The growth in revenues and profits is showing through at the delivery solutions specialist DX (Group) (LON:DX.).
The first half trading was strong, some 15% ahead, leaving the group well-positioned for the second half period.
Both divisions, DX Freight and DX Express, contributed to revenue growth and both have improved margins against the same period last year.
The group, which is a well-established provider of a wide range of delivery services to both business and residential addresses across the UK and Ireland, reported operational improvements and price increases boosted margins, while net new business in each division was healthy, with a strong pipeline of opportunities.
It is continuing its depot network expansion, helped by the end period net cash of £36.4m, with its £20m invoice discounting facility undrawn. Four new depots were opened in the first half, with two expected to open in the second half year.
DX now provides one of the widest ranges of overnight delivery services in the market, as well as logistics services. Items that DX transports range from confidential documents and valuable packages to large, awkward-to-handle freight, unsuitable for automated conveyor.
Newly appointed CEO Paul Ibbetson stated that:
“I believe that DX is in a strong position to build on the firm foundations that have been established over the last five years and has further significant growth opportunities ahead of it.”
Analyst Opinion – Target Price of 50p
Analyst Gerald Khoo at Liberum Capital rates the group’s shares as a Buy, assessing a 50p a share target price.
His estimates for the current year to end June are for revenues to increase to £467m (£428m) taking pre-tax profits up to £26.7m (£20.2m), with earnings of 3.3p (2.6p) and a dividend of 1.5p (nil) per share.
For the prospective year he sees £490m sales, £32.4m profits, earnings of 3.8p and a 1.7p dividend per share.
Conclusion – further to rise in price
A year ago, dealings in this group’s shares were suspended and were then requoted last October. Since when they have been down to 21p, before gradually recovering in price to around 30p.
On the basis of Liberum’s estimates they are undervalued and could continue to increase in price ahead of the interim figures due at the end of February.