The Investment column: Hampson

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The Independent Online
LIKE TT, Hampson, the world's largest producer of engine turbo chargers, is in the glass bottling business and taking a hit from the strong pound. However, Hampson is reporting strong orders.

Despite this, the shares are still off last year's high of 83.5p. The shares closed up 3.5p at 61p yesterday, after results showed the breadth of Hampson's capabilities and the quality of its product range are helping it hold its own in tough markets. The group has two problem areas. Precision engineering, less than 25 per cent of operating profits, is struggling in the face of tough European competition and the smaller metals division is suffering from weak scrap copper prices.

Hampson has spent pounds 37m on acquisitions to beef up aerospace in the last two years. Gearing is over 100 per cent and Hampson is expecting to slash its debt this year on the back of higher cashflow. This year, investors should expect to see Hampson reap the rewards of its investment. It is the largest supplier of components to Rolls Royce, which should be upping orders as it concentrates on engines for the Airbus.

Williams de Broe expects pretax profits of pounds 12.5m and earnings of 7.5p per share this year, putting Hampson on a forward p/e of just 8. As one of the few bullish engineering companies, with a record to justify it, the shares should go higher.

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