Vindon Healthcare believes the investment in its US storage services business will pay off over the longer-term
Vindon is on course to open its first US storage facility in Atlanta in the fourth quarter of this year.
The focus on this investment and the lack of new environmental storage cabinet sales in the US has held back the short-term figures. Revenues edged up from £2.59m to £2.64m in the six months to June 2010. However, pre-tax profit dipped from £506,000 to £412,000 even though the contribution from the Irish storage services business trebled to £155,000. There were extra overheads after the purchase of US distributor Westech.
The core business is the storage of drugs but areas such as cryogenics and heritage storage are growing in importance.
Orders for equipment are recovering and there is long-term contracted storage revenue of £3.9m. That includes £1m for the second half of 2010.
House broker WH Ireland forecasts a small improvement in profit to £1.1m this year, with a bigger improvement to £1.3m in 2011.
At 10.25p a share, Vindon is valued at £9.11m. The shares are trading on just over 11 times prospective earnings for 2010, falling to little more than nine in 2011.
The dividend is expected to be edged up from 0.165p a share to 0.18p a share this year. The prospective yield is 1.8%.
Net debt was £2.2m at the end of June 2010. The business is cash generative and this figure should reduce over time even with investment in expanding storage facilities.
Vindon is keen to supplement its organic growth through acquisition. Management would like to add further services that it could offer its customers.
Download the September edition of AIM Journal at http://www.hubinvest.com/AIMPDFSeptember2010_12.pdf
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