Companies: CIU   

Energy sector services counter Cape, reinvigorated by corporate recovery expert Martin May, has clinched a ‘significant’ new contract award on the high profile South Hook Liquefied Natural Gas (LNG) terminal in Milford Haven, South Wales.

Here, one of the largest LNG receiving terminals in the world is under construction – LNG is natural gas cooled and turned into liquid. It occupies six hundred times less space than gas, and can be pumped onto ships and transported across oceans. May, chief executive, says the contract complements other work already won on the site by Cape, including the installation of cryogenically insulated bases of five giant LNG storage tanks. He thinks the South Hook terminal, to be owned and operated by a joint venture between Qatar Petroleum and Exxon Mobil, and readily accessible by large LNG tankers, will have the capacity and facility to meet 20% of the UK’s current gas consumption.

Cape services organisations in the oil & gas, petrochemical and power generation industries in both the UK and the Middle East, and is a specialist provider of scaffolding, insulation, fire protection and also specialist cleaning, a skill set enhanced by recent acquisition DBI, a deal capped at £19.25m that heralded a start to Cape’s M&A ambitions.

Figures for the half to June were very strong, with turnover growing more than 20% to £145.1m, and pre-tax line losses of £3.6m converted into profits of £4.7m. May said the figures were ahead of management’s expectations in buoyant energy-related markets, and also flagged up a number of contracts and renewals.

This year, analysts envisage pre-tax profits of £16.3m, up from last year’s £12.9m, giving earnings of 15.8p, ahead of £20m and 17.8p for December 2007. On forward ratings of 14.5 and 12.9, the shares are worthy of strong consideration.