Rapidly rising baker Finsbury Food looks good value after completing its seventh acquisition just weeks after delivering a record set of results.

The acquisition, for a maximum £3.75 million, was that of profitable Anthony Alan Foods (AAF), which owns the licence to distribute Weight Watchers cakes, most of which Finsbury manufactured for them anyway. Chief executive Dave Brooks insists AAF is a perfect bolt-on deal for Finsbury – he aims to spruce up AAF’s ‘quite tired’ product range with £100,000 of product development and says, ‘We need to persuade people that low-fat food doesn’t taste like cardboard.'

Finsbury's recent results for the year to June revealed an appetising 89% rise in profits to £4.4m on turnover up 50% to £109.8m. While the existing parts of the group grew on average by 20%, February purchase Lightbody, a maker of ‘celebration cakes’, contributed £18.8m and its integration with the California Cakes division is saving the group £1m a year.

The sectors of the market in which Finsbury operates are all growing and the company’s manufacturing of the majority of cake products for supermarkets’ own brands puts it in a powerful position. ‘Retailers don’t like moving business around and we're not going to give them the excuse,’ stresses Brooks.

The shares currently change hands for less than nine times next year’s forecasts earnings, with the consensus pointing to 10.6p of EPS for 2008 and 12.4p for 2009. With all parts of the existing business growing at double-digit rates, much potential to be extracted from recent acquisitions and expected acquisitive moves into ‘kids’ and further into ‘bread’, the valuation looks under-cooked. Buy.

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Finsbury Food Group	AIM	£8.23m	16.00p	0.00p
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