Boxing clever

THE INVESTMENT COLUMN

Making the metal boxes that house mobile phone base stations is hardly the sort of business to make the heart pound, but Rainford - Europe's leading manufacturer - deserves more than a cursory glance.

Having started up in 1971 with £1,500 raised from the sale of his house, founder and chairman Barry Houghton is bringing the company to the stock market with a price tag of £64m. Family trusts will control 47 per cent of the shares after the float.

He has a good story to tell. Rainford's cabinets and the attendant wiring and assemblies for the transmission of digital voice data have become crucial to the rapid roll-out of the current second generation of mobile telephone networks.

Piggy-backing on Nokia's contract to build Hutchison Telecom's Orange network in the UK has led to exponential growth over the past four years. Profits of just £325,000 in 1991-92, struck on sales of £8.82m, have soared to an estimated £5.25m in the latest year.

Rainford also works for One-2-One, the Mercury mobile telephone subsidiary, and for cable TV telecoms suppliers like Ericsson and GPT. It has won work for the roll-out of digital networks in Germany and France and has just started shipments to the United States, Italy and Malaysia.

On forecast profits of around £7.7m for the current year, the 270p placing price puts the shares on a prospective multiple of around 13.5. There are plainly risks in the reliance on Nokia, but the shares look good value none the less.