Hold on to this handle maker as profits surge

TYMAN makes parts for doors and windows, such as locks, handles, hinges and sealants. It also sells security systems, including wireless burglar alarms and CCTV monitors.

The company derives about 65 per cent of its profits from the US and Canada, 25 per cent from the Continent and Asia and the rest – 10 per cent – from the UK.

Midas first recommended Tyman in May 2013, when the company was in the early stages of a recovery programme and the shares were 207p. We looked at the firm again in March 2015, by which time they had risen to 313p and we suggested that investors sell 25 per cent, but keep hold of the rest. Today, the price has slipped to 283¼p, despite better than expected interim figures last month. At this level, there is definitely upside potential for the shares.

Sales for the six months to June 30 rose 14.6 per cent to £201million, while pretax profits were 33 per cent ahead at £24.5million. The interim dividend is up 12.8 per cent at 3p.

The US was the star performer, which is particularly encouraging as it is Tyman’s largest division. The Continent is making progress and other parts of the world are mixed – Latin America is down but the Middle East is strongly ahead.

UK profits were up, but Tyman chief executive Louis Eperjesi, says left, homeowners were cautious even in the run-up to the EU referendum and he expects them to be more so in the months ahead.

Overall, however, he is confident about the future. In the US the company is expanding into commercial property – such as office blocks, schools, hospitals and warehouses – and in June bought American company Bilco as part of that strategy.

Meanwhile, the US residential market is in rude health and expected to continue in that vein.

The group also benefits from the dollar’s strength against sterling, because it has such a large US business.

Brokers expect full-year profits to increase by 22 per cent to £55million, rising to £64.3million in 2017. The dividend is likely to climb marginally from 8.8p last year to 8.9p this. In 2017, however, a more substantial gain is expected, to 10.2p.

Midas verdict: Tyman shares fell before the referendum, when it bought Bilco and partially financed the deal with a share placing at 225p. The stock has bounced back since and should prove resilient in the months ahead. Hold.