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Following LPA 18 July 2014

 

I had intended this one to tag on with the weekly column a couple of weeks back, but a certain cycling event and other news left things a bitsqueezed for space.

 

So, although a little late in the day I thought I would add it here, as a few people have e-mailed mentioning my previous intention of adding further comment.  

 

 

It is a while now since I last took a look at Saffron Walden based LPA, so  with the company recently announcing its Interim results, I thought it would be a good time to catch up.

Although I was very much hoping to speak with CEO Peter Pollock, he is currently off on his travels, no doubt drumming up more business for the company in far flung places.

Releasing its recent numbers it may have come as a surprise to some people that the share price has held up so well, sitting at present at £1.03p, a good deal higher than when I visited last summer, although off of the 52 week high of £1.45p.

While the numbers for the company, which is increasingly focused on LED lighting may not imply anything imminently exciting, many of those holding the shares, are taking a longer term view as the business continues to move through a period of transition.

 

This should ultimately pave the way for marked growth and increased profitability and perhaps reward those who believe in the longer term growth prospects of the company.  

Although sales dipped from £8.65m to £7.97m for the period, the trading picture continues to look solid, with LPA announcing that order entry is up 28% on the corresponding period to £9.36m.

 

However, those numbers do not account for £7m which is due on the Inter City Express Programme, along with around £2.5m relating to two Aerospace projects.

With notable contract wins achieved, such as a £1.4m award for LED lighting on a double deck high speed train in France, along with projects more further afield, such as in Hong Kong, then prospects would appear to be encouraging.  The company appears to be successfully widening its global reach where overseas revenues have near doubled in just three years moving from £4.29m in 2010 to last years £8.49m figure. 

 

Here in the UK though, Network Rail’s spending commitment of £38bn over the next five years along with Crossrail ordering some 600 carriages for assembly in Derby, could provide plenty of opportunities going forward  on its more traditional stomping ground, but backed up by further overseas wins.  

Trading aside,  the company has been busy refurbishing its new premises in Saffron Walden, which it should be moving into very soon, followed by a 50% planned capacity increase on its LED operation.

 

That is up in Yorkshire where an extension of the premises has been planned for sometime and should follow on from the Headquarters project.

With the old Tudor works set to commence development in the near future the company will at the end of the year, receive payment of the £1.3m balance of the £2.6m consideration.

 

There could also be further monies to follow should subsequent housing sales exceed expectations via an overage clause. 

At present, Broker expectations is for revenue this year of £17.8m with a pre-tax profit of £500k, rising to £18.7m next year and a £900k pre-tax profit. 

Taking the 2015 forward picture the shares based on EPS of 6.5p trade on a PER of circa 15, which may imply they are up with events at present.

But, with increased capacity an improving balance sheet, along with further opportunities ahead, there would appear to be scope for further upside in the medium to longer term.

 

 

    

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