Companies: CSG    GSH    INSP    MAYG    MER   

Support services isn’t the sexiest of sectors, but it does boast a slew of quality ventures with burgeoning order books, among them May Gurney (see Company Profile, page 10), which has forward orders in excess of £1 billion.

My attentions were recently drawn to GSH – worth £106 million at 490p after a strong share price turn – a player in the growing facilities and energy management space with clients including National Australia Bank and AstraZeneca. GSH scored a 22 per cent profits push to £8.2 million last year, paid out a total dividend of 8.8p and finished the year with £12 million cash.

Moreover, its order book blossomed by £77 million to a record £609 million, of which £150 million is secured for the current financial year. If you are looking for a play on the growing facilities management market, in which increasing sophistication and rising levels of red tape are squeezing out cowboy operators and a growing awareness of energy management issues is a marked feature, look no further. The GSH order book is worth around four times last year’s sales and the historic price-to-earnings (p/e) ratio of 16 is not unduly demanding.

Security in social housing
Social and affordable housing maintenance is an area in which quality players are banking terrific order visibility. Inspace, unloved at 110.5p, substantially south of its 197p 52-week peak, looks oversold. The company will be a major beneficiary of Government commitments to build three million new homes by 2020.

Half-time figures to June were boosted by last year’s transformational Widacre acquisition, with revenues rising more than 120 per cent to £139.9 million and operating profits up 80 per cent-plus to £6.6 million. Secured orders and framework deals stood at £1.3 billion at the half year.

Also marked lower recently is original AIM social housing star Mears. The legendary Bob Holt has put the company ‘back at the cutting edge’ of the social housing sector, having gone back to a more selective approach to bidding.

Mears signalled further improvement in earnings visibility at the interim stage, reporting its biggest increase in the order book (worth £1.24 billion) since the first half of 2005. Since then, Mears, whose shares are priced at 270p giving the company a £197 million market capitalisation, has cheered followers with the news of an £89 million partnering deal in the North East – its second sizeable deal in a matter of weeks – putting it back on track to exceed its target for new contract wins in 2007.

Forecasts for 2007 point to profits of £16.9 million and 16.3p of earnings ahead of £19.6 million and 18.3p the following year, placing Mears on a p/e of less than 17 times, falling to 15 times for 2008. Long-term upside looks assured.

Sweett earnings security
I urge you to check the credentials of recent debutante Cyril Sweett, a construction and property consultancy that provides quantity surveying and project management services in the UK, Europe, India and the Middle East.

Having raised £8.4 million of new money at 110p in October, the company has just announced strong maiden interim results revealing 23 per cent growth in both sales and profits to £29.3 million and £2.5 million respectively. Buoyant trading across its markets adds to Cyril’s appeal. Of particular interest was an increase in its order book to a healthy £67 million, with orders stretching to 2013, reflecting the strength of its long-term relationships with customers.

More than 70 per cent of its new orders came from existing framework deals or repeat customers. Furthermore, that order book prudently includes ‘secured workload’ only, suggesting a considerable pipeline of further work to come. With Cyril trading at just above its placing price, now is the time to pounce.