XP Power (XPP) was receiving orders for its power control products faster than it could fill them in the first half of 2017, demonstrated by a 1.16 book-to-bill ratio for the period. Sure, a chunk of that top-line momentum is reflective of a dollar earner that reports in sterling. But exclude currency tailwinds, and the year-on-year boost in orders was a still very strong 35 per cent.
That’s even more impressive given a fragmented customer base in which the largest client accounts for just 10 per cent of revenue over more than 150 different product lines. According to chief executive Duncan Penny, the engineer’s sales teams have been kept busy by both higher orders of existing products, and the arrival of new designs in time for recovering capital budgets. The star performer was the smaller technology division, which saw a 58 per cent boost in revenue to £22.1m thanks to strong growth among semiconductor manufacturing equipment makers.
Any slowdown on that front could intensify enthusiasm for M&A. Mr Penny agreed with a Peel Hunt estimate that £100m of liquidity could be drawn on for those efforts, although a paucity of mid-sized targets means any deal is likely to involve a 'bolt-on' bid for a new product line or team. The broker also upgraded its numbers to full-year adjusted pre-tax profit of £33.8m and EPS of 135p, against £27.8m and 115p in 2016.
| XP POWER (XPP) | ||||
| ORD PRICE: | 2,670p | MARKET VALUE: | £513m | |
| TOUCH: | 2,601-2,675p | 12-MONTH HIGH: | 2,750p | LOW: 1,604p |
| DIVIDEND YIELD: | 2.7% | PE RATIO: | 23 | |
| NET ASSET VALUE: | 561p* | NET CASH: | £8m | |
| Half-year to | Turnover | Pre-tax | Earnings per | Dividend |
| 30 Jun | (£m) | profit (£m) | share (p) | per share (p) |
| 2016 | 60.3 | 12.9 | 51.6 | 29.0 |
| 2017 | 80.2 | 14.4 | 57.2 | 31.0 |
| % change | +33 | +12 | +11 | +7 |
| Ex-div: | 14 Sep | |||
| Payment: | 12 Oct | |||
| *Includes intangible assets of £54.4m, or 284p a share | ||||
