Last close As at 05/08/2026
GBP17.92
▲ 6.00 (0.34%)
Market capitalisation
GBP501m
Research: TMT
While previously reported issues with an ERP upgrade limited the amount of product XP could ship in Q419, revenues for FY19 came in ahead of our forecast and XP closed the year with a strong order book after an acceleration in demand across all markets in December. We have revised our forecasts to reflect both factors, with normalised EPS upgrades of 4.3% in FY19 and 1.5% in FY20.
XP Power |
Demand acceleration through Q419 |
FY19 trading update |
Tech hardware & equipment |
13 January 2020 |
Share price performance
Business description
Next events
Analyst
XP Power is a research client of Edison Investment Research Limited |
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While previously reported issues with an ERP upgrade limited the amount of product XP could ship in Q419, revenues for FY19 came in ahead of our forecast and XP closed the year with a strong order book after an acceleration in demand across all markets in December. We have revised our forecasts to reflect both factors, with normalised EPS upgrades of 4.3% in FY19 and 1.5% in FY20.
Year end |
Revenue (£m) |
PBT* |
Diluted EPS* |
DPS |
P/E |
Yield |
12/17 |
166.8 |
36.1 |
147.0 |
78.0 |
21.8 |
2.4 |
12/18 |
195.1 |
41.2 |
172.8 |
85.0 |
18.6 |
2.6 |
12/19e |
200.4 |
34.3 |
143.1 |
91.0 |
22.4 |
2.8 |
12/20e |
211.0 |
40.5 |
169.3 |
95.0 |
19.0 |
3.0 |
Note: *PBT and EPS are normalised, excluding amortisation of acquired intangibles, exceptional items and share-based payments.
ERP issue resolved; Q4 orders +30% y-o-y
XP has reported Q419 revenue of £47.7m (-3% y-o-y, -5% constant currency), resulting in FY19 revenue of £200.4m (+3% y-o-y, -1% cc, -4% like-for-like), well head of our £194.8m forecast. Q4 bookings of £58.6m were 30% higher year-on-year and 29% higher on a constant currency basis. Combined with the previously announced delay in shipments, this resulted in a book-to-bill of 1.23x for Q4. The company noted that its ERP system is now working well and shipments have been at normal or higher rates since mid-November. Year-end net debt stood at £41.5m, well below our £54.2m forecast. The company highlighted that US-denominated debt benefited from stronger sterling while working capital requirements were lower than expected. During Q4, XP increased its debt facility from $105m to $120m and added a $60m accordion facility. XP expects to announce a Q4 dividend of at least 36p, bringing the full-year dividend to at least 91p (our forecast was 88p).
Forecasts upgraded to reflect bookings intake
Management pointed to an acceleration in bookings during December (XP had previously reported that bookings in the first two months of Q4 were 20% higher year-on-year) and noted that strength was across all sectors. We have revised our forecasts to reflect the stronger revenue performance and higher than expected bookings intake in Q4 as well as the higher dividend and better cash position. We have also reflected a slightly higher US$/£ rate in FY20 (1.31 vs 1.30). This results in a normalised EPS upgrade of 4.3% in FY19 and 1.5% in FY20.
Valuation: Well positioned going into 2020
The stock is up 43% over the last year and on an FY20e P/E basis, it trades at a small discount versus UK electronics peers. It continues to trade at a larger discount to international power converter peers. XP has taken steps to mitigate the impact of trade tariffs between China and the US as well as preparing for Brexit; evidence that this is helping margins should support upside to the stock. A sustained return to order growth from the semiconductor equipment sector would be a further trigger for upside.
