Despite a somewhat thin operating margin, adhesive products supplier Scapa (SCPA) has been a consistently strong performer on the London Stock Exchange. Following another decent set of preliminary results, the group trades on a forward earnings multiple of 24 – a rating that assumes another 11 per cent climb in the bottom line in the year to March 2019. The company has a habit of beating such targets.
But lofty valuations have a habit of jangling investor nerves. In the space of a week in April, Scapa’s shares dropped a fifth on news that an employee had died in an accident at the group’s Dunstable factory, and a separate trading statement assuring investors that full-year results would match the improved expectations flagged in October.
To the latter reaction, chief executive Heejae Chae said he had “given up trying to guess the market”, although in this instance it may be hard to disconnect the drop from fears that the Dunstable incident – currently the subject of a Health & Safety Executive investigation – might have wider ramifications for the company.
Yet fickle as ever, renewed investor clamour saw the share price rebound 10 per cent on these numbers, which detailed a 17 per cent jump in constant currency trading profits, thanks to a big outing from the industrial division. Numis expects adjusted pre-tax profits of £36.9m and EPS of 19.3p in the year to March 2019, up from £33.1m and 17.3p in FY2018.
| SCAPA (SCPA) | ||||
| ORD PRICE: | 464p | MARKET VALUE: | £713m | |
| TOUCH: | 463-466p | 12-MONTH HIGH: | 522p | LOW: 397p |
| DIVIDEND YIELD: | 0.5% | PE RATIO: | 30 | |
| NET ASSET VALUE: | 77p* | NET DEBT: | 3.2% | |
| Year to 31 Mar | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
| 2014 | 226 | 11.2 | -4.6 | 1.00 |
| 2015 | 236 | 13.7 | 6.5 | 1.50 |
| 2016 | 247 | 9.8 | 4.1 | 1.75 |
| 2017 | 280 | 21.8 | 11.6 | 2.00 |
| 2018 | 292 | 28.8 | 15.4 | 2.40 |
| % change | +4 | +32 | +33 | +20 |
| Ex-div: | 19 Jul | |||
| Payment: | 17 Aug | |||
| *Includes intangible assets of £78.2m, or 51p a share. | ||||
