Wyndeham, like rival St Ives, has been investing in new technology to satisfy clients' demands for faster and more flexible print runs. Printing magazines accounts for around 75 per cent of sales, and organic growth here is running at 12 per cent. Four-fifths of mags contracts are repeat business. To remain competitive, the group is investing pounds 11m this year, less than last year's pounds 15m. Gearing has risen from 49 per cent to 58 per cent.
However, Wyndeham's other businesses, which produce promotional brochures and labels for one-cup tea bags, are altogether less sexy. Contracts are erratic and some customers, such as charities, are cutting back ahead of the millennium. Including these businesses, group organic growth was just 3.5 per cent in the period.
Meanwhile, Bryan Bedson, chief executive, says he's eyeing up sizeable acquisitions which will be earnings enhancing from day one. His track record supports the claim.
After last year's hammering, Wyndeham shares have more than doubled as both cyclicals and small-cap stocks have returned to favour. Deutsche Bank has downgraded its pre-tax profits forecast by pounds 1.6m to pounds 14m, giving earnings per share of 22.8p. The shares, down 5p at 312.5p, trade on a forward p/e of 14. That's a premium to the sector which looks unjustified given the sluggishness of a quarter of Wyndeham's business. Sell.