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Valuation: Growing market share to drive margins Acal currently trades towards the bottom end of its peer group (FY13e P/E range 9.4x-16.6x) and has a stronger dividend yield than its closest peers. Aside from a general improvement in economic conditions (recent PMI data points to improving confidence that could lead to increasing demand), the company has scope to drive upside through its continued focus on margin expansion and growing market share.
Reflecting UK parts disposal Acal sold the UK Parts business on 7 January for £2m. We have reflected this in our estimates: we reduce Supply chain revenues by £6m in FY13 and £23m in FY14. Until more detail is available, we conservatively assume the business generated similar GMs to the rest of the group and was break even at the operating level, resulting in no change to our normalised operating profit and EPS estimates. Operating margins are much improved, with Supply Chain margins now comparable to the Electronics business (which generated 5.2% in H113), rising from 2.6% in H113 to our forecast of 5.4% by H214. We forecast that net cash will rise to £1.9m by end
Positive order trend continues Acal continued to see improving order intake, with orders up 9% y-o-y for the four months to 31 January, and a book-to-bill for the four months of 1.09x, versus 0.93x a year ago. The improving market environment is helping – eurozone manufacturing PMI is at an 11-month high and UK PMI is above 50 for the second month. Acal continues to expect sequential revenue growth for the Electronics business in H213 (our forecast +4.5% h-o-h) and H2 group gross margin at a similar level to H113 (our forecast 31.0% vs H113 31.2%). As a result of last year’s restructuring, operating costs were down 9% y-o-y and the company expects FY13 results to meet management expectations. The new marketing web platform has just been launched in the UK, and as planned, will roll out in other countries in the coming months. Management continues to focus on winning market share, both organically and via acquisition.
Acal’s order intake has improved through the course of H2 to date, supporting our forecast for sequential revenue growth in the Electronics business in H2 and into FY14. We have revised our estimates to reflect the recent disposal of the UK Parts business. This has no significant impact on earnings in FY13, but improves the company’s operating margins and net cash position. Management continues to focus on gaining market share, a key driver of upside to the share price.
Electronics company Acal has delivered weak interims although it does expect sales growth in the second half and has maintained its interim dividend of 2.5p per share. For the six months ended September 30th, revenues fell by 17.9% to £109.8m (September 30th 2011: £133.7m) with pre-tax profits plummeting 63% to £0.7m (2011: £1.9m). The company attempted to put a brave face on the revenue figures, saying that the European market declined by 15% and pointing out that at constant exchange rates its fall in revenues was 8%. Reduced profits were affected by 'exceptionals' for the period that totalled £1.6m, of which £0.9m was from its cost reduction programme and £0.7m from the development of a new electronics web platform. Further exceptional costs expected in the second half are £1.2m, being £0.4m for the remainder of the cost reduction programme, £0.6m for the completion of the web platform development and £0.2m for the integration of Compotron into Acal BFI. Chief Executive Nick Jefferies, commented: "The business has outperformed its core electronics market with growth in orders throughout the first half. The half-year results are in line with our expectations and reflect the growing market share which has minimised sales decline in difficult market conditions. This in turn has been partially offset by a further increase in gross margin as well as a 10% cost reduction programme implemented last year." The interim dividend of 2.5p is being maintained and will be paid on January 18th to shareholders on the register at December 28th.
Valuation: Supported by strong dividend yield Acal currently trades at a discount to peers on all multiples, and has a stronger dividend yield than its closest peers. Aside from a general improvement in economic conditions, which are not under Acal’s control, the company has scope to drive upside through continued focus on margin expansion, which we forecast despite a decline in FY13 revenues.
