In June, we exited our buy call on Gooch & Housego (GHH) when it was 42 per cent to the good. The move certainly didn’t reflect diminished faith in the group’s long-term prospects, but simply that strengthening investor support had driven valuations for the photonics (light sciences) specialist to equitable levels. That support seems wholly justified, as full-year sales have eclipsed the £100m mark for the first time, representing an 18.7 per cent increase at constant currencies.
That pushed adjusted pre-tax profit up 13.7 per cent to £16.1m. The industrial segment's revenue share declined proportionately, but it still added £64.3m to the top line, an 18 per cent advance on the 2016 financial year. The business is benefiting from rising demand for precision lasers used in micro-electronics manufacturing, particularly in telecommunications and sub-sea applications, evidenced by a 36.5 per cent increase in the group order book to £72.1m at the period-end.
There was also an improved showing from the aerospace and defence segment on the back of contributions from Kent Periscopes and Alfalight, acquired last year, together with a better-then-expected performance from StingRay Optics, which delivered £5.3m in sales even though it was only acquired in February. More importantly, the integration of new additions has helped to bolster the divisional operating margin.
Investec gives adjusted pre-tax profit of £18.4m for the September 2018 year-end, giving EPS of 52.9p, against £16.1m and 48.5p in FY2017.
GOOCH & HOUSEGO (GHH) | ||||
ORD PRICE: | 1,460p | MARKET VALUE: | £358m | |
TOUCH: | 1,436-1,470p | 12-MONTH HIGH: | 1,463p | LOW: 950p |
DIVIDEND YIELD: | 0.7% | PE RATIO: | 40 | |
NET ASSET VALUE: | 401p* | NET CASH: | £14.9m |
Year to | Turnover | Pre-tax | Earnings | Dividend |
30 Sep | (£m) | profit (£m) | per share (p) | per share (p) |
2013 | 63.3 | 8.3 | 27.7 | 6.3 |
2014 | 70.1 | 7.9 | 22.5 | 7.2 |
2015 | 78.7 | 10.1 | 30.9 | 8.2 |
2016 | 86.1 | 10.1 | 29.1 | 9.0 |
2017 | 112 | 12.6 | 36.4 | 10.2 |
% change | +30 | +25 | +25 | +13 |
Ex-div: | 25 Jan | |||
Payment: | 02 Mar | |||
*Includes intangible assets of £40.3m, or 164p a share. |