XP Power (XPP) has come a long way since it started developing its own power conversion technologies. Once upon a time, the market in power control components appeared staid and predictable; fast forward 12 years and investors have become accustomed to a far more dynamic backdrop with progressive returns almost taken for granted.
Against these rising expectations, XP still managed to pull off some pleasant surprises in 2017, including organic constant currency revenue growth of 19 per cent, the group’s best rate for eight years. Record sales and order intake were credited to a sharp global upturn in trading conditions. Leading the way was healthcare, buoyed by several new programmes entering production, and semiconductor markets, driven by gathering demand for applications linked to the internet of things – augmented intelligence, autonomous vehicles, and big data.
Unfortunately, those extra revenues weren’t always so profitable. The depreciation of sterling hit profitability as the majority of cost of sales and a large proportion of group operating expenses are denominated in US dollars. That factor, coupled with the initially earnings-dilutive £18m acquisition of Comdel, led to a 130-basis point decline in the gross margin to 46.5 per cent.
Peel Hunt expects adjusted pre-tax profits of £40.1 m, giving EPS of 171.9p in 2018, against £36.1m and 147p in 2017.
| XP POWER (XPP) | ||||
| ORD PRICE: | 3,300p | MARKET VALUE: | £ 635m | |
| TOUCH: | 3,220-3,300p | 12-MONTH HIGH: | 3,750p | LOW: 1,914p |
| DIVIDEND YIELD: | 2.4% | PE RATIO: | 22 | |
| NET ASSET VALUE: | 603p* | NET DEBT: | 8% | |
| Year to 31 Dec | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
| 2013 | 101 | 22.9 | 95.8 | 55.0 |
| 2014 | 101 | 24.3 | 102 | 61.0 |
| 2015 | 110 | 25.4 | 104 | 66.0 |
| 2016 | 130 | 27.8 | 112 | 71.0 |
| 2017 | 167 | 32.2 | 148 | 78.0 |
| % change | +29 | +16 | +32 | +10 |
| Ex-div: | 15 Mar | |||
| Payment: | 20 Apr | |||
| *Includes intangible assets of £64m, or 332p a share | ||||
