Kitchen furniture maker Omega International, which came to the market via a £2.25 million fundraising in April last year, is expanding sales, margins and profits, and has plenty of market to chase. After moving as high as 196p post-float, the shares have slipped back to 159p, presenting investors with a great buying opportunity.

Led by chief executive Francis Galvin and finance director Martin Levitt (and boasting Bob Murray, chairman of Sunderland football club and co-founder back in the 1980s of Spring Ram, as chairman), Omega operates out of purpose-built premises in Doncaster, where it designs, makes and markets kitchen furniture through three brands, Sheraton, Omega and Chippendale. These are sold to independent retailers. Omega manufactures for both the rigid furniture and ready-to-assemble markets.

Levitt claims Omega has 'just over two per cent' of a UK market worth £1 billion. However, he points out that 'we don't sell to the multiples, who make up 44 per cent of that. So really, we are chasing 56 per cent of that £1 billion and our growth is likely to come from market share gains.'

Maiden full-year results – for 2004 – announced in March proved that point emphatically. Turnover rose 20 per cent to a record £21.3 million and pre-tax profits finished 47 per cent higher at £3.9 million as gross margins improved from 44 per cent to 47 per cent. Omega's strong cashflow allowed the early repayment of some £1.3 million of long-term debt, leaving year-end gearing of only 15 per cent.

Galvin and Levitt's strategy remains clear – to keep developing the kitchen brands and expand their distribution through independent retailers in the replacement and new-build markets. 'It is very important that we refresh the brands every year,' explains Levitt. He says Omega works in tandem with its displaying outlets and uses its own sales force to motivate dealers. 'We're still growing in the North and the Midlands, and we're manning up on our dealer network penetration in the South, where we are making progress.’

Omega's prospects are linked to two forces in the market: kitchen replacement and the new housing market. The company benefits from a housing boom, yet perversely, can also thrive when the market slows. 'We're not totally immune from housing and consumer spending trends,' explains Levitt, ‘but when people stop moving, they do tend to spend on their existing house, and that helps us.’

House broker Evolution Securities argues the company has the ability to 'grow sales and profits above the market norm’. Although Omega is unique as a listed company, analysts lump it in with the likes of AIM-quoted Smallbone and Full List star Topps Tiles. Evolution has a 230p target for the shares.

For 2005, investors might expect profits of £4.5 million on turnover of £24 million. That should be followed by £5.6 million on sales of £28 million in 2006. That leaves the shares on a forward rating of 13.9 times, falling to 11.3 times by 2006. With 13 per cent of the company between them, the three executive directors have plenty of incentive to make Omega work. Strong buy.