Investment summary

XP reported a 10% y-o-y decline in Q1 revenues, in line with our expectations. Stronger order intake in Q1 should support higher Q2 revenues, in line with our forecast for growing orders and revenues through 2012. Consequently we maintain our forecasts. XP also announced a 10p dividend for Q1, up from the 9p paid for Q111. XP continues to deliver on its strategy of growing its in-house design and manufacturing and this will continue to drive margins over the forecast period. With much of the weaker trading environment factored into the share price, we view the stock as undervalued versus peers.

Last updated on 23/04/2012

Industry outlook

The three end-markets supplied by XP are growing at different rates. Healthcare equipment manufacturers are reporting relatively stable bookings and revenue growth, with book-to-bill ratios greater than 1. Technology customers are experiencing weakness after strong growth in 2010/11. The industrial sector recovered later than the technology sector and continues to see stable demand.

Last updated on 23/04/2012