A massive overhaul at pumps and motors manufacturer Hayward Tyler (HAYT) is finally bearing fruit. A 70 per cent surge in underlying pre-tax profit to £1.8m has driven earnings upgrades and management is so confident about prospects that investors are being sent a letter requesting their permission to pay a maiden dividend - more good news for those who followed our buy tip (28p, 11 July 2013).
That's a clear statement of intent and, with a net debt to cash profit ratio of 1.7 times - which is well below target - such confidence looks justified. Big contracts in North America, South Korea, China and South Africa grew order intake 30 per cent to £25.7m, building an order book worth £33.6m. Hayward has found more work since the period ended, too - in the conventional and nuclear energy markets in the US, China and Philippines - and management expects a further pick-up here. Crucially, the previously loss-making manufacturing plant in Luton made a small profit as Hayward sweated its assets harder. Equipment sales now comprise 35 per cent of the group total and should match aftermarket revenue in time.
After upgrading full-year forecasts by 16 per cent, finnCap now expects adjusted pre-tax profit of £3.7m, giving adjusted EPS of 5.1p (from £2.4m and 3.7p in 2013), rising to 6.2p in 2015.
HAYWARD TYLER (HAYT) | ||||
|---|---|---|---|---|
| ORD PRICE: | 69p | MARKET VALUE: | £31.4m | |
| TOUCH: | 68-70p | 12-MONTH HIGH: | 74.5p | Low: 16.5p |
| DIVIDEND YIELD: | nil | PE RATIO:† | 14 | |
| NET ASSET VALUE: | 23p* | NET DEBT: | 80% | |
| Half-year to 30 Sep | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2012 | 14.6 | -0.13 | -0.14 | nil |
| 2013 | 20.3 | 1.82 | 2.00 | nil |
| % change | +39 | - | - | - |
*Includes intangible assets of £3.1m, or 7p per share †Annualised | ||||
