Derek Pain: Fuel transport group is rewarded for its faith in the long haul
No Pain, No Gain
Saturday 05 March 2011
Hargreaves Services is one of my more successful investments. Progress has not been sensational; indeed some shares have made far more headway. Even so, a surge from 417p to a 985p peak since I recruited the shares to the No Pain, No Gain portfolio four years ago is a highly acceptable performance. Last week the fuel-to-transport group emphasised its strength. Interim underlying operating profits emerged 13.3 per cent higher at £20.9m with the pre-tax figure at £16.1m, a gain of 9.6 per cent. And there seems little doubt that the group will hit City forecasts of around £40m for the full year. The interim dividend, at 5.1p a share, is hoisted 15.9 per cent. No surprise then when the group says it "is expecting a strong second- half performance".
It has probably not benefited quite as much as some expected from the upsurge in coal and coke prices. The main reason is its policy of long-term fixed- price deals. But these contracts expire in the next 30 months and when renewed will reflect current prices, adding a possible £10m to group profits.
Hargreaves arrived on the stock market in November 2005. The shares were placed at 243p, capitalising the group – started 11 years earlier with 20 coal haulage lorries – at £57.5m. Current valuation is £264.1m. Since 1994 the group has spread far and wide. It now has interests in Europe, a big influence in the interim profit advance, and is building a presence in Asia. The 20-strong fleet has grown into a leading UK transport operation and its energy and commodities division – the largest profit contributor – provides a range of fuels, traditional and renewable.
Coal is mined at Maltby in South Yorkshire, with its production going towards making coke that is subsequently shipped to countries such as Finland and South Africa. The Maltby mine has presented a few problems, although overall production profits increased in the half year. Hargreaves is nursing hopes of lifting coal output by nearly seven million tonnes over six years through a development awaiting planning approval in Wales. Despite the emotional dialogue of the more vocal environmentalists, it remains convinced coal has a rewarding long-term future.
The shares have progressed, particularly in the past nine months, but are still reasonably priced, at around 9.3 times anticipated earning. Stockbroker Panmure Gordon has again revised its target price. A few months ago it was shooting for 910p; then it moved to 1,011p before settling for 1,154p.
From one of the longest serving portfolio members to one of the shortest – Avation, a January recruit. The aircraft-leasing business, which moved from the fringe Plus market to full London listing last year, is now thinking of obtaining a share presence in Australia. Such a development would make sense as it has close links with a "Down Under" airline, Skywest. The group is planning a significant expansion of its squadron with up to 18 new aircraft scheduled to feature with Skywest and another Australian airline, Virgin Blue.
Avation needs to raise cash. It feels a dual presence on the London Stock Exchange and the Australian Securities Exchange (ASX) will help. It is also exploring other funding avenues, including assistance from aircraft manufacturers. Still, it is pretty clear Avation intends to tap shareholders. I hope it will not indulge in one of those private placings that exclude most investors on the share register. I would suggest a straightforward rights issue. If it does adopt the placing method it should ensure it is accompanied by an open offer allowing all to participate.
The shares, helped by the proposed expansion, have flown high since arriving among fully listed stocks – from 58p to just over 100p. They joined Plus five years ago at 4p, after Skywest, which is traded on AIM, allowed its leasing side to go its own way. Interim figures last month were encouraging, up 82 per cent, and researcher GE&CR forecasts year's profits of £5.58m against £3.55m and lifted its target price to 172p.
Fuel poverty could kill 100,000 vulnerable people over the next 15 years, charity warns
Phoenix Life: Chance of a refund for overcharged policyholders has risen
Simon Read: You're guilty until proven innocent when HMRC sends in the tax credit detectives
Simon Read: That's right, BT, they'd rather pay for a free service
Bank-beating exchange rates on your international payments
- 1 Forget 'The Dress': Here are five of the biggest news stories you might have missed
- 2 The black and blue dress: Makers considering a white and gold version
- 3 Prince Harry leaving the armed forced to pursue conservation projects in Africa
- 4 PornHub turns masturbation into energy in bid to save the planet
- 5 The remarkable archaeological underwater discovery that could open up a new chapter in the study of European and British prehistory
New theory could prove how life began and disprove God
Half of Ukip voters say they are prejudiced against people of other races
'Cash for access' scandal: Sir Malcolm Rifkind says 'unrealistic' for MPs to live on £67,000 salary
This is what it's like to be dead, according to a guy who died for a bit
'Jihadi John': CAGE representative storms off Sky News accusing Kay Burley of Islamophobia
Aqsa Mahmood branded a 'disgrace' by her parents after claims she recruited three UK girls flying to Middle East
iJobs Money & Business
£40000 - £50000 per annum + pro rata: SThree: SThree Group have been well esta...
