With yet another set of fantastic results AB Dynamics has become a poster child for AIM and small cap investing in general
A highly supportive market bodes well for the future
AB Dynamics (LON:ABDP), the manufacturer of advanced testing systems to the global automotive sector, has issued yet another set of fantastic interim results.
Our earlier Blog from April 2016 commented how this terrific little business had delivered consistent excellence since arriving on AIM in 2013, highlighting the potential to uncover some brilliant businesses on the junior market if one undertakes the desired research and is prepared to display a bit of patience.
Founded in 1982 as a vehicle engineering consultancy, AB Dynamics is now engaged in the design, manufacture and supply to the global automotive industry of advanced testing and measurement products for vehicle suspension, brakes and steering, both in the laboratory and on the test track. The Group’s customers include the research and development divisions of some of the world’s leading vehicle manufacturers and it is a prime beneficiary of the automotive sector’s evolution to hybrid, electric, Advanced Driver Assistance Systems (“ADAS”) and autonomous vehicle technologies.
The Group arrived on AIM on 22nd May 2013 at a share price of 86p and market capitalisation of only £14m. Since then the share price has since climbed over 2000% with the current market capitalisation touching £400m.
Fundamental started acquiring shares for its AIM for IHT portfolios not long after listing, having visited AB Dynamic’s headquarters in Bradford-on-Avon in 2014.
While the Group has raised some additional capital to support the construction of a new facility, growth otherwise has been entirely organic.
The latest interim results for the six months to 28 February 2019 saw sales climb 69% to £25.8m (98% exports) and profit before tax rise 95% to £6.4m.
AB Dynamics delivered its 1,000th driving robot system in the period and a new product for testing ADAS systems with vulnerable road users continues to gain market traction with additional orders.
A second order was received for a newer advanced Vehicle Driving Simulator (“aVDS”) from Germany following successful delivery of a first aVDS to a customer in China. aVDS is a versatile and innovative driving simulator, capable of accurately representing the smallest changes to a vehicle’s configuration. The potential here looks considerable as the motor industry explores the best route to autonomous driving.
AB Dynamic’s valuation may look rich (current year PER 40x) but it is growing strongly and has a fantastic position in a booming market going through huge change. With planning permission having been received for another new facility due to be completed by 2020, the future looks bright for this delightful business.