Companies: TTG   

Resistor and sensor technology manufacturer TT's shares have risen 62% since our 'Buy' recommendation last September, helped by what might be called a highly progressive dividend policy. Interim results weren't desperately impressive, with profits before tax, amortisation and exceptionals down from £11.3m to £9.1m during the six months to June, on turnover raised 4% to £270.4m (on continuing activities). But executive chairman John Newman is bullish, saying that 'analysts were expecting the low eights (in millions of pounds of profit) and we came with more than nine', adding that 'we are very strongly cash generative'. Gearing is also comfortable at 27%, the interim dividend is to be maintained at 3.69p and Newman is adamant that more acquisitions will follow, saying 'that's our nature'. He adds that 'there is going to be an upturn in telecoms, [a major market for TT] saying that 'it has got to happen' and pointing to improved cashflow in the sector. Automotive sales are also set for further growth. Analysts reckon TT will make around £19.4m pre-tax for the year, producing 9.3p of earnings per share. So the prospective p/e ratio doesn't make the shares look immediately attractive at these levels. However, on a prospective dividend yield of 7.6%, they still look worth holding on to - though investors might consider banking some profits.