WS Atkins (ATK), the 14th largest global design company in the world, may be seeing the first sign of an upturn, judging by the fact that it has increased its annual intake of graduate trainees in Britain for the latest financial year, to 330 from 250. The underlying assumption, naturally, is that projects such as HS2 and Crossrail will generate more than enough work to keep them busy. Just as important, it has disposed of underperforming assets in both the UK and the US, which should feed through into improved margins this year.
The company targets margins for each division of 8 per cent. In parallel, the firm is centering its attention on the most profitable markets in the Middle East and the potential exists for work in helping China’s urbanisation programme. In anticipation of all of the above, however, shares have had a good run already, and are now selling on over 15 times’ earnings. That suggests further progress may be limited. ‘Hold’ says The Times’ Tempus.
Industrial parts distributor Brammer (BRAM) tends to be overlooked by investors given its exposure to European industry. However, its investment case has its merits. For one its products all have one very useful common denominator: all those ball bearings, gearboxes and tools move a lot and wear out with use. Translated into simple terms that means one thing above all else – recurring revenues. As well, its business is actually quite fairly split in its exposure, serving quite different sectors, providing a measure of diversification.
Proof of just how well the company is doing is the fact that it has maintained or increased dividends during the past decade. Furthermore, the fresh capital which it is about to raise from shareholders will allow it to continue expanding. Even so, despite its excellent growth prospects in Europe its stock is trading at 18 times’ forward earnings and 12-year highs. “One to watch but a hold for now,” says The Daily Telegraph’s Questor team.
BUSINESS PRESS HEADLINES:
Royal Bank of Scotland (RBS) secured a landmark deal with the European Union last night which paves the way for it to eventually begin repaying dividends to shareholders. Under the EU ruling, RBS will pay the UK government £320m in the next 45 days and the remaining £1.18bn over a period of time, allowing the Treasury’s golden share to beretired. - The Scotsman
The future of the Co-operative Group was thrown further into confusion last night after one of its most senior board members resigned. The departure of Lord Myners, the former City minister, from the mutual organisation comes after days of heavy criticism over his plans for reform. Midcounties, Britain’s largest independent co-operative society, voted unanimously this week not to support the changes. – The Times
The first hard evidence has emerged that sales of annuities have slumped in the three weeks since George Osborne announced his seismic reform to pensions. Just Retirement, a specialist annuity provider, reported that the shock Budget measure “has had a material effect on individually underwritten annuity volumes” and warned that it would not meet the sales growth target of 7% for its full year that had been flagged in February. – The Times
The Eurozone debt crisis is deepening and threatens to re-erupt on a larger scale when the liquidity cycle turns, a leading panel of economists warned in a clash of views with German officials in Berlin. "Debts above 130 per cent of GDP for Italy and 170 per cent for Greece are a recipe for disaster once we go into the next downturn," said Professor Charles Wyplosz, from Geneva University. - The Daily Telegraph
Britain's property market recorded the highest level of sales in more six years over the first three months of this year – but the surge came with a health warning from the Royal Institution of Chartered Surveyors (Rics). Surveyors sold an average of 22.7 homes each in the three months to March – the highest number since February 2008 – with strength in the market spread throughout the UK, according to the Rics. – The Guardian
