24/11/2006
In our last update on Latchways, the designer, maker and seller of ‘fall-arrest’ safety systems backed at 315p, we urged readers to book some profits at 792.5p in the wake of a seemingly inexorable share price ascent. Investors that retained exposure rejoice, since the shares have since surged north once more.
Spurring this powerful performance has been a slew of record profits and broker upgrades, the latest following formidable figures for the half to September revealing 36% pre-tax profits growth to £4.1m on turnover lifted 18% to £16.6m. Gross margins improved to 56% despite high stainless steel prices, and cash generation was strong, with net cash balances approaching £6m. As well as enabling the group to raise the interim dividend 54% to 5.92p, this cash-generative counter also declared a special dividend of 30p, representing a return of cash to shareholders of £3.34m.
Driving performance were the EU's Working at Height regulations, which drive spend on systems protecting workers plying trades at great heights, a strong UK commercial construction sector and good excellent turns from operations in mainland Europe and North America. Also noteworthy was a profit contribution from the Wingrip range, gaining acceptance in the aircraft manufacturing and airline industry, and now a specified system for a number of commercial aircraft manufacturers, airlines and the military.
Bell Lawrie’s Ian McInally has further upgraded his numbers for 2007 and 2008. He envisages pre-tax profits of £7.6m for the year to March, giving earnings of 47.25p, ahead of profits of £8.3m and 52.5p of earnings the following year. Those metrics place the shares on forward ratings of 24 and 21.6, multiples McInally thinks ‘well justified given the track record of out-performance by the company'. New investors might consider the shares pricey, but if you backed the story previously, sit tight.
| Market cap: | £123m |
| PE Forecast: | 24 |
| Share price: | 1132.5p |
| LSE | £91.26m |
820.00p
|
-2.50p
|
|
| Other company articles: |
| 18/06/2008 |
| 16/04/2008 |
| 09/08/2007 |
| 01/06/2007 |
| 24/11/2006 |
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