Brokers queue up to praise Chamberlin

Engineering firm Chamberlin said revenue and earnings are now at higher levels than they were before the recession bit in the last decade.Exports drove revenue growth, with turnover up 14% to £45.5m in the year to March 31st from £39.8m the year before. That was a shade below the £46m expected by the market, but underlying profit before tax, at £1.7m, was ahead of expectations of £1.6m, and more than double the £0.8m achieved the year before. As profits doubled, net debt almost halved to £1.6m at the end of March from £2.9m the year before.The group saw growth across all of its foundries, and that trend is expected to continue. Around 70% of sales are now for overseas markets and the group's tighter focus on the more technically complex end of the market is clearly boosting Britain's reputation for engineering excellence."This approach has delivered a strong foundation on which to build and our strategy for the future will focus on growing both top and bottom line by offering top class technology which is valued by our customers," said Chairman Keith Butler-Wheelhouse. "We anticipate that growth will be achieved both organically and by acquisition and we will continue to explore opportunities which would be a logical extension to the group," he added.Broker Northland Capital Partners described the results as "strong" and notes that the shares trade on eight times projected fiscal 2013 earnings (prior to any adjustments in the light of the release of the fiscal 2012 results). House broker Charles Stanley says the shares are still too cheap, with the company well placed for growth."Chamberlin's Walsall foundry produces small castings with complex geometries and a key market for the business is bearing housings for turbochargers. This market is expected to grow very strongly as manufacturers increasingly use pressure charging in downsized engines to meet CO2 targets. Furthermore, business continues to grow with recently won IHI as the full product family is brought on stream. New turbocharger products are being worked on and management are targeting other established OEMs [original equipment manufacturers] and new entrants to gain further market share," said Charles Stanley analyst Richard Hickinbotham.finnCap also rates the shares a "buy", after figures came in ahead of its forecasts. "Both divisions performed well with the Foundries division increasing EBIT [earnings before interest and tax] by 55% and the Engineering division by 50% with both delivering material margin enhancement," notes finnCap analyst Mark Paddon.A re-rating is overdue, in Paddon's view, with the group sitting on a 30% discount to its closest quoted peer, Castings, on both a price/earnngs ratio basis and also an enterprise value/EBITDa (EBIT plus depreciation and amortisation) basis.The final dividend has been doubled to 2p, taking the full year dividend up to 3p from 1p the year before, and well ahead of the 2.5p expected by the market. The shares rose 13p to 153p in afternoon trading, JH