The Investment Column: Land Securities still offers value

Aggreko powers on thanks to hurricanes; Stud bull good for business as Genus profits rise 35%
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The Property company Land Securities has had a good run over the past 18 months. Since equity markets bottomed out in March of last year, its shares have almost doubled, as the company has benefited from the double whammy of a turnaround in the office rental market and an increased demand for property investment across the board.

The Property company Land Securities has had a good run over the past 18 months. Since equity markets bottomed out in March of last year, its shares have almost doubled, as the company has benefited from the double whammy of a turnaround in the office rental market and an increased demand for property investment across the board.

The sector has also been buoyed by speculation over the positive effects that the Government's proposed Real Estate Investment Trust (REIT) scheme may have on the profits of property companies. While the final details of how the schemes will work have yet to be revealed, the industry widely expects REITs to provide a more tax efficient way of investing in property, which will only put more wind in the sails of the likes of Land Secs.

But with much of the possible potential of REITs already priced in to the shares and demand for property investment finally slowing, how much longer can Francis Salway, who was appointed chief executive in July, continue to deliver such strong returns? While there are one or two threats beginning to emerge on the horizon - notably, concerns about what effects the slowdown in consumer spending will have on high street rents - the answer would seem to be that the party is not over just yet.

With the recovery in the office sector slower than anticipated, there is more upside to be seen from this sector over the coming months. At the same time, Land Secs' market leading property outsourcing business continues to go from strength to strength, with income up almost 70 per cent over the past six months, compared to the same period last year.

Across the group, net asset value per share has increased by 8.4 per cent to 1,443p over the past six months, which is still a significant discount to yesterday's closing price of 1,221p.

With the stock trading at one of the lowest price to earnings ratios in the sector, and boasting one of the highest dividends, Land Secs remains a buy.

Aggreko powers on thanks to hurricanes

Few British companies operate in tougher markets than Aggreko, the temporary power supplier. But it does so rather well.

Thanks to the extraordinarily bad weather, which included hurricanes and ice storms, in the US this year, the company announced yesterday that pre-tax profits for the current year are likely to be nearly 10 per cent higher than previously thought.

Aggreko is sometimes, wrongly, seen as part of the dot.com boom, although it did enjoy high margins and surging demand for its products in 1999, due mainly to Millennium celebrations. But since then, a restructuring of the business in Europe and a glut of competition in the UK and US have conspired to leave the shares languishing at about 35 per cent of their peak value.

The US was showing signs of recovery before the extreme weather conditions in 2004, and so helped the company. The European reorganisation should bear fruit shortly and Aggreko is actively seeking to grow its business in emerging economies.

Considering that the company is only nine months into a two-year restructuring programme, yesterday's announcement should be enough to at least persuade the market that it is on track to deliver.

It is perhaps not for the faint-hearted, as in recent years the surprises have been more on the downside than the upside. But there is enough to interest higher risk investors prepared to take a longer-term view. The stock is a cautious buy.

Stud bull good for business as Genus profits rise 35%

The Recent images of Rebecca Loos, famous for having an affair with David Beckham, pleasuring a pig on television has made the business of animal semen collection a hot topic.

Genus is a leader in the field, mating specially selected sires and bulls to produce superior offspring. Their sperm is frozen and shipped to farmers, who use it to improve their own herd.

This year's biggest stud is Picston Shottle, who is pleasured, albeit by a machine, around 200,000 times a year. Announcing yesterday that half-year profits were up 35 per cent to £4.4m, Genus said Picston's supplies have sold out until April 2005. He promises to be even more prolific than Genus's current all-time hero, Macho Man.

Bovine semen prices have stabilised this year after a period plagued by BSE fears in North America. Genus is also improving its animal pharmaceuticals division, which accounts for nearly half its turnover. Instead of low-margin, high-volume sales to other wholesalers, it is building more direct relationships with vets.

The shares are held back by its shareholder base - an enormous 26,000 individuals. Most are inactive, having inheriting shares from Genus's origins as a co-operative. But the company is promising buy-backs to thin out its shareholder numbers, and so with the semen market bucking up, roll up your sleeves and get stuck in. Buy.

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