Oxford Instruments (OXIG) is a solid company. Thirty-five years after it was spun out of academia, the Abingdon-based company supplies an ever-widening array of industrial and research-focused customers, who rely on the company’s cutting edge in high-end microscopy and nanotechnology products.
In theory, such high economic moats – powered by a growth-oriented strategy dubbed ‘Horizon’ – should also provide a sound case for investment. Results for the half-year to September lend some credence to that view, as orders climbed 12 per cent at constant currencies to £163m, while adjusted operating profits increased by 16 per cent.
Still, the nature of Oxford’s products means orders can prove either lumpy or slow, which explains why operating cash flow fell short of adjusted operating profits. Nonetheless, a cash conversion rate of 91 per cent was a sharp improvement on the comparative period, and enabled Oxford to cut its debt pile and propose a small rise in the half-year dividend.
Working capital will remain in focus, as the company prepares for any disruption a no-deal Brexit might bring to the supply chain. Mitigation currently involves limiting the stockpiling of key components, and an application for 'authorised economic operator' status, which would allow it to facilitate the movement of goods under World Customs Organisation rules.
On average, analysts expect earnings per share of 59.9p for the year to March 2019, rising to 64p in 2020.
| OXFORD INSTRUMENTS (OXIG) | ||||
| ORD PRICE: | 990p | MARKET VALUE: | £568m | |
| TOUCH: | 988-994p | 12-MONTH HIGH: | 1,116p | LOW: 676p |
| DIVIDEND YIELD: | 1.4% | PE RATIO: | 31 | |
| NET ASSET VALUE: | 315p* | NET DEBT: | 7% | |
| Half-year to 30 Sep | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
| 2017 | 132 | 12.7 | 17.5 | 3.7 |
| 2018 | 147 | 11.6 | 15.6 | 3.8 |
| % change | +11 | -9 | -11 | - |
| Ex-div: | 28 Feb | |||
| Payment: | 8 Apr | |||
| *Includes intangible assets of £157m, or 273p a share | ||||
