Companies: CHLD   

Here’s one for the long-term pension portfolio: Chloride. Capitalised at £330 million (at a share price of 133.25p), Chloride is a leader in the uninterruptible power supplies (UPS) market. It sells not only UPS equipment but complete packages including service contracts. Business is booming and with links to some very fast expanding sectors Chloride has a very bright future. So much so, that it has been picked out as a bid candidate for a number of large electricals groups.

The latest half-time figures showed operating profits up 36 per cent on sales 11 per cent ahead. The order book is currently £12 million higher than a year ago, and sales look set to top the £200 million mark for the time in the year to end-March 2007. A number of customer markets are growing at double digit rates. These include the oil and gas sector and, particularly, data centres where demand continues to outpace new building. Chloride has a specialist offering for this market which is widely recognised as the number one product.

Acquisitions are also likely to boost growth. With its shares selling for around 20 times forecast earnings for the current year, Chloride is well placed to use its paper to buy businesses on attractive terms. That rating looks well merited on growth prospects.

Profits this year are expected to jump from £15.6 million to over £21 million, with a similar increase in 2007/8. Earnings per share should emerge at around 6.5p, but there is potential for pleasant surprises. Timing differences on Middle East contracts were a negative factor in the first half but should be good news in the second. And a rise of more than a half in new service contracts in the first half will progressively feed through to profits as the second half wears on.

Chloride’s success and its relatively small market capitalisation make it a likely bid target for electricals businesses on either side of the Atlantic. The shares are a lock-away. Buy

Chloride Group	LSE	£359.93m	138.00p	2.50p
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Other company articles:
Chloride Group			03/11/2008
Chloride			14/05/2008
Company Watch Review			09/02/2007
Chloride – lock away for the long-term			03/11/2006
Chloride			03/11/2006