Companies: SPGH   

Government energy efficiency programmes such as the Carbon Emissions Reduction Target (CERT) are driving the UK insulation market and swelling prospects for Sterling-based Superglass, a leading manufacturer of glass mineral fibre insulation.

Specialising in the retrofit market, the company will be able to produce 70,000 tonnes of the fibre by the end of 2008, having invested £11.8m in its manufacturing facilities since 2003.

Rising red tape is forcing utility companies to improve the quality and quantity of insulation in new builds and retrofits or face hefty fines – effective insulation is the best way to do this. Moreover, the latest efficiency targets for CERT, which came into force on 1 April, are creating significant demand for insulation products.

Interim figures to 29 February revealed a 27% rise in pre-tax profits (adding back amortisation) to £3.3m, ahead of analysts’ numbers, despite a decline in sales to £20.5m (£21.4m), mainly caused by a delay in the beginning of the latest CERT. Investors were treated to a maiden interim dividend of 1.7p, payable from increased earnings of 1.3p (0.3p).

Brewin Dolphin suggests 180p as fair value for the shares, presently trading at 118.5p, following a de-rating of insulation stocks. It says Superglass should outperform other insulation companies, while flagging up its strong domestic growth and experience in export markets. Based on the house broker’s full-year estimated earnings figure of 12p, the shares are trading on a forward multiple of 9.6 and look an attractive investment proposition.

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Superglass Holdings	LSE	£17.24m	29.75p	-0.75p
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Other company articles:
Superglass Holdings			25/11/2008
Superglass			29/04/2008
How to profit from red tape			09/08/2007