Bottom Line: Good signs at Dawson

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The Independent Online
PETER DAWSON, the taciturn chairman of Dawsongroup, is a much wealthier man this morning. Shares in his eponymously named truck and trailer rental business shot up 60p to 303p yesterday after much-better-than-expected profits of pounds 3.6m before tax for the first half of the year.

That values Mr Dawson's 75 per cent stake at about pounds 84m; not to mention the pounds 400,000 or so that will come his way from a doubled interim dividend of 1.5p.

Other investors in Dawsongroup who kept faith when the shares languished as low as 15p have done as well proportionately, albeit not on the same scale.

The rest of us can take comfort from the good auguries for economic recovery inherent in Dawson's own return to rude health. Here the recovery is actually happening.

The company supplies trucks and trailers to as representative a cross-section of UK plc as a statistician could hope for. Its better margins and higher utilisation rates are as good a sign as any that the domestic economy is, literally, moving again and Dawson's short-term rental arm is an early beneficiary. Contract hire will follow.

Dawson is also well placed to squeeze even better returns out of its business, as it has used the recession prudently to refresh its fleet with better-quality, higher-margin vehicles.

Analysts are now expecting profits of up to pounds 7.5m for the full year, and although the company, on a p/e of 19, looks fully valued after yesterday's leap, the scarcity of the shares makes them worth having.

Mr Dawson says he would be happy to dilute his stake at the right price. The fact that he's not taking profits is a fairly good indication that there is mileage in this transport company yet.

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