ALUMASC (ALU) 171p

Shares - - GREAT IDEAS UPDATES -

Orig­i­nal en­try point: Buy at 174.5p, 9 Feb 2017

MAN­AGE­MENT AT build­ing prod­ucts out­fit Alumasc (ALU) ad­mit they still have work to do in telling the story of its trans­for­ma­tion from an engi­neer­ing con­glom­er­ate to a fo­cused play on niche build­ing prod­ucts.

Speak­ing to Shares on the pub­li­ca­tion of full year re­sults (5 Sep), chief ex­ec­u­tive Paul Hooper and fi­nance di­rec­tor An­drew Mag­son point to un­der­ly­ing pre-tax profit up 9% to £9m in the 12 months to 30 June. Rev­enue was up 14%, partly driven by a dou­bling in ex­port sales. Its Levolux so­lar shad­ing busi­ness was the star per­former.

We still think the new it­er­a­tion of the busi­ness war­rants a higher price-to-earn­ings ra­tio than the 7.8 times im­plied by house bro­ker Peel Hunt’s fore­casts. The com­pany also of­fers a div­i­dend yield of 4.5% and trades on a free cash flow yield of 8.7%.

Man­age­ment’s am­bi­tion to per­form bet­ter than the wider con­struc­tion mar­ket is sup­ported by its fo­cus on prod­ucts which, among other things, pro­mote en­ergy ef­fi­ciency, man­age and con­trol the flow of wa­ter, pro­vide be­spoke solutions and sup­port cus­tomers on qual­ity and cost. The bal­ance sheet is ro­bust with net cash of £6.1m.

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