Bottom Line: Watch Westland

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The Independent Online
THE ORDERS bonanza awaiting Westland in the second half of the decade makes the shares look tantalisingly under-valued.

Although its order book stands at just under pounds 1.5bn, the worldwide potential for its EH101, the helicopter on which the company's future rests, is estimated at up to 750 aircraft worth pounds 15bn.

The naval variant of the EH101 has already been selected by the Ministry of Defence and Westland is also in the running to provide an Army version. Solid defence orders at home often translate into export orders. Further afield there is enormous civil potential.

It is, however, important to sound a note of caution. Defence and export customers can be a notoriously fickle bunch - witness Canada's decision to abandon its pounds 1.7bn order for the EH101 and the MoD's decision to order a mix of EH101s and Boeing Chinooks as troop carriers rather than opting for Westland alone. Undaunted, Westland shares have been strong performers this past year and at 250p the share price compares with fully diluted earnings of only 11.5p in the year to 1 October.

But if the core order book and future variants live up to their potential then profits could double or even triple later this decade, which makes the rating look less sky-high.

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