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magazineAlumasc is still too cheap
Alumasc (ALU) 171p
Original entry point: Buy at 174.5p, 9 Feb 2017
Management at building products outfit Alumasc (ALU) admit they still have work to do in telling the story of its transformation from an engineering conglomerate to a focused play on niche building products.
Speaking to Shares on the publication of full year results (5 Sep), chief executive Paul Hooper and finance director Andrew Magson point to underlying pre-tax profit up 9% to £9m in the 12 months to 30 June. Revenue was up 14%, partly driven by a doubling in export sales. Its Levolux solar shading business was the star performer.
We still think the new iteration of the business warrants a higher price-to-earnings ratio than the 7.8 times implied by house broker Peel Hunt’s forecasts. The company also offers a dividend yield of 4.5% and trades on a free cash flow yield of 8.7%.
Management’s ambition to perform better than the wider construction market is supported by its focus on products which, among other things, promote energy efficiency, manage and control the flow of water, provide bespoke solutions and support customers on quality and cost. The balance sheet is robust with net cash of £6.1m.
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