Molins (MLIN) does much of its work for the tobacco industry, but it was the high-speed packaging machinery business that impressed most in 2012. Profit there tripled to £1.5m and a 5 per cent increase in the order book improves visibility. It's also forced earnings upgrades out of broker Canaccord Genuity, which now thinks the shares could be worth 200p.
Underlying pre-tax profit grew 9 per cent to £4.9m and a lower tax rate helped underlying EPS jump almost a fifth to 21.8p. Canaccord now expects a profit of £5.3m this year, giving EPS of 22p. Despite difficulty squeezing orders out of European customers, the packaging division is expected to do well again. Tobacco machinery should, too. Sales there fell 9 per cent to £31.1m last year after an order worth almost £3m was held back, yet a 10 per cent increase in sales of spare parts, mostly to cigarette makers in the Philippines and Africa, meant underlying operating profit remained at £2.2m.
But it's the Scientific Services unit that's set to excite. A new lab and lumpy work from the US Food & Drug Administration may have cut profit at its Arista Laboratories tobacco testing business by over a third to £1.2m, but Molins, with nearly two-thirds of the market, should make a fortune when a new stricter testing regime is introduced in the US. Expect an announcement in April.
MOLINS (MLIN) | ||||
|---|---|---|---|---|
| ORD PRICE: | 171p | MARKET VALUE: | £34.5m | |
| TOUCH: | 169-173p | 12-MONTH HIGH: | 174p | LOW: 106p |
| DIVIDEND YIELD: | 3.2% | PE RATIO: | 4 | |
| NET ASSET VALUE: | 151p* | NET CASH: | £7.4m | |
| Year to 31 Dec | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2008 | 91.5 | 8.8 | 35.2 | 5.00 |
| 2009 | 83.8 | 2.1 | 6.30 | 9.00 |
| 2010 | 86.4 | 4.1 | 15.3 | 5.00 |
| 2011 | 89.9 | 10.4 | 37.4 | 5.25 |
| 2012 | 93.0 | 9.8 | 40.0 | 5.50 |
| % change | +3 | -6 | +7 | +5 |
Ex-div: 17 Apr Payment: 10 May *Includes intangible assets of £14.5m, or 72p a share | ||||
