Investor's Champion Blog
Provides refreshingly forthright, independent comment on predominantly small cap companies and specialist investment funds. Informed opinion, based on first-hand research, but pulls no punches in exposing management weaknesses.

Pressure Technologies (AIM:PRES) – Wake up market and look at the cycle!

The trading update was disappointing but one look at the market and recent updates from some of the key players (some of which are surely customers of PRES) suggests this business is in great shape for 2012 and beyond.

In the Group’s new Engineered Products Division management confirmed that Al-Met had record annual sales in 2011. When it bought Al-Met in Feb 2010 it announced that turnover for the 12 months ending 31 December 2009 was £4.2m, adjusted adjusted EBITDA £0.5m and gross assets of £2.0m. The initial cash consideration, represents a multiple of 3.5 times unaudited historical adjusted EBITDA. That sounds alright to us!

Management has confirmed that they expect the current record level of sales in Al-Met to be maintained into 2012 with further growth in this business expected in 2013. Industry forecasts and customer feedback indicate significant growth for wear parts into the subsea market from 2013 with double digit growth forecast for both 2013 and 2014.

Hydratron acquired on 18th Oct 2010 had sales of £4m in the UK in the year ended 30 April 2010.

With 1H11 sales in the Engineered Products Division of £5.1m the house broker is now forecasting full year sales in 2011 of £11.1m. That doesn’t look too bad either if one considers that 2010/2011 wasn’t an easy period for the industry – remember Macondo!

It’s worth noting that Cameron International, the industry leader in the provision of flow equipment products, systems and services to the oil and gas market yesterday reported total orders of US$2.0bn for the quarter and a backlog of US$5.8bn, the second highest quarter-end level in its history. PRES is bound to be dealing with CAM in some form

Management confirmed that the Group’s stated focus remains to double the size of the Engineered Products Division organically – the market looks highly supportive to us!


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