Last close As at 05/08/2026
GBP17.86
▲ 86.00 (5.06%)
Market capitalisation
GBP501m
Research: TMT
XP’s Q1 revenues reflect varying performance by end-market: encouraging growth from industrial, healthcare and technology customers was offset by the expected decline in demand from the semiconductor sector. Order intake was higher on a year-on-year and quarter-on-quarter basis, resulting in a book-to-bill of 1.16x for the quarter. With management’s full-year expectations unchanged, we maintain our forecasts.
XP Power |
Q1 book-to-bill of 1.16x |
Q1 trading update |
Tech hardware & equipment |
15 April 2019 |
Share price performance
Business description
Next events
Analyst
XP Power is a research client of Edison Investment Research Limited |
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XP’s Q1 revenues reflect varying performance by end-market: encouraging growth from industrial, healthcare and technology customers was offset by the expected decline in demand from the semiconductor sector. Order intake was higher on a year-on-year and quarter-on-quarter basis, resulting in a book-to-bill of 1.16x for the quarter. With management’s full-year expectations unchanged, we maintain our forecasts.
Year end |
Revenue (£m) |
PBT* |
Dil. EPS* |
DPS |
P/E |
Yield |
12/17 |
166.8 |
36.1 |
147.0 |
78.0 |
17.3 |
3.1 |
12/18 |
195.1 |
41.2 |
172.8 |
85.0 |
14.7 |
3.3 |
12/19e |
210.3 |
43.9 |
184.2 |
88.0 |
13.8 |
3.5 |
12/20e |
220.0 |
46.0 |
192.4 |
92.0 |
13.2 |
3.6 |
Note: *PBT and EPS are normalised, excluding amortisation of acquired intangibles, exceptional items and share-based payments.
Q119 revenues weaker as expected
XP reported Q119 revenues of £46.9m, 1% higher than a year ago. On a constant currency basis, revenues declined 5% and like-for-like revenues (excluding Glassman) declined 12% y-o-y. XP had already flagged weaker demand from the semiconductor sector and this continued through Q1. The other markets (industrial, healthcare, technology) that make up c 75% of revenues saw good demand in the quarter. The company announced a 17p quarterly dividend, in line with our forecast, which will be paid on 11 July to shareholders as at 14 June. Net debt reduced from £52.0m at the end of FY18 to £49.1m by the end of Q119.
Order intake supports FY19 revenue expectations
XP received orders worth £54.6m in Q1, 7% higher than a year ago and 21% ahead of last quarter. Constant currency orders were flat and like-for-like orders were down 4% y-o-y. This resulted in a book-to-bill of 1.16x for the quarter. Management continues to expect a year of revenue growth, with growth weighted to the second half, and maintains expectations for the year. We leave our estimates unchanged.
Valuation: Still trading at a discount
Since the company reported FY18 results in March, the stock has gained 28%. Despite the discount narrowing, XP still trades at a more than 20% discount to both power converter and UK electronics peers on a P/E basis, and has a dividend yield at the top end of the range. With a broad product portfolio focused on structural growth markets, local customer support, control over the manufacturing process and strong cash generation, we view the company as well positioned to grow market share while maintaining high operating margins. Evidence of order growth in the semiconductor equipment sector is likely to be the key trigger for share price upside from this point.
Exhibit 1: 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 |
210.3 |
220.0 |
Cost of Sales |
(49.0) |
(51.5) |
(51.0) |
(55.1) |
(67.8) |
(89.2) |
(102.8) |
(112.8) |
(117.3) |
||
Gross Profit |
44.9 |
49.6 |
50.1 |
54.6 |
62.0 |
77.6 |
92.3 |
97.5 |
102.7 |
||
EBITDA |
|
|
23.3 |
26.0 |
27.6 |
29.7 |
33.0 |
41.7 |
49.2 |
52.9 |
55.8 |
Normalised operating profit |
|
|
21.0 |
23.3 |
24.5 |
25.9 |
28.8 |
36.4 |
42.9 |
45.7 |
47.8 |
Amortisation of acquired intangibles |
0.0 |
0.0 |
0.0 |
0.0 |
(0.4) |
