Questor share tip: Good growth makes Hilton Food Group a hold

The market had anticipated the good numbers released by Hilton Food Group yesterday, as the shares had spiked into the statement.

Hilton Food Group

272½p-10

Questor says HOLD

The company packs and supplies meat for major European supermarket groups such as Tesco, Ahold, Albert Heijn and ICA. It has state-of-the-art facilities in the UK, Ireland, Holland, Sweden and Poland - and Hilton plans to continue to invest in its industry-leading plants and operations.

The group's interim results were excellent, with good growth in Central Europe, where 10pc of sales are generated. Volume growth in the region was 45pc, with sales growing 35pc because of higher raw material prices and a higher proportion of lower-priced pork and minced-meat products.

Products are supplied to Ahold stores in the Czech Republic and Slovakia, to Tesco stores in the Czech Republic, Hungary, Poland and Slovakia and to Rimi stores in Latvia, Lithuania and Estonia,

Hilton began supplies to Estonia earlier this year and it will start shipping to stores in Denmark in the second quarter of next year. Volumes in the rest of Europe grew by 6pc, with sales growth of 3pc.

In the 28 weeks to July 18, turnover rose 5pc to £44.9m and pre-tax profits rose 12pc to £11.5m. Net debt was cut to £16m from £20.6m six months ago. The interim dividend was raised by 8pc to 2.8p, which will be paid on December 3.

The shares are trading on a December 2010 price-earnings multiple of 13.2 times, falling to 11.9 in 2011. They are up 45pc since their recommendation on April 12 last year at 160p, compared with a market up 40pc.

The current yield is 3.6pc, but based on last year's dividend payment of 9.36p, investors who bought in on the initial tip would have locked in a yield of 5.9pc.

However, because of the rating and the recent spike in the shares price, Questor thinks the share price is up with events.