Stadium Group
HOLDStadium, originally recommended by Growth Company Investor at 36.5p in 2002, continues to play its part in the ongoing consolidation of the UK electronic manufacturing services sector.
Its latest acquisition is that of Rugby-based Zirkon, purchased for a net-cash consideration of £2.5m and bringing additional ‘high technology market experience' in sectors including industrial instrumentation and medical. In the year to June, Zirkon, described as ‘a perfect fit’ with Stadium’s operational model and growth strategy, made profits of £600,000 on turnover of £7.3m.
In September Stadium, whose core business is the design and manufacture of electronic and power supply products for OEMs from facilities in the UK and China, acquired Fox Industries for £100,000 in cash. Fox added further strings to the Stadium bow, being a profitable designer and distributor of specialist power supplies for the military, medical and industrial sectors.
So far, Stadium appears to be wearing the combined challenges of economic slowdown and rising energy and commodity prices well. Results for the half to June revealed a creditable 13% increase in pre-tax profits to £1.4m, on turnover lifted 16% to £23.1m, with strong cash conversion enabling a reduction in borrowings.
Based on forecasts for the current year to December – profits of £2.8m, earnings of 7.7p and a likely 3.9p dividend – shares in Stadium trade on a forward p/e of only 6.5 and offer a bumper yield of 7.8%. They remain worth holding for steady growth and income.
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Market cap: £14.4m
PE Forecast: 6.5
Share price: 50p
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