We last covered Hargreaves Services (HSP) in early 2016 during a difficult time for the group. Since then, the company has moved away from coal, taking a more diversified approach to work on services and projects across a range of sectors including energy, infrastructure and property. As part of this, the group set itself a target in April 2016 to raise £60m by selling legacy assets. It’s going well so far, with £25.5m banked and a further £3.2m contracted for sale post period-end.
What's got the analysts excited, however, are its property assets. The group recently carried out its first independent “Red Book” – meaning it adheres to the standards of the Royal Institute of Chartered Surveyors – valuation of the portfolio. The results were good: with a current book value of £31m, the immediate market value of the estate has been estimated at £49m. The total development value is even higher, at £83m. As a percentage of acreage, the portfolio is 56 per cent agricultural grade, 23 per cent energy, 18 per cent commercial/industrial and 2 per cent residential. Management is now looking to begin development, and has received planning permission for Blindwells, a new town site near Edinburgh.
Analysts at N+1 Singer are forecasting adjusted pre-tax profit of £6.7m, giving EPS of 16.6p for the full year to May 2018 (FY2017: £7.7m, 17.9p).
| HARGREAVES SERVICES (HSP) | ||||
| ORD PRICE: | 380p | MARKET VALUE: | £ 121m | |
| TOUCH: | 370-379.8p | 12-MONTH HIGH: | 385p | LOW: 180p |
| DIVIDEND YIELD: | 1.9% | PE RATIO: | 24 | |
| NET ASSET VALUE: | 432p | NET DEBT: | 11% | |
| Year to 31 May | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
| 2013 | 843 | 43.1 | 113 | 20.5 |
| 2014 | 869 | 52.1 | 123 | 25.5 |
| 2015 | 662 | 24.9 | 65.3 | 30.0 |
| 2016 | 341 | -10.6 | -33.0 | 2.3 |
| 2017 | 343 | 4.1 | 16.1 | 7.2 |
| % change | +1 | - | - | +213 |
| Ex-div: | 21 Sep | |||
| Payment: | 20 Oct |
