XP Power continues to please

Power control components manufacturer XP Power has a habit of pleasing the market and today's results provided another opportunity. The share price has not seen its current level for a decade. At the previous peak it was the time of the tech boom so ratings were sky high. The share price has nearly tripled in the past 12 months. The rating is now around 20 times 2010 earnings but that is relatively modest given the potential growth. Revenue grew 36% to £91.8m in 2010 but bookings rose even faster - up 51% at £103.4m - which augurs well for the current year. Underlying pre-tax profit more than doubled to £18.7m. Gross margin improved by three percentage points to 48% thanks to more own-designed products. This is part of the strategy of moving up the chain to supply higher margin, unique products. Own-brand products account for 88% of revenues, while own-designed products accounted for 48%. The final dividend was kept at 12p a share but the total for the year was 50% higher at 33p a share. This is because XP is paying quarterly dividends. Net debt was £18.4m at the end of 2010. The debt has risen over the year because of higher inventories due to the improved demand. XP is winning business for its Chinese facility, which is operating at more than 50% of capacity, and it has started building a Vietnam factory, which will double XP's manufacturing capacity by early 2012. Vietnam does not yet have China's wage inflation.XP says it increased its share of the global power components market from 6.5% to 8%.Industrial and technology markets recovered strongly last year. The biggest bounce back came in North America. The recovery in the global economy is fuelling the growth of XP, and it is supplementing this with new product investment. Many of the new products are energy efficient. Once it is designed-in the lifecycle of a component is five-to-seven years. Xp Power