BULL POINTS
• Robust order book and impressive earnings visibility
• Strong presence in regulated industries
• Decent cash pile
• Shares undemandingly rated compared with peers
BEAR POINTS
•Public spending on capital projects could fall
•Road building and rail services operations under pressure
In today's more troubled economic times, it's entirely feasible that government spending on infrastructure projects could be cut back. But May Gurney is focused on maintaining and upgrading services - where spending is far harder to cut - leaving it only marginally exposed to large capital projects. That defensive quality was further bolstered after the group acquired ECT Recycling this summer - it brought several county council contracts with it.
The group's private sector business isn't badly placed, either. It's primarily focused on sectors such as water, gas and telecommunications, where regulatory requirements support continued expenditure.
A trading update earlier this month confirmed that the group remains on target to meet full-year expectations. The update also highlighted the high level of earnings visibility - the group has already booked 90 per cent of forecast revenues for the current financial year. May Gurney has a forward order book that's grown from £1bn in March to £1.25bn.
MAY GURNEY INTEGRATED SERVICES (MAYG) | ||||
|---|---|---|---|---|
| ORD PRICE: | 172p | MARKET VALUE: | £120.8m | |
| TOUCH: | 172-178p | 12-MONTH HIGH/LOW: | 345p | 195p |
| DIVIDEND YIELD: | 3.1% | PE RATIO: | 9 | |
| NET ASSET VALUE: | 94p | NET CASH: | £21m | |
| Year to 31 Mar | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2006 | 365 | 16.7 | 22.5 | nil |
| 2007 | 406 | 15.2 | 17.7 | 3.00 |
| 2008 | 437 | 17.0 | 18.2 | 4.60 |
| 2009* | 493 | 17.8 | 19.0 | 4.80 |
| 2010* | 522 | 19.2 | 20.1 | 5.30 |
| % change | +6 | +8 | +6 | +10 |
Normal market size: 1,100 Market makers: 4 Beta: 0.4 *Altium Securities estimates | ||||
