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Automotive testing firm continues to look very attractive

AB Dynamics (ABDP:AIM) £10.19

Gain to date: 8.6%

Original entry price: Buy at 937.5p, 21 Dec 2017

Automotive testing specialist AB Dynamics (ABDP:AIM) is rewarding our faith with very strong trading. A robust first half period puts the company on course to hit expectations for the August 2018 financial year.

We originally highlighted the company’s potential to benefit from a state of significant change in the automotive industry, led by the electric vehicle revolution. It is clearly seeing strong demand for advanced driving robots and other products, as illustrated by half year pre-tax profit rising by 77.8% to £2.9m and the dividend hiked 10% to 1.465p.

Cantor Fitzgerald analyst Robin Byde has lifted his pre-tax profit forecasts by circa 3% each year for the 2018-2020 financial years and by 6% for revenue. The profit growth rate is lower due to Byde’s cautious stance on costs. He continues to assume dividends will increased by 10% each year.

Chief executive Tim Rogers left in February, stepping aside to let someone with more experience of corporate development run the business. His replacement is expected to be announced in the summer.

Byde says: ‘AB Dynamics has a healthy net cash position providing plenty of financial headroom for further product development, organic expansion and acquisitions.’


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