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RESULTS: As fast-growing engineering companies go, Pressure Technologies is hard to beat
June 10, 2014

After a stunning first half, engineer Pressure Technologies (PRES) believes full-year revenue and underlying operating profit will beat forecasts. Its order book is already up 59 per cent since September and the acquisition of Roota Engineering in March is expected to more than double second-half profit. Even analysts' upgraded forecasts could prove conservative.

IC TIP: Buy at 655p

Strip out the cost of buying oil industry supplier Roota, plus related amortisation, and operating profit surged by over half to £2.2m. Broker Charles Stanley "conservatively" estimates profit from Roota of £1.4m in the first seven months of ownership, and £3m in the following full year. Pressure's cylinders division supplied more air pressure vessels for oil rigs by cutting prices, but a slug of work on naval submarines still boosted underlying pre-tax profit 23 per cent to £2.2m. A drop in drill rig rates is a "temporary pause", management believes. Meanwhile, profit nearly quadrupled at the smaller engineered products unit, and orders for biogas 'upgraders' within the alternative energy division could take off once potential customers see how well the current batch performs.

Even the original business should grow by 52 per cent in the second half, says Charles Stanley, which has upgraded its full-year adjusted pre-tax profit forecast by over 18 per cent to £6.4m, giving adjusted EPS of 38.1p (from £3.3m and 22.4p in 2013).

PRESSURE TECHNOLOGIES (PRES)

ORD PRICE:655pMARKET VALUE:£93.7m
TOUCH:645-665p12-MONTH HIGH:735pLow: 168p
DIVIDEND YIELD:1.2%PE RATIO:37
NET ASSET VALUE:236p*NET CASH:£10.5m

Half-year to 29 MarTurnover (£m)Pre-tax profit (£m)Earnings per share (p)Dividend per share (p)
201316.41.38.52.6
201419.91.36.92.8
% change+21-1-19+8

Ex-div: 9 Jul

Payment: 8 Aug

*Includes intangible assets of £14.6m, or 102p a share