When miners need a deep mine shaft they go to specialist digger,
Business can be lumpy, so the absence of any large new contracts and the conversion of £112m of orders into revenue shrunk the order book from £488m at the end of 2010 to £425m, excluding a £22m currency benefit. Still, management is fielding plenty of tender inquiries and requests for quotes; and in India, Russia and the old Soviet Union - away from its core South African business - a big pipeline of possible projects over the next 12-18 months could provide rich pickings.
Prior to these results, broker Arbuthnot had forecast 2011 pre-tax profit of £10.2m, giving EPS of 21.9p (£16.7m and 23p in 2010).
|SHAFT SINKERS (SHFT)|
|ORD PRICE:||145p||MARKET VALUE:||£69m|
|TOUCH:||143-148p||12-MONTH HIGH:||199p||Low: 123p|
|DIVIDEND YIELD:||1.7%||PE RATIO:||6|
|NET ASSET VALUE:||102p||NET CASH:||£7.2m|
|Half-year to 30 Jun||Turnover (£m)||Pre-tax profit (£m)||Earnings per share (p)||Dividend per share (p)|
Ex-div: 7 Sep
Payment: 7 Oct
Shaft Sinkers is on track to meet full-year forecasts, has net cash, a big order book and the potential for more sizeable contracts. Meanwhile, its shares, which are above their 124p float price, offer a prospective dividend yield of almost 5 per cent and trade on less than seven times forecast earnings. Good value.
Last IC view: Good value, 185p, 26 April 2011