Companies: CHLD   

Chloride, the ‘pure’ power protection play first unearthed as an investment proposition by Growth Company Investor at 101.75p, has surged 31% ahead of our recommendation price.

The company provides uninterruptible power supply systems and power conditioners, as well as service and maintenance packages – a great market to inhabit, with the importance of secure power receiving increased recognition – and recent interim figures to September revealed a 43% pre-tax profit push to £9.4m in a half of strong organic growth.

Sales nudged 11% north to £93.3m, and operating margins sparked up from 8.9% to 11%, Chloride’s first ever double digit return. Chloride also kick-started the second half with a record £68.3m order book, and there was also a 30% dividend improvement to 1.3p.

First half success reflected good progress in the core European business, as well as in areas such as data centres for IT and financial services – sectors where power protection is critical – and in manufacturing, transport and oil & gas. Sales in both the European and Asian markets were 16% ahead, and there was good growth in the US and South America, though the US power conditioning business underperformed.

Encouragingly, high margin services revenues continued to burgeon – there was a 51% rise in new service contracts – as customers including Cable & Wireless opted for the group’s total range of support services. Recent acquisition Cener has also boosted the group’s ‘solutions’ capability in the fast-growing Spanish market.

Forecasts for March 2007 suggest full year earnings of 6.4p and we think Chloride merits its premium rating of 21 times prospective earnings. Add.

Chloride Group	LSE	£354.71m	136.00p	-7.75p
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Other company articles:
Chloride Group			03/11/2008
Chloride			14/05/2008
Company Watch Review			09/02/2007
Chloride – lock away for the long-term			03/11/2006
Chloride			03/11/2006