Join our community of smart investors

Alkane Energy powers up

TIP UPDATE: Recent buy tip Alkane Energy has reported strong interim results with all key financial metrics materially up year-on-year
September 11, 2013

These stellar interim results from Alkane Energy (ALK) are exactly what the market has come to expect from the burgeoning alternative power provider. The newly acquired Maltby coal-mine-methane assets came onstream five weeks ahead of schedule and helped drive substantial increases in nearly all of the company's key financial metrics year-on-year.

IC TIP: Buy at 41.5p

Record revenues were also partly driven by non-recurring growth in Alkane's lower-margin Design, Build and Operate (DBO) division, where the company designs and builds a variety of power plants for third parties. Revenues here totalled £4.7m, up from £0.8m in the same period last year, due to a large one-off contract, and management cautioned this "is not expected to recur in 2014".

Nevertheless, a 44 per cent rise in power output year-on-year to 94GWh and increased demand for standby power response generation bodes well for the years ahead. Alkane's management did not provide any fresh guidance regarding the shale gas potential of its onshore licences, but stated that the company is "continuing our early stage evaluation of our licences and the development options open to us".

Broker VSA Capital kept its full-year EPS forecast unchanged at 2.54p, up from 2.38p in 2012.

ALKANE ENERGY (ALK)

ORD PRICE:41.5pMARKET VALUE:£51.3m
TOUCH:41-42p12-MONTH HIGH:42pLOW: 20p
DIVIDEND YIELD:0.2%PE RATIO:16
NET ASSET VALUE:25pNET DEBT:34%

Half-year to 30 JunTurnover (£m)Pre-tax profit (£m)Earnings per share (p)Dividend per share (p)
20125.30.680.78nil
201311.11.021.05nil
% change+110+50+35-