I have had XPP under my radar for the past couple of months, and I've toyed with the idea of making a purchase of some of their shares. I started out by doing some fundamental analysis linked here. I've also been reading a few bits and pieces about them online and wondered what folk thought them from this point in time.
My comments from the FA are margins are good 19-24%, and sales (CAGR 14%) and profits are steadily rising. What I did notice is a big capex and debt lump in the last reporting period, with a corresponding hit to the ROCE. In AR18 the reason behind the recent capex is partly explained:
Significantly, we completed the acquisition of Glassman High Voltage which expands our addressable market by an estimated $500 million and gives us a foothold in an exciting new product segment. In addition, we completed construction of our second manufacturing facility in Vietnam which will start production in Q2 2019.
From another thread Alaric said:
Alaric wrote:Over the past two years, the share price climbed to a peak about a year ago, then fell back a long way, but over the past three months has recovered and is climbing again. Is there anything external that might explain this? Takeover rumours and stake building perhaps.
I believe the shock to the SP was due to US/china tariff impositions, and the slight recent lift due the facility in Vietnam being tariff exempt. Plus the market is perhaps upbeat about the sales which will start to arrive from GHV?
Trying to keep up to date with them here is a small section from their their latest trading statement:
The Company has made a good start to the new financial year with order intake in the first quarter of 2019 of £54.6 million (2018: £51.2 million), up 7% on Q1 2018 on a reported basis and in line on a constant currency basis. On a “like for like” basis, removing currency effects and the contribution from Glassman High Voltage which was acquired in May 2018, orders decreased by 4%.
Group revenue for the three months to 31 March 2019 was £46.9 million (2018: £46.6 million), up 1% on Q1 2018 on a reported basis, or 5% below in constant currency. On a “like for like” basis revenue decreased by 12%.
Revenue growth in the first quarter was encouraging across the industrial, healthcare and technology sectors. The semiconductor manufacturing equipment sector continued to feel the impact of the widely reported slowdown with both order intake and revenue down on the strong comparatives of 2018.
So how badly should one view the decreases in recently reported LFL revenues?
Any other views on XPP appreciated,