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Speedy Hire looks cheap as recovery delivers

RESULTS: Despite tough market conditions, Speedy Hire's recovery continued to make progress - yet the shares still trade well below net assets.
November 15, 2012

Despite tough market conditions, plant hire company Speedy Hire (SDY) grew half-year underlying pre-tax profit by an impressive 37.5 per cent year-on-year to £6.6m with underlying revenue having risen 6.4 per cent. That reflected decent trading in both the UK and overseas operations and was also helped by a focus on costs.

IC TIP: Buy at 34p

Even though the UK construction market continues to struggle, a focus on core customers in water, waste, energy and transport markets, including work related to London's Crossrail project, helped UK & Ireland revenue rise 4.2 per cent to £160.6m - divisional operating profit rose from £8m to £11.9m. The much smaller international business, meanwhile, benefited from strong sales in the United Arab Emirates, Oman and Egypt - helping revenue there to jump by £3.7m to £8.5m and turning last year's £800,000 operating loss into a £300,000 profit. Speedy also boosted investment in its hire fleet with net capital spending rising from £2.2m to £9m - increasing the value of the group's property plant and equipment to £250.8m.

Broker N+1 Singer expects that progress to continue and forecasts adjusted full-year pre-tax profit of £17m, giving EPS of 2.6p (2012: £12.4m/1.7p), rising to £20.8m and 3.2p, respectively, in 2014.

SPEEDY HIRE (SDY)

ORD PRICE:34pMARKET VALUE:£176m
TOUCH:34-34.25p12-MONTH HIGH:35pLOW: 18.5p
DIVIDEND YIELD:1.4%PE RATIO:26
NET ASSET VALUE:45p*NET DEBT:35%

Half-year to 30 SepTurnover (£m)Pre-tax profit (£m)Earnings per share (p)Dividend per share (p)
2011162-2.3-0.160.20
20121694.70.810.22
% change+5--+10

Ex-div: 2 Jan

Payment: 25 Jan

*Includes intangible assets of £56m, or 11p per share.