The Investment Column: Regus has room to grow, thanks to new focus on Asia

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The Independent Online

Our view: Buy

Share price: 99.5p (- 3p)

The temporary office space group Regus completed its recovery earlier this year when it bought back the 58 per cent of its UK operations that it did not already own for £88m. Yesterday, the company indicated that it has its sights firmly set on expansion and emphasised opportunities in Asia.

Regus wants to spend between £80m and £100m per annum on this and aims to lift the total number of workstations it has across the globe by 50 per cent in this year alone. It plans to do this by opening more Regus business centres and by acquiring rival operations and re-branding them.

In the six months to the end of June, Regus enjoyed a 25 per cent increase in the number of workstations it has available to more than 96,000 while the average revenue it generates per desk, a key measure for the group, rose 12 per cent to £6,200. Overall, its pre-tax profits more than doubled to £31m, from £14m a year earlier. Sales gained 40 per cent to £303m.

Mark Dixon, Regus' chief executive, singled out Asia as a key target market for his company. At present just 7 per cent of its sales come from this part of the world, but it is without doubt the group's fastest-growing prospect.

The office space group nearly went bust in 2002. Back then, its shares traded as low as 5p. Having survived this, it now looks to be in good shape. Of course, it is still dependent on the US and UK economies holding up, although not as much as before. These days they account for just 60 per cent of its revenues.

At 10 times forecast earnings for 2007, Regus shares are worth buying.

Monterrico Metals

Our view: Buy

Share price: 188p (+6.5p)

A wall of worry surrounded the Peru-focused copper miner Monterrico Metals at the start of the summer, and understandably so. A maverick left-winger, from the Hugo Chavez mould, looked poised to win the presidency of the South American country where the Aim-listed group has all its assets.

Ollanta Humala, with the public backing of the radical Venezuelan leader, was busy campaigning for greater state control of Peru's economy and had even hinted at a part-nationalisation of the country's mining companies.

Luckily for Monterrico, Alan Garcia, a moderate left-winger, won May's election. Since coming to power, he has shown himself sensitive to the interests of business, and has been supportive of Monterrico's planned Rio Blanco copper mine, allowing the company to focus fully on getting the mammoth project up and running.

Yesterday, the group posted interim results which, as expected, saw it unveil a small loss. However, of more interest to the City is how Monterrico is getting on with its feasibility study. This will be the master plan for the project, detailing everything from how much it will cost to its environmental and social impact. Monterrico has promised to publish it before the end of the year.

In terms of the group's long-term timetable, the management expect construction of the Rio Blanco mine to start in 2008 and production in early 2010. Current estimates suggest it will cost the group around £550m to get the project to the production stage. For a company of Monterrico's size (£49m at yesterday's close) this looks to be too big a financial burden for it to carry alone. Hence, it is looking for a partner - probably one of the bigger beasts of the mining jungle - to help it shoulder these costs as well as advise on some of the technical aspects of the mine's development.

Monterrico believes Rio Blanco is capable of one day producing 25 million tonnes of copper per year. Achieving such a feat would make it the biggest copper mine in Peru and one of the 10 biggest in the world.

This makes Monterrico's shares worth tucking away, but investors should not expect immediate results. Monterrico is a long-term investment.


Our view: Worth a punt

Share price: 15p (unch)

An update on the progress of Antisoma's AS1402 cancer treatment had no impact on shares of the biotech yesterday. The statement was not bearish. