Search:
 
 

James Cropper - SPECULATIVE BUY

Companies: CRPR   
21/11/2007

Pleased as it is with strong half-time sales growth, management at paper-maker James Cropper has warned the second half is likely to be hit by rising prices of paper pulp and energy.

These creeping costs are projected mostly to affect the speciality papers division, which enjoyed 6% sales growth during the first half. Price increases have been scheduled to absorb some of the impact, but the next six months are expected to be roughly flat.

Another external influence on the company has been the weakness of the US dollar, which quashed most of the benefits of the internal investment at the converting division. Thus profits were only in line with last year despite sales rising 6%.

With half its sales made across the Pond, performance at Technical Fibre Products (TFP) was similarly dampened by the weak greenback: profits were flat despite 30% turnover growth within the division. During the half, TFP acquired two key suppliers for £0.5m because, explains finance director John Denman, ‘even though they’re small, they service either very important customers or potentially very large contracts’. This ‘potentially very large’ contract – assumed to be with defence specialist Northrop Grumman to provide a skin for stealth aircraft – is not likely to reach commercialisation until at least 2012.

Finally, the Paper Mill Shop retail arm lost a similar amount last year, despite growing revenues. Denman reckons management now have a better idea of their ideal market, and a restructuring of the company’s estate and offering is imminent.

House broker Brewin Dolphin forecasts that full-year earnings of 19.5p will grow almost 40% to 27.2p for 2009, reducing the forward earnings multiple from 12.3 to 8.8. Forewarned cost escalation will repel the cautious, but the shares look good value and could reward a punt.

Growth Company Investor subscribers have full access to all our AIM and small-cap share recommendations. To subscribe today with a half-price offer, and gain immediate access to all the recommendations, click here.

Market cap: £20.25m
PE Forecast: 12.3
Share price: 239p

AIM£6.57m 77.50p -4.50p
Other company articles:
21/11/2007
31/08/2007
22/06/2006
23/11/2005
21/06/2005

Sponsored Listings

Agency Commercial Mortgage We present absolutely free financial information and a superior financial search system.

Agency Commercial Mortgage Looking for Agency Commercial Mortgage? Search over 15,000 sites with one click. Your source for everything under the sun.

Looking for Agency Commercial Mortgage We have reviewed and sorted 382 odd links for agency commercial mortgage - the top 10 list is presented here.

Hyder Consulting
01/12/2008

STRONG BUY

Futura Medical
28/11/2008

SPECULATIVE BUY

Education Development International
28/11/2008

ADD

Umeco
27/11/2008

HOLD

Relax Group
27/11/2008

HOLD