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Legend Corporation Limited
ASX code: LGD
Share price: $0.30
Industry: Technology Hardware & Equipment
FY2014 dividend: 1.85c per share (fully franked)
Forecast FY2015 dividend: 2c per share (fully franked)
Legend Corporation Limited (ASX: LGD) is an Australian engineering solutions provider, operating in the electrical, information technology, semiconductor, medical and power utility industries.
LGD was established in Adelaide in 1962 and listed on the ASX in 2004. Today it operates through two core segments; Electrical, Power and Infrastructure and Innovative Electrical Solutions.
The company supplies a large range of hardware and equipment across various industries and is leveraged to both commercial and residential construction activity in Australia. One of LGD’s core brands, Cabac, is a designer, manufacturer and distributor of products to the electrical industry and is a likely beneficiary of the recent upturn in housing construction in key markets.
Recent results for the company have been sound, with LGD delivering profit of $3.4m for the half, up 9 per cent. Each business segment delivered revenue growth, with Electrical, Power and Infrastructure up 3 per cent whilst Electrical Solutions was up 10 per cent.
Management was broadly pleased with the results, despite some competitive pressure and currency headwinds being felt by the business. More specific to the outlook, Managing Director Brad Dowe commented “Despite these challenges, indicators for traditional core markets of residential and commercial construction point towards growth for some years to come.”
The balance sheet remains in reasonably solid financial shape, with a moderate level of gearing. The net debt to equity ratio was broadly flat for the half at 26 per cent. Operating cash flow was healthy for the half at $4.8m, which was up 55 per cent on the prior corresponding period.
Accordingly, LGD management marginally increased the dividend payment concurrent with the first half result announcement, declaring a fully franked interim dividend of 0.75 cents per share.
With keen eye on value, we would demand a reasonably large discount margin of safety when considering the investment merits of a small cap company such as LGD. Our 2014 intrinsic valuation is about 33 cents per share and as such, we would suggest tracking the company more closely should further share price weakness materialise.
For more income hungry investors, a purchase at the current market price would offer a sound fully franked yield of about 6.5 per cent.
This entry was posted on Tuesday, April 1st, 2014 at 1:59 pm and is filed under Dividend Detective, Latest News. You can follow any responses to this entry through the RSS 2.0 feed. Both comments and pings are currently closed.