Peter Gyllenhammar has taken a stake in Pressure Technologies (LON: PRES) following the share price slump after last week’s trading statement.
Premier Miton more than halved its stake in Pressure Technologies from 9.99% to 4.59% – Miton UK MicroCap Trust has cut its stake in to 2.29% and this was being reduced before the trading statement. Rockwood Strategic, which moved from AIM to the Main Market last week, holds 13.8%.
Pressure Technologies had a disappointing second half. There will be a full year loss and the engineering company will also breach covenants on its bank facility. More cash is required.
Net debt was £5.4m at the interim stage and it could be £3.9m at year-end. The finance could come from a share issue or a convertible issue or another form of funding. Management is talking to Lloyds about the bank facility.
Supply chain and manufacturing problems hampered progress with defence contracts, while oil and gas companies delayed orders. On top of this costs have been rising.
Demand for the Chesterfield Special Cylinders remains strong with potential from the hydrogen sector. Precision Machined Components should benefit from a recovery in oil and gas demand.
Management believes that Pressure Technologies can return to profit in 2022-23 on the back of improving order levels. VSA forecasts a 2022-23 pre-tax profit of £200,000, recovering to £1.7m the following year.
Forecast net assets are £15.4m, including the company’s main factory. The share price has fallen from 63p to 27p since the trading statement. That values Pressure Technologies at £8.5m, which is low considering the asset backing. However, the concerns about cash are likely to hold back the share price in the short-term.
