Bottom Line: A healthy surge in profitability

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The Independent Online
ROLF SCHILD may not be a Rothschild, as the kidnappers of his wife and daughter mistakenly thought 14 years ago in Sardinia, but the majority shareholder in Huntleigh Technology is fast becoming a rich man. His 56 per cent family holding in the company he founded is worth more than pounds 40m. Three years ago it could have fetched only a tenth as much.

The stunning growth in Huntleigh's share price from 100p early in 1990 to a close yesterday of 1070p, up 95p on the session, reflects an impressive run of profits growth. Earnings per share of 0.5p in 1987 grew to 17.4p in 1991. Yesterday the market was taken by surprise when 1992's figure leapt to 40.1p.

Profits before tax of pounds 5.5m were almost pounds 1m more than analysts had expected. Sales from continuing operations were 60 per cent better at pounds 28.4m and the dividend more than doubled from 4.5p to 10p.

The key to Huntleigh's success is that, although small in the context of the world's healthcare industry, it behaves like a much bigger player. It sells its two main product ranges - ultrasonic equipment to measure blood flow and foetal heartbeats, and mattresses designed to prevent bedsores - throughout Europe, the US and even Japan.

So successful has Huntleigh been that it plans to double its productive capacity this year. And there, if anywhere, lies the rub. The sales force doubled last year and is still increasing; expansion will wipe out a cushion of net cash; and growth will inevitably increase the risks.

That said, Kleinwort Benson expects profits to reach pounds 7m this year and pounds 8.8m in 1994. If profits do indeed grow at 25 per cent a year, then a prospective p/e of over 20, while daunting, is likely to be maintained.

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