Scapa Making Profits Stick

Plasters

Scapa are a specialist manufacturer in adhesive components and industrial bonding materials with great market capture, supplying bespoke adhesive solutions to electronics, healthcare, industrial and automotive industries.

Some of Scapa’s more obscure specialisms are: -

  • Highly specialist foam tapes used to affix solar panels into place thereby avoiding more conventional mechanical fixings, which allows better degree of precision, faster drying times, flusher design solutions and obviates the need for extensive drilling methods.
  • Utility based pipeline infrastructure protection which has to stand up to extremely cold temperatures and intensive and prolonged ultra-violet attack. These pipelines often occur in the most arduous of environments where reliability of operation is paramount.
  • Adhesives for electronic applications where electromagnetic shielding is required to operate robustly, sometimes in high ambient temperatures.
  • Skin friendly adhesives used within healthcare applications to hold remedial dressings in place.

To augment the last point Scapa have just acquired First Water Ltd for £15.3m and Scapa board expect this acquisition to be earnings enhancing within the first year of operation.

Date Company Status Mid Price Target 1 Target 2 Target 3 Target 4
17/03/2015 Scapa Initial write up £1.47 £1.60 £1.74 £2.06 £2.60

Pre-tax profits released for the six months to 30 September were reported on 25 November 2014 to have risen £6.2m from £5.8m, a healthy 6.9% increase, on revenues that rose 2.8% to £114.7m, which greater efficacies of operations are being deployed to good effect.

Scapa board have been showing confidence lately with 3 directors picking up an accumulated 72,000 shares, albeit 42,000 of those were through an exercising of options which were kept.

Statements from Scapa are also encouraging with expectation that earnings are ahead of expectations which should make the release of full year results interesting at end of May.

Technically, owning these shares from March has proved beneficial in all years from 2008, with 3 of those years (2009 – 2011) returning just shy of doubling each year. Stripping out those exceptional years the average return between March and peak on route to September from 2012 is still an impressive 38% (assuming perfect timing troughs to peaks).

Scapa certainly have carved out a niche market place and with directors making positive noises backed up with real buying it seems Scapa will be making better profits stick, which bodes well for a repeat performance of share price enhancement this year.

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