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XP Power shares soar as dividend returns

Semiconductor and healthcare equipment orders are strong
August 3, 2020

XP Power (XPP) reinstated its dividend at its half-year results, pledging a second-quarter payout after halting payouts in April in response to the coronavirus pandemic. A strengthening sales performance was due in part to the expansion of XP's capabilities into higher voltage, higher power and RF (radio frequency) power applications. The power supply equipment specialist’s shares leapt 12 per cent after a results announcement that also included a record order book for the company.

IC TIP: Hold at 4,320p

XP’s order intake rose 45 per cent to £146m, or 41 per cent on a constant currency basis. This surge was driven by strong showings in its semiconductor and healthcare divisions, which XP attributed to a cyclical recovery in the former segment that began last year, and unprecedented demand for healthcare equipment that was prompted by the health crisis.

The outlier was XP's Industrial electronics segment, where revenues pulled back by a quarter. This part of the business is considered more vulnerable to wider economic pressures, as it is the most customer-diverse segment and has few large customers, which XP admits makes it the hardest to analyse. XP suggested that the decline may have been due to a Covid-led slump in its smaller customers’ end markets and disruptions to their supply chains.

Analysts at Peel Hunt forecast full-year 2020 adjusted pre-tax profits and EPS of £37.5m and 152.1p respectively, rising to £39m and 156.2p in 2021.

XP POWER (XPP)   
ORD PRICE:4,320pMARKET VALUE:£ 839m
TOUCH:4,280-4,340p12-MONTH HIGH:4,480pLOW: 2,000p
DIVIDEND YIELD:0.9%PE RATIO:45
NET ASSET VALUE:776p*NET DEBT:23%
Half-year to 30 JunTurnover (£m)Pre-tax profit (£m)Earnings per share (p)Dividend per share (p)
201998.912.953.835
202010510.342.018
% change+6-20-22-49
Ex-div:10 Sep   
Payment:09 Oct   
*Includes intangible assets of £104m, or 535p a share