21 October 2014

Inter Link Foods

BUY

08/07/2003 Leslie Copeland

Acquisitive cake and pastry products play Inter Link has baked up some exceptional full-year numbers to April, now supplies all UK grocery multiples and is raising the total dividend almost 20% to 5p. In a year of record sales, profits, and earnings, pre-tax profits were raised 10% to £3m on sales which warmed up by 12% to £51.4m - profits before tax and goodwill clipped ahead 11% to £3.7m. In February, chief executive Alwin Thompson wrapped up Blackburn-based Inter Link's biggest deal to date. It bought malt loaf maker Soreen from Warburtons, funded by a well-supported but discounted share placing and open offer, raising £7m at 285p. Despite City grumbling at the time about pricing, 'the fundraising brought in around 19 new shareholders, and we bought Soreen', chirps Thompson. Inter Link is chasing a UK cake market that was worth £1.76bn in 2002. More specifically, the company has about £50m of the £1.1bn 'ambient wrapped cake' arena; 'we've not really even started yet,' tantalises Thompson. Apparently 69% of the UK population now buy cakes on a regular basis - bad news for the nations' arteries, but good news for shareholders if the trend continues. City broker Numis Securities is still forecasting £5.5m pre-goodwill and tax for the current year, which gives EPS of 41.3p and a 6p dividend. Still exceedingly good value on 8.9 times estimated earnings. Buy.

Sector: Food Producers

Companies: Inter Link Foods

Market cap: £26m

PE Forecast: 8.9

Share price: 369p

Growth Company Investor: free trial

Since 2008, our share tips outperformed the benchmark by 281%. Take a free trial and get access to our recommendations today. Start free trial now.

Share recommendations and small-cap stock picks

Small-cap and growth company share recommendations on AIM- and PLUS-listed companies. Latest analysts' stock tips and advice on which are the best shares to buy on London's junior stock markets.

What Investment magazine: save 45% on the shop price

Be the first to receive our independent analysis and research, designed to help you generate more wealth for you and your family over the long term. Subscribe and save.

Popular Recommendations