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Halma in buying mood

A near-£100m spending spree has put Halma back on the radar
June 3, 2014

Acquisitive engineer Halma (HLMA) has attracted interest after splashing out almost £100m last month on a trio of earnings-enhancing acquisitions. Upcoming full-year results should also confirm across-the-board top-line growth.

IC TIP: Buy at 597p

Of the three purchases, Rohrback Cosasco Systems (RCS), at £65m, is the biggest and most lucrative. Making sensors and systems used by oil, chemical and utility companies to monitor pipeline corrosion generates operating margin of 25 per cent. Halma has also paid up to £25m for Newcastle-based Advanced, which makes networked fire detection and control systems, and £3.2m for Switzerland’s Plasticspritzerei, whose plastic parts are already used in ophthalmic products made by Halma’s medical unit.

Investec Securities now expects adjusted pre-tax profit of £155m for the current financial year, giving adjusted EPS of 31.1p. That’s 11 per cent more than the £139m-140m for 2013-14 promised by management in February (Investec estimates EPS of 28p).