Tricorn

A massive improvement in trading results has enabled tube manipulation specialist Tricorn (TCN) to recommend its first dividend payment since joining AIM.

Following a slew of profit upgrades, in the year to March sales jumped 45% to £21.7m as pre-tax profits soared almost four-fold to £1.07m (2010: £288,000). Greater operational efficiencies helped margins double to 5.5%, and the payout of 0.1p a share is a further positive sign.

The energy arm MTC manufactures fabricated and manipulated tube assembles for large diesel engines and radiator sets. It has boosted market share, which has driven results and a major investment in kit is planned, including a £350,000 new electric bender is to be installed to help widen its product set.

In transportation, over 50 new products were introduced, and what was a break-even business when acquired in 2007 has enjoyed a strong increase in performance. Moreover, the development of next generation products that allow electronic verification of critical components has been well received.

The utilities arm holds worldwide patents on a method of joining polythylene pipes, largely used in the water industry this remains a small business but is doing well. For Tricorn, the one weak spot has been aerospace, which fell into a loss due to a hike in raw materials and difficulties in sourcing product. The hope is for a break-even position this year.

Current trading is good, largely driven by sales that are made into the UK market being shipped to stronger international markets. Tricorn is on the lookout for complementary acquisitions, but says that targets are hard to come by due to the unrealistic price expectations of vendors.

Broker Arbuthnot predicts 2012 pre-tax profits of £1.4m and EPS of 3.2p. We recommended the shares in February at 16.75p, so the near doubling in price is welcome news - but there is still more to come. Buy.