231p* | NET DEBT: | 11% | |
| Half-year to 30 Jun | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2011 | 115 | -1.08 | -0.42 | nil |
| 2012 | 118 | 3.48 | 2.27 | 1.0 |
| % change | +3 | - | - | - |
Ex-div: 12 Sep Payment: 25 Oct *Includes intangible assets of £306m, or 236p a share | ||||
