Richard Tyson’s bid to transform TT Electronics (TTG) from a serial underperforming distributor of run-of-the-mill components into an efficient, sales savvy manufacturer of "design-led" product solutions continues to impress. Against a strong comparator, revenues grew 12 per cent at constant currencies, buoyed by a big £14.6m contribution from the recent acquisitions of Stadium and Precision.
Encouragingly, investments to boost the top-line aren’t coming at the expense of profits. Endeavours to develop new strategic relationships with customers in high-growth markets resulted in a better product mix, supported by medical contract wins. Operational efficiency measures also made further headway, helping to trigger a 170 basis points widening of the underlying operating margin to 7.5 per cent.
Management is confident that TT can build on this momentum in the second half, driven by the introduction of a record number of new product launches and the bedding in of acquisitions that are boosting the group’s exposure to the connected devices and 'the internet of things' megatrends. A book-to-bill ratio above 1.0 times underpins that optimism.
Numis forecasts pre-tax profit of £31m and EPS of 15.2p for the year-end, up from £22m and 10.9p in 2017.
| TT ELECTRONICS (TTG) | ||||
| ORD PRICE: | 264p | MARKET VALUE: | £ 430m | |
| TOUCH: | 258-264p | 12-MONTH HIGH: | 265p | LOW: 197p |
| DIVIDEND YIELD: | 2.3% | PE RATIO: | 23 | |
| NET ASSET VALUE: | 165p* | NET DEBT: | 15% | |
| Half-year to 30 June | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
| 2017 | 181 | 5.4 | 2.4 | 1.75 |
| 2018 | 194 | 7.1 | 4.4 | 1.95 |
| % change | +8 | +31 | +83 | +11 |
| Ex-div: | 04 Oct | |||
| Payment: | 18 Oct | |||
| *Includes intangible assets of £197m, or 121p a share | ||||
