A boom in oil and gas exploration has proved lucrative for Pressure Technologies (PRES), which makes about 80 per cent of its business in the sector. That was partly responsible for a two-thirds increase in underlying pre-tax profit this year to a forecast-beating £3.3m.
In response, broker Charles Stanley upgraded forecasts and now expects pre-tax profit of £4m in 2014 with adjusted EPS of 26.7p (2013: 22.4p), rising to £4.9m and 33.1p the year after. Much is expected from the core cylinders division. Supplying the deep-water oil and gas industry helped that unit make £3.6m in operating profit - up 57 per cent - and there’s also a good pipeline of work. True, prices have been cut to protect market share from cheaper rivals in South Korea, but Pressure supplies cylinders for South Korean navy submarines and all the big European submarine projects also use Pressure’s cylinders. Management put the odds of breaking the lucrative US market at "better than evens".
Profit jumped 60 per cent at Pressure’s engineered products division to £1.6m, driven by demand for hard-wearing parts used in deep-water oil wells. Increased capacity and new products should improve volumes and margins further. Even the alternative energy division will make money this year following a rush of orders for biogas 'upgraders'.
PRESSURE TECHNOLOGIES (PRES) | ||||
|---|---|---|---|---|
| ORD PRICE: | 406p | MARKET VALUE: | £46.3m | |
| TOUCH: | 400-412p | 12-MONTH HIGH: | 413p | LOW: 158p |
| DIVIDEND YIELD: | 2.0% | PE RATIO: | 21 | |
| NET ASSET VALUE | 153p* | NET CASH: | £4m | |
| Year to 28 Sep | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2009 | 26.2 | 5.05 | 32.1 | 6.60 |
| 2010 | 21.7 | 3.51 | 22.3 | 7.20 |
| 2011 | 23.1 | 0.58 | 3.50 | 7.20 |
| 2012 | 30.4 | 1.78 | 11.2 | 7.50 |
| 2013 | 34.4 | 2.88 | 19.4 | 7.80 |
| % change | +13 | +62 | +73 | +4 |
Ex-div: 12 Feb Payment: 7 Mar *Includes intangible assets of £3.2m, or 28p per share | ||||
