A drop in demand for chemicals at the end of 2011 was bad news for logistics company
A year has passed since Sinotrans bought over a third of the company yet there have been few signs of tangible progress. True, the Chinese money used to pay down debt cut finance costs by a further £1.3m, but underlying operating profit still fell 11 per cent to £6.5m overall, dragged down by a 33 per cent drop in liquid bulk profits and an extra £800,000 spent on growing its fleet and having equipment in the wrong place.
Turning a "significant number of business opportunities" with Sinotrans into firm contracts to diversify away from chemicals is crucial. An event in China this month could drum up business on the dry bulk side. Here, a weak European polymer sector during the first quarter was more than offset by 24 per cent growth in food transport and temporary storage, and a new 10-year deal to run a terminal in Tomsk for Russian petrochemicals giant Sibur will kick in this year.
|ORD PRICE:||6.13p||MARKET VALUE:||£28.7m|
|TOUCH:||5.75-6.5p||12-MONTH HIGH:||8.75p||Low: 6p|
|DIVIDEND YIELD:||nil||PE RATIO:||6|
|NET ASSET VALUE:||18p*||NET DEBT:||92%|
|Half-year to 31 Mar||Turnover (£m)||Pre-tax profit (£m)||Earnings per share (p)||Dividend per share (p)|
*Includes intangible assets of £126m, or 27p a share
Interbulk should do well once Sinotrans starts putting business its way. Until then, economic and political concerns in Europe and the risk of further volatility in the chemicals industry mean the shares rate a hold.
Last IC view: Buy, 6.75p, 21 Dec 2011