A surge in aerospace work at Avingtrans easily offset "stubborn weakness" elsewhere and gave management at the precision engineer sufficient optimism to more than double the dividend. Add that to an undemanding share price rating and more upside looks likely.
Indeed, making pipe assemblies and other parts for Rolls-Royce helped swell aerospace turnover by over a third to £17.1m, and operating profit reached £1.68m compared with £962,000 in 2011. Boeing may be talking of peak orders, but Avingtrans doesn't expect an equivalent peak for years. In fact, its biggest problem is growing capacity to meet demand. A largely Formula One-focused composites business, bought in February, is moving into aerospace, too. It's "small beer" now, but orders for aircraft interiors are already in the bag and its high-tech pipes are generating interest.
True, both the energy and medical businesses were disappointing - road signs and gantries division Crown is losing money and a contract to supply parts for Siemens MRI scanners won't ramp up until the second half. Yet underlying group pre-tax profit grew 43 per cent to a better-than-expected £2.3m, before a £850,000 charge for downsizing Crown.
Broker finnCap expects adjusted pre-tax profit of £3m in 2013, giving adjusted EPS of 8.8p (from 7.5p in 2012).
AVINGTRANS (AVG) | ||||
|---|---|---|---|---|
| ORD PRICE: | 86.5p | MARKET VALUE: | £22.5m | |
| TOUCH: | 85-88p | 12-MONTH HIGH: | 87.5p | LOW: 48.5p |
| DIVIDEND YIELD: | 1.2% | PE RATIO: | 24 | |
| NET ASSET VALUE: | 91p* | NET DEBT: | 35% | |
| Year to 31 May | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2008 | 41.2 | 1.69 | 6.50 | 1.25 |
| 2009 | 37.6 | 1.83 | 5.10 | nil |
| 2010 | 28.6 | 0.47 | 2.40 | nil |
| 2011 | 36.3 | 1.42 | 4.90 | 0.40 |
| 2012 | 44.0 | 1.24 | 3.60 | 1.00 |
| % change | +21 | -13 | -27 | +150 |
Ex-div:17 Oct Payment:14 Dec *Includes intangible assets of £12m, or 46p a share | ||||
