The Investment Column: Hammerson offers a safe haven

Chaucer tells a good tale but hold for the full story - Profitable Bodycote is looking good value

Hammerson was the company which called the turn in the West End of London property market last year, and it was doing something similar for the City yesterday. Hardly a ringing endorsement, but its chief executive John Richards said he saw "room for recovery" in the UK's financial capital.

Hammerson was the company which called the turn in the West End of London property market last year, and it was doing something similar for the City yesterday. Hardly a ringing endorsement, but its chief executive John Richards said he saw "room for recovery" in the UK's financial capital.

The first signs are likely to be a reduction in the rent-free periods offered to tenants, he predicted, with rents not starting to shift higher until next year. So far, he has been proved right about the West End, where rents are up by between 5 and 10 per cent in the first half.

The property group placed its own bet on the City market with the £68m purchase of the old Stock Exchange building. Mr Richards expects work to start there on a speculative basis in the second half of next year.

Meantime, Hammerson delighted its followers yesterday by unveiling a 5 per cent rise to 844p in underlying net assets per share, the key measure for property companies. Given that net assets have risen steadily during a bloody period for other investments - Hammerson's adjusted nav is now 45 per cent above its position at the end of 1999 - it is little wonder investors are chasing property assets these days.

Some would argue that the investment appetite is not justified by tenant demand, but Mr Richards says that on the whole, the market is pretty balanced.

Hammerson has anticipated the Government's proposals to allow companies to turn themselves into "property investment funds" modelled on US real estate investment trusts. At an initial cost of £70.6m, it has converted its French operations into the new French equivalent. That, plus a near-£900m development programme over the next three years and deferred tax on the balance sheet, means Hammerson expects its annual tax bill to be below 5 per cent annually for the next few years.

With only 31 per cent of the portfolio in offices, Hammerson may not be the ideal property vehicle to capitalise on any revival in this part of market. Still, even with a meagre of yield of 2.4 per cent, the shares - down 2p at 730p - should offer a safe haven.

Chaucer tells a good tale but hold for the full story

Chaucer, a Lloyd's of London insurer, spun the City yet another upbeat tale yesterday, as it revealed a 15 per cent rise in premiums for the first half of the year, adding that prospects continued to look strong for the months ahead.

The news was well received by investors, who have spent the past six months worrying about a long-predicted collapse in premiums, which as yet has not materialised. Indeed, the odds of such a hard landing appear to be diminishing.

While the cost of Hurricane Charley looks to be well within most insurers' budgets - including Chaucer's - it has served the purpose of ensuring that premiums will continue to rise in some US markets next year. Meanwhile, worldwide premiums have been beginning to plateau rather than fall.

Last time this column looked at the shares, in April, they looked a bit expensive at 53.5p. However, having fallen more than 10 per cent since then, and offering a dividend yield of more than 4 per cent, prospects are looking up. While it is hard to advise new investors to be buying in at such a risky stage in the cycle, existing investors should enjoy some recovery in the shares over the coming months. Hold.

Profitable Bodycote is looking good value

Bodycote International, when it was run by John Chesworth in the 1990s, was a proselyte for outsourcing. In Bodycote's case, it was the outsourcing of the specialist process of heat treating metal parts to make them stronger or harder wearing.

Its zeal was blunted by the downturn that has hit the aerospace and power generation industries in the past few years. But under its newish boss from the US, John Hubbard, it has been quietly sorting itself out.

Yesterday's half-year figures, showing underlying profits romping up 25 per cent to £25.5m in the six months to June - about 10 per cent ahead of expectations - seem to have justified Hubbard's decision to launch a £61.9m rights issue in March.

However, since then, the shares have marked time. Yesterday's price of 138.75p (up 0.75p) is little different from the ex-rights price of 138.5p. That seems a little niggardly. The closure of the underperforming electroplating division will eliminate £6m of losses, while margins in the rest of the group are generally moving in the right direction.

The £5.4m exceptional charge in these figures should be the last from the restructuring, which should have left a reasonable platform for growth. Bodycote reckons it has about 8 per cent of a UK market where some three-quarters of the work is done in-house.

Rising energy costsare clearly a worry, but Hubbard reckons the hit would be only £1m in the worst instance. The shares look good value on a prospective price-earnings ratio of 12 and forward yield of 4.4 per cent.

