Huntleigh finds comfort

The Investment Column

Think of a fantastic growth market and the chances are it will not be the sale of mattresses, hospital beds and other low-technology medical equipment. Glamorous it may not be, but those mundane pieces of kit have been a gold mine for Huntleigh Technology, one of the most successful companies on the stock market since its 1985 flotation.

Profits of pounds 12.8m in the year to December were 32 per cent better than in 1994, confirming the continuation of the growth story.

Earnings, up a third to 29.9p, have risen tenfold in as many years, allowing a 33 per cent rise in the dividend for the year to 8p.

The success of Huntleigh, whose products also include Doppler foetal monitors and pressure-relieving devices for reducing the risk of bedsores, stems from its success in tackling overseas markets. Last year 56 per cent of turnover was derived from exports and sales are now made in more than 80 countries.

With markets in areas such as the Far East growing at an impressive lick, that geographical diversity is a real bonus and should pave the way for good growth for years to come. Further reassurance is provided by the very dullness of Huntleigh's products - they are not fashion items and buyers such as hospitals, doctors and nursing homes tend to stick with a product they know and are happy with.

The key for investors, who have seen their shares grow from just 17p in 1988 to 888p yesterday, up a dramatic 75p on the day, is just how much of the good news is in the price, especially as brokers' forecasts suggest that the growth rate of 30 per cent a year over the past decade is set to slip to a more modest, although still impressive, 20 per cent from now on.

On the basis of house broker Beeson Gregory's forecast profits of pounds 15.3m this year and pounds 18.4m in 1997, the shares now stand on a prospective price/earnings ratio of 25 falling to 21. With such an impeccable track record, that is almost an acceptable level but there really is little scope for any disappointment from the company. High enough.

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