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) |
|---|---|---|---|---|
| 2010 | 80 | 9.43 | 15.8 | nil |
| 2011 | 112 | 6.22 | 8.5 | 2.4 |
| % change | +40 | -34 | -46 | – |
|
Ex-div: 7 Sep Payment: 7 Oct |
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IC View:
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
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