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Stadium Group

  • BY: Andrew Hore |
  • POSTED: 16/11/2012 |

Contract electronics manufacturer and displays supplier Stadium Group says that weakening demand means that the second half profit will be lower than the first half outcome.

House broker N+1 Singer has cut its 2012 profit forecast from £2.2m to £1.2m. This follows a downgrade with the interims back in September. The broker is not changing its 2013 forecast at the moment because of potential reductions in capacity.

The share price slumped by one-quarter to 39p, valuing Stadium at £11.5m The shares are trading on 13 times prospective 2012 earnings.

The main weakness is demand is in the contract manufacturing operations and Stadium is looking to cut costs and may cut capacity in the UK. Volumes in the Chinese factory have been lower as customers cut demand to reduce their stocks.

The power systems business should report flat revenues and profit. The displays business is being integrated and should make a positive contribution in 2013. These businesses are the focus of growth.

The sale of a building in Hong Kong should raise £3m and generate a profit of £2.2m, which is better than expected.

The dividend was not mentioned in the trading statement but the cash position should be strong enough to maintain the current payout at 2.8p a share – a yield of 7.2%.

Download the latest AIM Journal from http://www.hubinvest.com/AIMPDFNovember2012_38.pdf

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