Companies: SDY   

Priced north of £12 a share a year ago, shares in the UK’s number one tool hire venture, Speedy Hire, have slid dramatically to just 411.5p in markets gripped by fear and with investors shunning companies with links to construction.

However, Speedy Hire continues to issue upbeat announcements, and a number of trends underpin growth prospects long term. A recent trading update from the company, which hires out everything from tools to portable accommodation and power generation equipment, gave much cause for optimism, despite wider economic uncertainties.

Chairman David Wallis reported an encouraging start to the financial year to March 2009, with Speedy enjoying strong growth across both its tool hire and equipment hire divisions, and achieving a 36.4% year-on-year revenue rise for the first quarter to June.

Reminding the market that Speedy’s direct exposure to the beleaguered housebuilding sector is less than 5% of sales, Wallis also highlighted recent statements from contractors such as Carillion and Balfour Beatty, in which they point out that construction activity is being underpinned by infrastructure-related spend in the public sector and regulated industries such as water, gas, electricity and transport.

Indeed, Speedy Hire scored near 54% growth in first-quarter sales from its top 50 contracting clients, while its longer-term growth prospects are underpinned by a continued trend towards outsourcing and efficiency among its bigger clients.

While Speedy’s net debt of £295m is significant, the company claims plenty of financial headroom, and there is more to come from recent acquisitions, among them 2007’s Hewden Tools takeover and the Amec LSS and CAS acquisitions completed earlier this year.

With analysts forecasting strong profits progression to £62m (2008: £30.5m) this year and EPS of 87p, the shares are trading on a prospective multiple of just 4.7. At current levels, the shares are worth picking up ahead of November’s interim results.

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Speedy Hire	LSE	£170.6m	334.75p	-43.75p
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