04/11/2008
Suffering in line with a general derating of the oil services sector and concerns about debt, AIM-listed energy support services counter Cape’s current discounted rating is too great. So argues Numis’s Francesca Raleigh, urging clients to buy at 86p. Based on her forecasts for December 2008 – pre-tax profits to grow from £33.7 million to £46.7 million and earnings from 24.1p to 28.6p – Cape trades on a p/e of three times, versus seven to ten times for quoted peers.
Welcoming the recent clarification of Cape’s debt position – net debt at the end of September was £175 million versus £199 million in June and will reduce to between £160 and £165 million by year-end – Raleigh has set a 132p target price for this house client.
Connaught’s profits jump
She also warmed to final results from FTSE 250-traded integrated services group Connaught, which revealed a strong jump in adjusted pre-tax profits from £17.8 million to £30.7 million and in earnings by the best part of 50 per cent to 17.5p. She expects £42.5 million pre-tax and EPS of 23.2p from Connaught for the year to August 2009.
Growing organically, expanding margins and swelling its order book, Connaught, the broker believes, offers exposure to largely non-discretionary spend and should deliver high-quality earnings growth for many years to come. Urging clients to ‘add’ and with a 417p target, Raleigh reckons the 374p shares ‘are a good haven in a downturn’.
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| AIM | £136.6m |
127.00p
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3.00p
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