£30000 - £37000 per annum: Recruitment Genius: Established in 1999, a highly r...
£250-£300 Day Rate: Jemma Gent: Are you a qualified accountant with strong exp...
£230 - £260 Day Rate: Jemma Gent: Do you want to stamp your footprint in histo...
Day In a Page
This six-bedroom Georgian home is on three floors with open fireplaces, a two-oven Aga, an annexe, and cottage gardens with outbuildings and a car barn
High Crest House covers an impressive 9384sq ft, with almost three acres of grounds including a tennis court and summer house enclosed by electric gates
A six-bedroom farmhouse with separate accommodation in converted stables. Situated in the village of Church Aston, within walking distance to the market town
A two-bedroom flat with under-heated walnut floors and bespoke built-in storage. The Tube and Clapham Common are a short stroll away
A refurbished seven-bedroom townhouse with staff quarters, cinema room, superb gym, steam room and plunge pool
A minimnalist four-bedroom home designed to the highest spec, featuring glass walls and a kitchen space lit by a glass roof
Hibernate during winter and make your living during the summer at this busy guesthouse with panoramic sea views, in the village of Lynton
A four-bedroom penthouse next to the Tate with direct views of St Paul's from two floors of luxurious living space
A four-bedroom detached home surrounded by spacious gardens and woodland, close to New Pudsey
An 18th-century, three-bedroom home near Langstone Harbour built from ships beams with vaulted ceilings and wood burning stoves
A five-bedroom semi-detached home with a mix of period and modern features in a popular and convenient location
This five-bedroom red-brick beauty overlooks the village green and sits in just under two acres of land
A three-bedroom villa with self-contained flat, minutes from Lake Windermere
A deceptively spacious, beautifully presented Georgian home with 3000sq ft of living space and five reception rooms
A five-bedroom Victorian home with four receptions, superb gardens and paddock in Pembury
An eight-bedroom house on the south side of the The Green with cinema, wine cellars and summer house
This 17th century beauty is full of rustic cosiness, while the detached home office means you can also run a business
Four exclusive apartments in a Grade II-listed former medical school with 2,275 sq ft of living space and 18ft ceilings
A five-bedroom terraced house on the popular Peterborough Estate, ideally located for both Eel Brook Common and South Park
A state-of-the-art farm-building conversion on the former Cliveden Estate, with 11,420sq ft of internal space, cinema and wine cellar
A three-bedroom, 15th-century cottage with original features in the picturesque village of Sissinghurst
A six-bedroom terraced house with large south-facing roof terrace, cinema room and wine cellar
A new seven-bedroom home built in Queen Anne-style with swimming pool and parkland views in Mortimer
A listed, four-bedroom farmhouse in the rural hamlet of Rushall with detached barn, four acres of gardens and paddocks
A first-floor flat with two bedrooms, a spacious reception room and communal grounds in a leafy part of London
A three-bedroom flat with a spacious rootop terrace and balcony, accessed from a private gated courtyard
A Grade II-listed pile with six bedrooms, stables and 39 acres of grounds in Standlake
A two-bedroom flat with boutique hotel-style interiors, close to the foodie haunt of West End Lane
A two-bedroom flat in a beautiful old vicarage, with many original features, close to the city centre
A three-bedroom 16th-century home with an aga kitchen, private gardens and heated outdoor pool, in Hadleigh
A three-bedrom home in sought-after Queen's Gate Mews, with Italian marble-finished bathrooms
Surrounded by glorious countryside in the village of Udimore, sits this impressive four-kiln oast and barn conversion
A five-bedroom house in the picturesque village of Kettlewell, north Yorkshire
An 18th-century former coaching inn with original staircase, open fireplaces and beams throughout
A Grade II-listed Georgian town house with three bedrooms and a south-facing courtyard, near Arundel Castle
Feel on top of the world at this über chic penthouse on the 37th floor of one of Europe’s tallest blocks.
A Grade II-listed Victorian villa with six bedrooms and two further cottages, all with spectacular sea views
A grade II-listed, Georgian cottage with mature 50ft garden, perfect for summer entertaining
A magnificent Georgian pile with turrets, seven bedrooms, a heated pool and four acres of gardens
Fairoak Farm has five bedroom suites, gym, outdoor swimming pool and golf course
Chic two-bedroom river-fronted flat with a private lift that delivers you directly to your home
A spectacular seven-bedroom Tudor pile, once owned by Henry VIII, with 18 acres of land
A seven-bedroom Georgian property previously used as a picturesque wedding venue
A split-level flat in a church conversion with two en suite bedrooms and 1,200sq ft of living space
A three-bedroom bungalow situated behind an impressive stone wall, £645,000
Windsor Castle overlooks this three-bedroom Victorian cottage located on one of Windsor's smartest roads