Astaire Securities found plenty of reason to be bullish about industrial engineering group Hartest (LON:HTH) this morning after the company released preliminary results for the 12 month period ending 31 March 2010. For the year, Hartest posted a 7% rise in group revenues to £22 million and swung back to a profit, reporting a profit before tax of £1 million compared to a loss of £0.86 million in 2009. The company also restored its dividend, proposing a payout of 4 pence per share.
Astaire is forecasting continued growth from the engineering group, expecting turnover to increase to £26 million in FY 2011 and £28.5 million in FY 2012 which will boost adjusted pre-tax profits £1.7 million and £2 million in 2011 and 2012 respectively. Based on Astaire’s forecasts, Hartest is trading on 2011 Profit to Earnings (P/E) of just 6.1, and 2012 P/E of 5.3. After today’s announcement of a reinstated dividend, the company is also yielding a healthy 4.8%, which prompted Astaire to place a ‘buy’ rating on the shares, noting their ‘good value’.
Analysts at Astaire also liked the look of TV shopping business Ideal Shopping Direct (LON:IDS) after paying a visit to the company’s headquarters in Peterborough last Thursday. The analyst visit was following up from a trading statement released by the company on Tuesday when it upgraded its full year outlook, forecasting profit before tax to come in between £5.1 million and £5.4 million. Astaire said it was impressed by the turnaround of the business, and noted that a 12.5 times consensus earnings was ‘not unreasonable’ considering the strong trading and strong balance sheet.
While not placing any recommendation on cleantech company TEG (LON:TEG), Astaire said this morning’s contract with May Gurney was a ‘particularly good contract’ for the company. TEG’s contract will see it process food waste collected by May Gurney under its Bridgend Council contract. TEG is developing a food waste processing facility at Stormy Down near Bridgend. The contact with May Gurney is expected to generate revnues of £0.5 to £0.8 million over three years.
“May Gurney is a serious contender in the waste collection and recycling space having won a number of new contracts in the last year. Environmental services is an important and growing part of its business and TEG can only benefit from the association.”
Despite posting a larger loss than forecast, Daniel Stewart maintained its 20 pence price target and ‘buy’ stance on Akers Biosciences (LON:AKR). The company reported a 68% increase in unit sales of its PIFE Heparin/PF4 Rapid Assays which can detect is a patient being treated with Heparin may develop Heparin-Induced Thrombocytopenia. Heparin is prescribed to 12 million patients each year in the United States. The company also reported a 10% increase in sales of its Breath Alcohol Detector units.
The increase in unit sales lifted revenues to $1.8 million, which was in line with Daniel Stewart’s forecasts, however, the company reported lower margins that had been expected, which results in a loss of $2.3 million against Daniel Stewart’s forecast of a loss of $0.9 million. Despite the weaker margins, analysts at Daniel Stewart argued that the company’s $2.6 million in cash and cash equivalents and earnings potential were the key to their valuation.
Daniel Stewart also maintained its ‘buy’ stance on RM PLC, which is hosting a site visit for analysts today. The broker noted RM PLC’s statement that it has the ‘skills to respond to any shift in emphasis away from the Labour sponsored Building Schools for the Future’ program. Daniel Stewart’s analysts are awaiting further details from the new government about where it will cut public spending.