Changes to forecasts
Exhibit 1: Changes to estimates
£m |
FY19e |
FY20e |
|||||||
Old |
New |
Change |
y-o-y |
Old |
New |
Change |
y-o-y |
||
Revenues |
194.8 |
200.4 |
2.9% |
2.7% |
209.0 |
211.0 |
1.0% |
5.3% |
|
Gross profit |
86.5 |
89.0 |
2.9% |
(3.5%) |
94.9 |
95.8 |
1.0% |
7.6% |
|
Gross margin |
44.4% |
44.4% |
0.0% |
(2.9%) |
45.4% |
45.4% |
0.0% |
1.0% |
|
EBITDA |
45.1 |
46.5 |
3.1% |
(5.5%) |
52.5 |
53.1 |
1.1% |
14.2% |
|
EBITDA margin |
23.2% |
23.2% |
0.0% |
(2.0%) |
25.1% |
25.2% |
0.0% |
1.9% |
|
Normalised operating profit |
36.1 |
37.5 |
3.9% |
(12.6%) |
42.9 |
43.5 |
1.4% |
16.0% |
|
Normalised operating profit margin |
18.5% |
18.7% |
0.2% |
(3.3%) |
20.5% |
20.6% |
0.1% |
1.9% |
|
Reported operating profit |
29.8 |
31.2 |
4.7% |
(20.6%) |
39.2 |
39.8 |
1.5% |
27.5% |
|
Reported operating margin |
15.3% |
15.6% |
0.3% |
(4.6%) |
18.7% |
18.8% |
0.1% |
3.3% |
|
Normalised PBT |
32.9 |
34.3 |
4.2% |
(16.8%) |
39.9 |
40.5 |
1.5% |
18.0% |
|
Reported PBT |
26.6 |
28.0 |
5.2% |
(25.6%) |
36.2 |
36.8 |
1.7% |
31.4% |
|
Normalised net income |
26.7 |
27.9 |
4.3% |
(17.4%) |
32.5 |
33.0 |
1.5% |
18.3% |
|
Reported net income |
21.6 |
22.7 |
5.3% |
(24.8%) |
29.4 |
29.9 |
1.7% |
31.7% |
|
Normalised basic EPS (p) |
139.9 |
145.9 |
4.3% |
(17.2%) |
170.0 |
172.6 |
1.5% |
18.3% |
|
Normalised diluted EPS (p) |
137.3 |
143.1 |
4.3% |
(17.2%) |
166.8 |
169.3 |
1.5% |
18.3% |
|
Reported basic EPS (p) |
112.9 |
118.9 |
5.3% |
(24.7%) |
154.1 |
156.6 |
1.7% |
31.7% |
|
Dividend per share (p) |
88.0 |
91.0 |
3.4% |
7.1% |
92.0 |
95.0 |
3.3% |
4.4% |
|
Net debt/(cash) |
54.2 |
41.5 |
(23.4%) |
(20.1%) |
45.7 |
38.7 |
(15.5%) |
(6.9%) |
|
Source: Edison Investment Research
Exhibit 2: Financial summary
£m |
2012 |
2013 |
2014 |
2015 |
2016 |
2017 |
2018 |
2019e |
2020e |
||
31-December |
IFRS |
IFRS |
IFRS |
IFRS |
IFRS |
IFRS |
IFRS |
IFRS |
IFRS |
||
INCOME STATEMENT |
|||||||||||
Revenue |
|
|
93.9 |
101.1 |
101.1 |
109.7 |
129.8 |
166.8 |
195.1 |
200.4 |
211.0 |
Cost of Sales |
(49.0) |
(51.5) |
(51.0) |
(55.1) |
(67.8) |
(89.2) |
(102.8) |
(111.3) |
(115.2) |
||
Gross Profit |
44.9 |
49.6 |
50.1 |
54.6 |
62.0 |
77.6 |
92.3 |
89.0 |
95.8 |
||
EBITDA |
|
|
23.3 |
26.0 |
27.6 |
29.7 |
33.0 |
41.7 |
49.2 |
46.5 |
53.1 |
Normalised operating profit |
|
|
21.0 |
23.3 |
24.5 |
25.9 |
28.8 |
36.4 |
42.9 |
37.5 |
43.5 |
Amortisation of acquired intangibles |
0.0 |
0.0 |
0.0 |
0.0 |
(0.4) |
(0.6) |
(2.8) |
(3.2) |
(3.2) |
||
Exceptionals |
0.0 |
0.0 |
0.0 |
(0.3) |
(0.4) |
(3.3) |
(0.8) |
(2.6) |
0.0 |
||
Share-based payments |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
(0.5) |
(0.5) |
||
Reported operating profit |
21.0 |
23.3 |
24.5 |
25.6 |
28.0 |
32.5 |
39.3 |
31.2 |
39.8 |
||
Net Interest |
(0.8) |
(0.4) |
(0.2) |
(0.2) |
(0.2) |
(0.3) |
(1.7) |
(3.2) |
(3.0) |
||