Sport
formula oneLive lap-by-lap coverage of championship decider
News
Boxing promoter Kellie Maloney, formerly known as Frank Maloney, entered the 2014 Celebrity Big Brother house
people
Arts and Entertainment
tvStrictly presenter returns to screens after Halloween accident
News
video
PROMOTED VIDEO
News
peopleFormer civil rights activist who was jailed for smoking crack cocaine has died aged 78
Arts and Entertainment
Jerry Hall (Hand out press photograph provided by jackstanley@theambassadors.com)
theatre
Arts and Entertainment
tv
Arts and Entertainment
Carrie Hope Fletcher
booksFirst video bloggers conquered YouTube. Now they want us to buy their books
Arts and Entertainment
Damien Hirst
artCoalition's anti-culture policy and cuts in local authority spending to blame, says academic
Sport
premier leagueMatch report: Arsenal 1 Man United 2
Arts and Entertainment
Kirk Cameron is begging his Facebook fans to give him positive reviews
film
News
ebooksNow available in paperback
News
i100
Life and Style
Small winemakers say the restriction makes it hard to sell overseas
food + drink
Arts and Entertainment
Jason goes on a special mission for the queen
tvReview: Everyone loves a CGI Cyclops and the BBC's Saturday night charmer is getting epic
Sport
Jonny May scores for England
rugby unionEngland 28 Samoa 9: Wing scores twice to help England record their first win in six
Life and Style
fashionThe Christmas jumper is in fashion, but should you wear your religion on your sleeve?
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Reach Volunteering: Trustee – PR& Marketing, Social Care, Commercial skills

Voluntary Only - Expenses Reimbursed: Reach Volunteering: Age Concern Slough a...

Reach Volunteering: Charity Treasurer

Voluntary Only - Expenses Reimbursed: Reach Volunteering: Crossroads Care is s...

SThree: Trainee Recruitment Consultant - Soho

£20000 - £25000 per annum + OTE £35,000: SThree: We consistently strive to be ...

Ampersand Consulting LLP: Markit EDM (CADIS) Developer

£50000 - £90000 per annum + benefits: Ampersand Consulting LLP: Markit EDM (CA...

Day In a Page

Mau Mau uprising: Kenyans still waiting for justice join class action over Britain's role in the emergency

Kenyans still waiting for justice over Mau Mau uprising

Thousands join class action over Britain's role in the emergency
Isis in Iraq: The trauma of the last six months has overwhelmed the remaining Christians in the country

The last Christians in Iraq

After 2,000 years, a community will try anything – including pretending to convert to Islam – to avoid losing everything, says Patrick Cockburn
Black Friday: Helpful discounts for Christmas shoppers, or cynical marketing by desperate retailers?

Helpful discounts for Christmas shoppers, or cynical marketing by desperate retailers?

Britain braced for Black Friday
Bill Cosby's persona goes from America's dad to date-rape drugs

From America's dad to date-rape drugs

Stories of Bill Cosby's alleged sexual assaults may have circulated widely in Hollywood, but they came as a shock to fans, says Rupert Cornwell
Clare Balding: 'Women's sport is kicking off at last'

Clare Balding: 'Women's sport is kicking off at last'

As fans flock to see England women's Wembley debut against Germany, the TV presenter on an exciting 'sea change'
Oh come, all ye multi-faithful: The Christmas jumper is in fashion, but should you wear your religion on your sleeve?

Oh come, all ye multi-faithful

The Christmas jumper is in fashion, but should you wear your religion on your sleeve?
Dr Charles Heatley: The GP off to do battle in the war against Ebola

The GP off to do battle in the war against Ebola

Dr Charles Heatley on joining the NHS volunteers' team bound for Sierra Leone
Flogging vlogging: First video bloggers conquered YouTube. Now they want us to buy their books

Flogging vlogging

First video bloggers conquered YouTube. Now they want us to buy their books
Saturday Night Live vs The Daily Show: US channels wage comedy star wars

Saturday Night Live vs The Daily Show

US channels wage comedy star wars
When is a wine made in Piedmont not a Piemonte wine? When EU rules make Italian vineyards invisible

When is a wine made in Piedmont not a Piemonte wine?

When EU rules make Italian vineyards invisible
Look what's mushrooming now! Meat-free recipes and food scandals help one growing sector

Look what's mushrooming now!

Meat-free recipes and food scandals help one growing sector
Neil Findlay is more a pink shrimp than a red firebrand

More a pink shrimp than a red firebrand

The vilification of the potential Scottish Labour leader Neil Findlay shows how one-note politics is today, says DJ Taylor
Bill Granger recipes: Tenderstem broccoli omelette; Fried eggs with Mexican-style tomato and chilli sauce; Pan-fried cavolo nero with soft-boiled egg

Oeuf quake

Bill Granger's cracking egg recipes
Terry Venables: Wayne Rooney is roaring again and the world knows that England are back

Terry Venables column

Wayne Rooney is roaring again and the world knows that England are back
Michael Calvin: Abject leadership is allowing football’s age-old sores to fester

Abject leadership is allowing football’s age-old sores to fester

Those at the top are allowing the same issues to go unchallenged, says Michael Calvin