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Mouchel motors on

Created:
31 March 2008
Updated:
17 July 2008
Written by:
Algy Hall

At 428p, Mouchel's share price performance can hardly be described as stellar since we made the shares a 2008 tip of they year at 436p. Nevertheless, the performance looks impressive compared with the majority of listed engineering consultants, which have been battered due to fears that the credit crunch could lead to big capital projects being delayed or pulled.

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Part of Mouchel’s charm is that its markets do not look at much risk from the crunch, as it focuses on government and regulated industries. The group is also increasingly seen as comparable with the big, highly-rated and defensive business process outsourcing (BPO) players, such as Capita and Serco. Mouchel significantly boosted its presence in this market last August with the £46m acquisition of HBS, which is integrating well. By increasing integration costs from £2.5m to £3m, Mouchel believes that it can boost annual savings from the business by £500,000 to £3m.

The tally of big order wins so far this year has been impressive, and the group's win-rate remains at the top of its targeted level of 33 to 40 per cent. The order book now stands at £2.3bn, while the bid pipeline finished 2007 at £2.1bn.

TIP UPDATE:

Buy

Mouchel's first half results this week marked solid progress, and priced on 17 times Citi’s expected 2008 earnings per share of 25.6p (21p in 2007), which is predicted to rise to 32.7p in 2009, the shares remain a buy.

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