The latest news from LPA Group (87p) is clearly encouraging with two new projects being announced in the last few days.
Last Thursday, the company announced that it had won a significant project award from Siemens Austria for the design and supply of interior and door lighting for the London Underground’s Deep Tube upgrade programme. This will cover lighting systems on 94 newly designed trains for the Piccadilly line although there are options for another 216 trains across other lines.
Yesterday, the company announced a second project award to provide seat automation and lighting and power electronics for the Avelia Horizon high speed trains being built by Alstom in France for SNCF, the French national rail company. The initial order is for 50 double decker train sets with an option for another 50 train sets if needed.
For those new to the company, LPA is a world leader in the design, manufacture and supply of LED lighting, electrical connectors/connector systems and high-performance electrical components. These are supplied to a range of industries including rail, marine, aerospace and industrial markets. In its most recent results, which covered the six months to 31 March. Revenue rose 7% to £10.8m with a modest pre-tax profit of £0.2m being recorded. Clearly, the company has been adversely affected by Covid-19, but we believe that this is reflected in the share price and the long-term nature of the group’s business should mean it is here for the long haul. Apart from the contracts referred to above, the company also announced further orders in July and August.
We believe that the shares should recover to the year’s high point of 116p over time and this would represent growth of over 33% if achieved. We therefore believe the shares are deserving of a BUY rating for those readers looking for an AIM share tip.