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Volex considers China move

The cable specialist could reconsider its manufacturing presence in China
November 9, 2018 and Alex Janiaud

Power and data cabling provider Volex (VLX) is firmly back on track. The wireless revolution hasn't been kind to the business, but the share price has been in steady ascendance since mid-2016. A January move from the main market to Aim has also allowed for more financial flexiblity, including a $46.7m (£35.9m) share placing in May. 

IC TIP: Hold at 87p

That all sounds good, but political volatility in key markets poses a problem. In January, the rate of US trade tariffs on Chinese imports will rise to 25 per cent from 10 per cent, and three of Volex's 10 manufacturing locations are in China. To continue serving US customers without seeing an explosion in the cost base, Volex is considering a move out of the country. Bosses are also eying up another acquisition, with the intention of expanding, and consolidating, the group's UK footprint. 

Having upgraded profit forecasts by 7 per cent, analysts at Liberum now expect to see operating profits of $18.7m (£14.3m) for the year ending March 2019, equating to EPS of 11.1¢ (from $11.5m and 8.9¢ in FY2018). 

VOLEX (VLX)    
ORD PRICE:87.4pMARKET VALUE:£126m
TOUCH:87.2-89p12-MONTH HIGH:91pLOW: 63p
DIVIDEND YIELD:NILPE RATIO:36
NET ASSET VALUE:74¢NET CASH:$24.9m
Half-year to 30 SepTurnover ($m)Pre-tax profit ($m)Earnings per share (¢)Dividend per share (¢)
20171614.23.9nil
20181824.92.7nil
% change+13+17-31-
Ex-div:na   
Payment:na   
£1=$1.30