4Imprint

Promotional products specialist 4Imprint (FOUR) recently unveiled a robust set of figures - a move that prompted its house broker Peel Hunt to upgrade profit forecasts.

In the six months to 2 July, sales increased 9% to £103.4m as pre-tax profits jumped 31% to £3.65m. At two-thirds of total revenues, the largest division remains its direct marketing operation in the US - it achieved a solid performance thanks to the recruitment of 60,000 new customers. Moreover, it is winning market share, as it significantly outperformed a market that is predicted to have grown by 7%. With orders from existing clients up 20%, the business is well positioned to grow, and is well spread given its broad customer base.

Based in the UK and Germany, Brand Addition is a promotional merchandise business, aimed at medium to large companies. Sales increased 13% to £28.5m, as underlying operating profits stepped up 34% to £2.04m. As market leader in the UK, it has worked hard to secure new accounts.

The problem child remains its SPS operation in Blackpool, which is the largest supplier of promotional products in the UK. Revenues dipped 19% to £7.2m, however 4Imprint has taken a big chunk of cost out of the business, and appointed a new managing director.

Investors are to be rewarded with a 6% hike in the interim dividend to 5p a share - with a forecast of 14.3p expected for the year. Peel Hunt has upped its 2011 pre-tax profit forecast by 3% to £12m (and share price target to 345p), to produce EPS of 35.7p. Though economic headwinds are unhelpful, at 225p, a forward PE rating of just 6 and a predicted yield of 6.4% leaves 4Imprint firmly in the value stock category. Buy.