Edison Investment Research Limited
02-Mar-2022 / 07:00 GMT/BST

London, UK, March 2, 2022

XP Power (XPP): focused on efficiency and growth

XP Power experienced another year of strong customer demand, with orders up 33% year-over-year after growing 20% ​​in FY20. FY21 results reflected challenges from component shortages, increased transportation costs and new COVID-19 restrictions, which limited H221 revenues and weighed on gross margin. XP enters FY22 with its strongest order book ever, providing good visibility for the year. The company is focused on strengthening operational and supply chain agility while investing in product development and adding capabilities to support future growth.

Over the past year, stocks have fallen 19% even as our forecasts have risen, reflecting uncertainty around supply chain issues, a shift towards value stocks and concerns over the conflict between Ukraine and Russia. On a FY22 P/E basis, XP trades in line with global power solutions companies and at a discount to UK electronics companies, with a dividend yield at the upper end of the range. fork. The company is generating EBITDA and EBIT margins among the best of the two peer groups and has a record FY22 backlog. In our view, accelerating revenue growth, the successful integration of FuG and de Guth and evidence that supply chain issues are easing will be key drivers for the stock price.

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