(0.6) |
(2.8) |
(4.4) |
(4.4) |
||
Exceptionals |
0.0 |
0.0 |
0.0 |
(0.3) |
(0.4) |
(3.3) |
(0.8) |
(1.0) |
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 |
39.8 |
42.9 |
||
Net Interest |
(0.8) |
(0.4) |
(0.2) |
(0.2) |
(0.2) |
(0.3) |
(1.7) |
(1.8) |
(1.8) |
||
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 |
43.9 |
46.0 |
Profit Before Tax (reported) |
|
|
20.2 |
22.9 |
24.3 |
25.4 |
27.8 |
32.2 |
37.6 |
38.0 |
41.1 |
Reported tax |
(4.5) |
(4.5) |
(4.8) |
(5.5) |
(6.3) |
(3.6) |
(7.2) |
(6.8) |
(7.4) |
||
Profit After Tax (norm) |
15.7 |
18.4 |
19.5 |
20.2 |
22.3 |
28.8 |
33.9 |
36.1 |
37.7 |
||
Profit After Tax (reported) |
15.7 |
18.4 |
19.5 |
19.9 |
21.5 |
28.6 |
30.4 |
31.2 |
33.7 |
||
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 |
35.8 |
37.4 |
||
Net income (reported) |
15.5 |
18.2 |
19.4 |
19.7 |
21.3 |
28.3 |
30.2 |
30.9 |
33.4 |
||
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 |
187.7 |
196.1 |
EPS - diluted normalised (p) |
|
|
81.3 |
95.1 |
101.1 |
104.3 |
115.3 |
147.0 |
172.8 |
184.2 |
192.4 |
EPS - basic reported (p) |
|
|
81.7 |
95.8 |
102.1 |
103.7 |
112.0 |
148.3 |
157.8 |
162.1 |
175.2 |
Dividend (p) |
50 |
55 |
61 |
66 |
71 |
78 |
85 |
88 |
92 |
||
Revenue growth (%) |
(9.4) |
7.7 |
0.0 |
8.5 |
18.3 |
28.5 |
17.0 |
7.8 |
4.6 |
||
Gross Margin (%) |
47.8 |
49.1 |
49.6 |
49.8 |
47.8 |
46.5 |
47.3 |
46.4 |
46.7 |
||
EBITDA Margin (%) |
24.8 |
25.7 |
27.3 |
27.0 |
25.4 |
25.0 |
25.2 |
25.2 |
25.3 |
||
Normalised Operating Margin |
22.4 |
23.0 |
24.2 |
23.6 |
22.2 |
21.8 |
22.0 |
21.7 |
21.7 |
||
BALANCE SHEET |
|||||||||||
Fixed Assets |
|
|
52.8 |
53.3 |
56.1 |
65.4 |
73.2 |
88.1 |
129.2 |
138.1 |
140.7 |
Intangible Assets |
38.1 |
39.1 |
40.5 |
48.2 |
53.0 |
63.9 |
97.7 |
100.4 |
100.0 |
||
Tangible Assets |
13.2 |
12.7 |
14.4 |
16.1 |
19.1 |
22.5 |
30.7 |
36.9 |
39.9 |
||
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 |
109.5 |
119.9 |
Stocks |
19.8 |
20.4 |
25.2 |
28.7 |
32.2 |
37.8 |
56.5 |
55.6 |
57.9 |
||
Debtors |
14.2 |
15.4 |
16.0 |
17.5 |
21.5 |
23.8 |
33.0 |
34.6 |
36.2 |
||
Cash & cash equivalents |
4.1 |
5.0 |
3.8 |
4.9 |
9.2 |
15.0 |
11.5 |
15.2 |
21.7 |
||
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) |
(30.3) |
(31.4) |
Creditors |
(11.1) |
(12.7) |
(14.4) |
(14.6) |
(16.1) |
(21.4) |
(22.4) |
(25.9) |
(27.0) |
||
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 |
0.0 |
0.0 |
||
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) |
(65.1) |
(60.1) |
Long term borrowings |
(7.4) |
0.0 |
0.0 |
(4.6) |
0.0 |
(24.0) |
(63.5) |
(58.5) |
(53.5) |
||
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 |
152.2 |
169.0 |
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 |
151.1 |
167.9 |
CASH FLOW |
|||||||||||
Op Cash Flow before WC and tax |
23.3 |
26.0 |
27.6 |
29.7 |
33.0 |
41.7 |
49.2 |
52.9 |
55.8 |
||
Working capital |
4.2 |
(0.3) |
(4.1) |
(4.6) |
(6.1) |
0.4 |
(21.6) |
2.8 |
(2.7) |
||
Exceptional & other |
0.4 |
(0.5) |
1.9 |
0.6 |
5.1 |
(6.3) |
3.2 |
(1.0) |
0.0 |
||
Tax |
(4.3) |
(5.0) |
(3.6) |
(4.7) |
(4.1) |
(6.1) |
(4.1) |
(6.8) |
(7.4) |
||
Net operating cash flow |
|
|
23.6 |
20.2 |
21.8 |
21.0 |
27.9 |
29.7 |
26.7 |
47.8 |
45.7 |
Capex |
(4.7) |
(3.2) |
(5.8) |
(5.4) |
(6.8) |
(10.1) |
(15.0) |
(20.5) |
(15.0) |
||
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) |
(1.8) |
(1.8) |
||
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) |
(17.4) |
||
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) |
8.7 |
11.5 |
||
Opening net debt/(cash) |
|
|
18.6 |
10.6 |
3.5 |
(1.3) |
3.7 |
(3.7) |
9.0 |
52.0 |
43.3 |
FX |
0.3 |
0.1 |
(0.1) |
(0.2) |
(0.5) |
0.6 |
(2.7) |
0.0 |
0.0 |
||
Other non-cash movements |
0.0 |
0.0 |
0.0 |
0.1 |
(0.2) |
0.0 |
(0.1) |
0.0 |
0.0 |
||
Closing net debt/(cash) |
|
|
10.6 |
3.5 |
(1.3) |
3.7 |
(3.7) |
9.0 |
52.0 |
43.3 |
31.8 |
Source: XP Power, Edison Investment Research
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