Sprue Aegis (LON:SPRP)

  • Share Price 215p  (up so far today 10.2%)
  • Market Cap  £101.7 million             
  • Enterprise Value  £85.4 million
  • Bid/Offer      210p - 220p                   
  • Normal Market Size  1,500 shares



Sprue Aegis happens to represent one of my better knife catching moments.  Everything simultaneously went wrong for the company.  Sales had peaked in one of their major markets, they had, distribution issues and who could forget the battery fiasco?  The stock price nose-dived in a straight swoop as the controversy played out in the media.  Even now the share price is still a long way short of previous highs.

Previous Comments

About the Company

Sprue Aegis plc is involved in the business of design, sale and marketing of smoke and carbon monoxide detectors and accessories. The range of brands, includes FireAngel, AngelEye, Pace Sensors, First Alert, SONA, BRK and Dicon brands.

Trading Update today  June 15th, 2017

Summary Highlights

  1. Expecting a strong return to profitability in H1 2017 exceeding the good performance in 2nd half of 2106.
  2. Significant improvement in gross margin and a net reduction in overheads.  However, to be fair the comparison with H1 2016 is a bit too easy.
  3. Currency fluctuations aside operating profit will be in line with market expectations. 
  4. The new manufacturing and distribution arrangements are in the company's words transformational which will allow growth to accelerate over the medium term.

Profit Forecasts 

Sprue Aegis bar the one time normally surprises on the upside.  I have pencilled in 11p for the year 31/12/17  with 13.5p for the following year 31/12/18. Recent tragic events will alert authorities for the need to legally insist on better alarm systems not only in the UK but also in Europe as well.  However, the same necessary relevant legislative changes can take years to pass and afterwards to enforce implementation is another matter.


Final Comment

Sprue Aegis is a core holding as I do expect to see many years of growth in earnings.  Operating gearing means any modest increase in revenue sales will drop to the bottom line very quickly. The current high p/e reflects the optimism that earnings per share will be closer to 20p by 31/12/19, with the company having effectively doubled earnings per share over 3 years. 

Forecasts depend on the continued success in the German market with multiple smoke alarm sales (4-5) expected for each German home.  …

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