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Self-help electrifies TT Electronics

Shares in the maker of electronic components, controls and sensors remain in the doldrums, despite clear signs that new management's aggressive self-help strategy is already delivering a marked improvement
Self-help electrifies TT Electronics

TT Electronics ' (TTG) reputation has taken a battering over the past few years. New chief executive Richard Tyson admitted as much, before embarking on a turnaround strategy focused on better fulfilling customer wishes, driving efficiencies and instilling financial discipline. After several years of hard graft and depressing financial results, the benefits of these changes are finally starting to filter through. Yet, judging by the depressed share price, investors are none the wiser.

IC TIP: Buy at 125p
Tip style
Growth
Risk rating
Medium
Timescale
Medium Term
Bull points
  • Self-help triggering earnings growth
  • 4.4 per cent forecast dividend yield
  • Building exposure to structural growth
  • Chairman recently bought 50,000 shares
Bear points
  • Global economic concerns
  • Troubled past

One of Mr Tyson's first goals involved transferring production lines to cheaper Romania and Mexico. Fortunately, the £23m cash cost associated with this complex process was £7m less than expected and annual savings of £5m should be seen from 2017, a year earlier than thought. Providing another boost is the relocation of production from the US to the UK to create savings and improve timing and inventory levels.

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