Joint ventures & associates |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
||
Exceptional & other financial |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
||
Profit Before Tax (norm) |
|
|
20.2 |
22.9 |
24.3 |
25.7 |
28.6 |
36.1 |
41.2 |
34.3 |
40.5 |
Profit Before Tax (reported) |
|
|
20.2 |
22.9 |
24.3 |
25.4 |
27.8 |
32.2 |
37.6 |
28.0 |
36.8 |
Reported tax |
(4.5) |
(4.5) |
(4.8) |
(5.5) |
(6.3) |
(3.6) |
(7.2) |
(5.0) |
(6.6) |
||
Profit After Tax (norm) |
15.7 |
18.4 |
19.5 |
20.2 |
22.3 |
28.8 |
33.9 |
28.1 |
33.2 |
||
Profit After Tax (reported) |
15.7 |
18.4 |
19.5 |
19.9 |
21.5 |
28.6 |
30.4 |
23.0 |
30.2 |
||
Minority interests |
(0.2) |
(0.2) |
(0.1) |
(0.2) |
(0.2) |
(0.3) |
(0.2) |
(0.3) |
(0.3) |
||
Discontinued operations |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
||
Net income (normalised) |
15.5 |
18.2 |
19.4 |
20.0 |
22.1 |
28.5 |
33.7 |
27.9 |
33.0 |
||
Net income (reported) |
15.5 |
18.2 |
19.4 |
19.7 |
21.3 |
28.3 |
30.2 |
22.7 |
29.9 |
||
Basic ave. number of shares outstanding (m) |
19 |
19 |
19 |
19 |
19 |
19 |
19 |
19 |
19 |
||
EPS - basic normalised (p) |
|
|
81.7 |
95.8 |
102.1 |
105.3 |
116.2 |
149.4 |
176.1 |
145.9 |
172.6 |
EPS - diluted normalised (p) |
|
|
81.3 |
95.1 |
101.1 |
104.3 |
115.3 |
147.0 |
172.8 |
143.1 |
169.3 |
EPS - basic reported (p) |
|
|
81.7 |
95.8 |
102.1 |
103.7 |
112.0 |
148.3 |
157.8 |
118.9 |
156.6 |
Dividend (p) |
50 |
55 |
61 |
66 |
71 |
78 |
85 |
91 |
95 |
||
Revenue growth (%) |
(9.4) |
7.7 |
0.0 |
8.5 |
18.3 |
28.5 |
17.0 |
2.7 |
5.3 |
||
Gross Margin (%) |
47.8 |
49.1 |
49.6 |
49.8 |
47.8 |
46.5 |
47.3 |
44.4 |
45.4 |
||
EBITDA Margin (%) |
24.8 |
25.7 |
27.3 |
27.0 |
25.4 |
25.0 |
25.2 |
23.2 |
25.2 |
||
Normalised Operating Margin |
22.4 |
23.0 |
24.2 |
23.6 |
22.2 |
21.8 |
22.0 |
18.7 |
20.6 |
||
BALANCE SHEET |
|||||||||||
Fixed Assets |
|
|
52.8 |
53.3 |
56.1 |
65.4 |
73.2 |
88.1 |
129.2 |
141.7 |
144.9 |
Intangible Assets |
38.1 |
39.1 |
40.5 |
48.2 |
53.0 |
63.9 |
97.7 |
103.3 |
105.1 |
||
Tangible Assets |
13.2 |
12.7 |
14.4 |
16.1 |
19.1 |
22.5 |
30.7 |
37.6 |
39.0 |
||
Investments & other |
1.5 |
1.5 |
1.2 |
1.1 |
1.1 |
1.7 |
0.8 |
0.8 |
0.8 |
||
Current Assets |
|
|
39.3 |
42.2 |
47.0 |
53.5 |
65.7 |
83.5 |
105.1 |
108.0 |
111.1 |
Stocks |
19.8 |
20.4 |
25.2 |
28.7 |
32.2 |
37.8 |
56.5 |
53.4 |
55.2 |
||
Debtors |
14.2 |
15.4 |
16.0 |
17.5 |
21.5 |
23.8 |
33.0 |
31.3 |
34.7 |
||
Cash & cash equivalents |
4.1 |
5.0 |
3.8 |
4.9 |
9.2 |
15.0 |
11.5 |
19.3 |
17.1 |
||
Other |
1.2 |
1.4 |
2.0 |
2.4 |
2.8 |
6.9 |
4.1 |
4.1 |
4.1 |
||
Current Liabilities |
|
|
(20.2) |
(22.4) |
(18.6) |
(19.8) |
(25.8) |
(25.1) |
(26.8) |
(35.8) |
(34.4) |
Creditors |
(11.1) |
(12.7) |
(14.4) |
(14.6) |
(16.1) |
(21.4) |
(22.4) |
(29.5) |
(28.1) |
||
Tax and social security |
(1.6) |
(1.1) |
(1.7) |
(1.2) |
(3.3) |
(3.5) |
