Pressure Technologies - 175p

We highlighted Pressure Technologies as an interesting idea in January and now is a good time to revisit the story.

The Sheffield-based company operates as Chesterfield Special Cylinders and is a well established name in the cylinders and specialised pressure vessel market.

It listed on AIM just over two years ago, which for most companies would have been terrible timing, but investors who participated in the placing at 150p will still be pleased they did so.

Interim results for the six months to March 28, 2009, were released on Monday and these demonstrated decent performance given trading conditions.

Revenue rose from £11.7 million to £12.7m. Profit before tax was unchanged at £2.4m and this translated into basic earnings per share of 15.5p versus 15.0p for the same period last year.

The balance sheet is strong, with no gearing and £6.1m of cash at the bank, which allowed the interim dividend to be increased from 2.0p to 2.2p.

Income seekers may wish to know that the ex-dividend date will be July 8 and the dividend will be paid on August 10.

The order book stood at £21m at the period end versus £18m a year earlier and this means that previous forecasts for the current year remain realistic.

However, competitive pressures in the oil and gas sector mean that the following year could be tough.

Revenues could dip next year but prospects over the medium to long term remain intact.

Ultimately the company could also benefit from the economic downturn as it may be able to make acquisitions at more sensible prices. The long-standing plan has involved using acquisitions to fuel growth.

The share price has dropped back since we previously looked at the company and a weakening near term outlook does justify this.

However, with a healthy cash balance and excellent order book the business remains in good shape.

There may be some challenges in the short term, but Pressure Technologies has planned early for this.

An in-house mergers and acquisitions specialist has been appointed and this should lead to corporate activity in due course.

On balance, the shares continue to look good value and we rate them as a buy, especially for those with a longer term investment horizon.

WARNING: Opinions expressed are the writers’ judgments at the time of writing. The information does not constitute a personal recommendation and readers should seek their own professional advice as to the suitability of the investments.