DAVY VIEW

XP Power (XPP) has raised £45m via a 19.99% equity capital increase. This increases revolving credit facility (RCF) covenant headroom for FYDec23, and our new FY24E net debt-to-EBITDA moves back below 2.0x. We expect Malaysia capex can restart, supplying extra manufacturing capacity from 2025. We remove our 20% peer group discount and adjust only our share count and capex forecasts, resulting in our new 12-month price target increasing 31% to 2,550p. This provides scope for the share price to double over the next 12 months. We reiterate our ‘Outperform’ recommendation.