(4.2) |
(4.2) |
(4.2) |
||
Short term borrowings |
(7.3) |
(8.5) |
(2.5) |
(4.0) |
(5.5) |
0.0 |
0.0 |
(1.9) |
(1.9) |
||
Other |
(0.2) |
(0.1) |
0.0 |
0.0 |
(0.9) |
(0.2) |
(0.2) |
(0.2) |
(0.2) |
||
Long Term Liabilities |
|
|
(10.6) |
(3.7) |
(4.2) |
(10.0) |
(6.2) |
(29.6) |
(70.1) |
(65.5) |
(60.5) |
Long term borrowings |
(7.4) |
0.0 |
0.0 |
(4.6) |
0.0 |
(24.0) |
(63.5) |
(58.9) |
(53.9) |
||
Other long term liabilities |
(3.2) |
(3.7) |
(4.2) |
(5.4) |
(6.2) |
(5.6) |
(6.6) |
(6.6) |
(6.6) |
||
Net Assets |
|
|
61.3 |
69.4 |
80.3 |
89.1 |
106.9 |
116.9 |
137.4 |
148.4 |
161.1 |
Minority interests |
(0.2) |
(0.2) |
(0.1) |
(0.8) |
(0.8) |
(0.9) |
(1.0) |
(1.1) |
(1.1) |
||
Shareholders' equity |
|
|
61.1 |
69.2 |
80.2 |
88.3 |
106.1 |
116.0 |
136.4 |
147.3 |
160.0 |
CASH FLOW |
|||||||||||
Op Cash Flow before WC and tax |
23.3 |
26.0 |
27.6 |
29.7 |
33.0 |
41.7 |
49.2 |
46.5 |
53.1 |
||
Working capital |
4.2 |
(0.3) |
(4.1) |
(4.6) |
(6.1) |
0.4 |
(21.6) |
12.0 |
(6.6) |
||
Exceptional & other |
0.4 |
(0.5) |
1.9 |
0.6 |
5.1 |
(6.3) |
3.2 |
(2.6) |
0.0 |
||
Tax |
(4.3) |
(5.0) |
(3.6) |
(4.7) |
(4.1) |
(6.1) |
(4.1) |
(5.0) |
(6.6) |
||
Net operating cash flow |
|
|
23.6 |
20.2 |
21.8 |
21.0 |
27.9 |
29.7 |
26.7 |
50.8 |
39.8 |
Capex |
(4.7) |
(3.2) |
(5.8) |
(5.4) |
(6.8) |
(10.1) |
(15.0) |
(18.4) |
(16.0) |
||
Acquisitions/disposals |
(1.6) |
0.1 |
0.1 |
(8.3) |
0.1 |
(18.3) |
(35.4) |
0.0 |
0.0 |
||
Net interest |
(0.5) |
(0.3) |
(0.1) |
(0.1) |
(0.2) |
(0.2) |
(1.5) |
(3.2) |
(3.0) |
||
Equity financing |
(0.5) |
0.1 |
(0.2) |
0.0 |
0.2 |
(0.2) |
0.6 |
0.0 |
0.0 |
||
Dividends |
(9.1) |
(10.1) |
(11.0) |
(12.2) |
(13.1) |
(14.2) |
(15.6) |
(16.8) |
(18.0) |
||
Other |
0.5 |
0.2 |
0.1 |
0.2 |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
||
Net Cash Flow |
7.7 |
7.0 |
4.9 |
(4.8) |
8.1 |
(13.3) |
(40.2) |
12.4 |
2.9 |
||
Opening net debt/(cash) |
|
|
18.6 |
10.6 |
3.5 |
(1.3) |
3.7 |
(3.7) |
9.0 |
52.0 |
41.5 |
FX |
0.3 |
0.1 |
(0.1) |
(0.2) |
(0.5) |
0.6 |
(2.7) |
2.9 |
0.0 |
||
Other non-cash movements |
0.0 |
0.0 |
0.0 |
0.1 |
(0.2) |
0.0 |
(0.1) |
(4.8) |
0.0 |
||
Closing net debt/(cash) |
|
|
10.6 |
3.5 |
(1.3) |
3.7 |
(3.7) |
9.0 |
52.0 |
41.5 |
38.7 |
Source: XP Power, Edison Investment Research
|
|
Research: TMT
EQS is making progress on its journey to become a fully embedded provider of investor relations and compliance platforms and products to corporate customers. While conversion of sales leads has been slower than initially hoped, the group returned to EBITDA profitability in Q3 and is set to build a sustainable business model in markets driven by increasing regulation. FY19 guidance, revised with the Q3 figures, was for revenue growth of 10–15% pro-forma (down from 18–25%), taking €0.5m off EBITDA. The valuation is well below a DCF based on targeted growth.