http://www.edisoninvestmentresearch.co.uk/researchreports/Acal230712update.pdf
Valuation: Continued margin expansion to drive upside Acal currently trades at a discount to peers on all multiples, and has a stronger dividend yield than its closest peers. Aside from a general improvement in economic conditions, which are not under Acal’s control, the company has scope to drive upside through continued focus on margin expansion, which we forecast despite a decline in FY13 revenues
http://www.edisoninvestmentresearch.co.uk/researchreports/Acal280612outlook.pdf
Nick Jefferies, Group Chief Executive, commented: "The business has performed well during the year delivering a 9% growth in underlying operating profit and free cash flow of £10.5m, building upon the significant progress of the last two years. The Company has benefited from taking market share from smaller independent competitors who are unable to match the breadth and technical depth of our offer and has continued to attract new supply partners to our business. The plan to become a fully specialist business is now largely complete and on schedule. The business is resourced to take benefit from the growing pipeline of new opportunities and is well positioned for further growth when economic conditions improve. Given the continuing difficult economic conditions in Europe and the uncertainty of the timing and pace of a recovery, we remain cautious for the year ahead, but well positioned to accelerate growth as and when conditions improve."
Full year highlights · Underlying operating profit up 9% to £8.1m · Gross Profit up 4% with gross margin up 1.8ppts to 30.2% · Underlying diluted EPS up 7% · Free cash flow (2) up 98% to £10.5m, being 130% of underlying operating profit · Full year dividend increased by 7% to 8.0p 3 year highlights(3) · Gross profit up 77% driven by gross margin up 3.7ppts · Underlying operating margin up 3.0ppts to 3.1% · Underlying diluted EPS up 23.7p to 19.9p · Working capital ratio to sales reduced by 23% · Free cash flow (2) generated of £22.4m · Dividend increased by 14% · 4 value enhancing acquisitions(4)
http://www.investegate.co.uk/Article.aspx?id=201205290700142699E
Nick Jefferies, Group Chief Executive commented: "We continue to see good trading conditions in the Electronics Division across Europe. With its strong order book, Electronics like for like sales1 increased by 21% in the last quarter. Overall, Group sales increased by 17%, with the non-Electronics businesses showing improved performance despite continued softness in our UK Medical business. The Board remains confident that our strategy for growth both organically and by further targeted acquisitions will continue to build long term value for shareholders."
Continuing strong growth with Group like for like sales1 up 17% Acal plc (LSE : ACL, "The Group"), the European specialist provider of technology products and services, is today issuing a trading update for its year ended 31 March 2011, ahead of the announcement of its preliminary results on 1 June 2011. The Board is pleased to report that, since its second interim management statement on 3 February 2011, trading has continued to remain strong. In the fourth quarter ended 31 March 2011, Group like for like sales1 increased by 17% year on year. Group sales continue to be driven by a strong Electronics order book. The Electronics division (which accounts for approximately 78% of Group sales) reported a fourth quarter increase in like for like sales1 of 21% despite more challenging comparators. Sales of products manufactured in Japan (all of which are in the Electronics division and represent approximately 4% of Group revenues), were not significantly impacted by the earthquake in mid March and Acal has continued to meet its customers' needs. The acquisition of Compotron GmbH ("Compotron"), a specialist provider of electronic communication components, was completed with effect from 1 January 2011. Since the acquisition, Compotron has performed well and ahead of our expectations. In the non-Electronics businesses (approximately 22% of Group sales), total like for like sales1 in the fourth quarter were up 7%. As a result, we expect full year results for this year to be ahead of our previous expectations.
http://www.investegate.co.uk/Article.aspx?id=201104190700111357F
http://www.proactiveinvestors.co.uk/companies/news/17869/wired-for-upside-at-acal-17869.html
ru still there petertee ?
down now
I decided to get a bit of these as the company reports seem to show stabilisation and maybe even recovery.The great INTEL results might also help.Just sold BATM,BVC at a reasonable profit I think something is stirring electronically lol.Maybe a spark boom boom...???
Even with turmoil in the markets these shares are ridiculously low
Final Dividend of 14.7p paid 29 July 08, so the shares are ex-div and therefore lower
Any justification?
This is a good share for recovery to the 160p level. It has fallen much too far.
Combined with company experiencing challenging market, amkes for 132p share price. Even so there is good value here and shares should recover over time. Hope very soon.