Gain to date: 17.7%

Orig­i­nal en­try point: Buy at £24.11, 6 July 2017


THE POWER SWITCH­ING tools de­signer has re­turned to the ac­qui­si­tion trail nearly two years after its last foray. The $23m (£17m) pur­chase of US-based ra­dio fre­quency (RF) power sup­plies busi­ness Comdel looks like a sen­si­ble move, in our view.

The ac­qui­si­tion opens up a new mar­ket seg­ment for XP Power (XPP), with typ­i­cal ap­pli­ca­tions in plasma-weld­ing and both di­elec­tric and in­duc­tion heat­ing.

Re­search group Edi­son says the Comdel ac­qui­si­tion will in­crease XP Power’s ex­po­sure to the semi­con­duc­tor man­u­fac­tur­ing in­dus­try. It says there is some cus­tomer over­lap be­tween XP and Comdel but no prod­uct over­lap.

Comdel will add about 8% to XP’s group rev­enues in 2018 and 2019, ac­cord­ing to fore­casts from in­vest­ment bank In­vestec, and mid-sin­gle dig­its to earn­ings. That im­plies earn­ings per share of 144.4p next year to 31 De­cem­ber 2018, putting the shares on a for­ward price to earn­ings mul­ti­ple of 19.7.

Shares in the com­pany have en­joyed a firm run since our orig­i­nal fea­ture in early July, al­though we also re­mind read­ers of the stock’s at­trac­tive 2.9% yield­ing div­i­dend (2018), paid quar­terly.

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