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Premature exit for AB Dynamics

The testing systems manufacturer has had a record year
November 14, 2018

In April, when we advised shareholders to 'take profits' as our buy call on AB Dynamics (ABDP) was a measly 51 per cent to the good, we noted that "inventories and receivables have soared...a reflection of the marked step-up in commercial activity". We should have kept the faith; the share price has cranked up another 45 per cent since our last update and the manufacturer of automobile testing products has just revealed record full-year profits, while confirming that the "order intake has continued to run ahead of sales". 

IC TIP: Sell at 1390p

Inventory levels continue to surge, a reflection of the step-up in order volumes. And although the group has been building capacity and developing new product lines and systems, with the new facility in Bradford on Avon now fully operational, it is looking to develop an adjacent site for an additional factory of approximately 3,000 square metres to meet "future expansion needs". 

Broker Cantor Fitzgerald forecasts adjusted pre-tax profits for the August 2019 year-end of £10.8m, with EPS of 46.4p, up from £8.6m and 38.3p in 2018.

AB DYNAMICS (ABDP)  
ORD PRICE:1,390pMARKET VALUE:£271m
TOUCH:1,350-1,43012-MONTH HIGH:1,473pLOW: 724p
DIVIDEND YIELD:0.3%PE RATIO:38
NET ASSET VALUE:195pNET CASH:£15.9m
Year to 31 AugTurnover (£m)Pre-tax profit (£m)Earnings per share (p)Dividend per share (p)
201413.82.713.12.500
201516.53.819.22.750
201620.54.522.33.025
201724.64.520.83.331
201837.07.936.33.665
% change+50+76+75+10
Ex-div:22 Nov   
Payment:14 Dec