Scott Tech shares hit year-high

A year on from Brazilian food giant JBS taking a controlling 50.1 per cent stake in nicheDunedin engineering company Scott Technology, its share price has almost doubled, hitting a year-high of $3.05 yesterday.

At the time of purchase, JBS was adamant Scott would remain listed, JBS was not intending to move to a 100 per cent takeover and Scott’s head office would remain in Dunedin.

The more than $40 million JBS Australia takeover was completed a year ago, which allowed Scott to pay off $16.6m debt, invest in new acquisitions and as of February it retained almost $33m cash.

Craigs Investment Partners broker Peter McIntyre said several components had underpinned the rising share price, including the debt reduction and having made accretive company acquisitions.

“There’s been a steady climb in the share price since JBS came on board,” he said.

A year ago Scott shares were trading at $1.65.

Last week in its half year result Scott reported strong operating cash inflow of $10.2m, with $32.8m cash in hand, of which $25m was from the JBS capital raising, after repayment of all bank debt.

Scott’s managing director Chris Hopkins said last week 2017’s growth had been greatly assisted by the integration of recent acquisitions, plus uptake of the company’s own developed technologies.

McIntyre said Scott was in a position to benefit in the future from JBS’ relationships with its own subsidiaries and other companies in the global food supply chain.

“They’ve now got the capital flexibility to expand, and [also] had a good first-half result,” he said.

Scott’s revenue for the first half was $56.7m, up 32 per cent on the $42.8m reported in the first half of 2016.

“They now have entry into bigger and larger markets, which gives them a bit more scaleability,” McIntyre said.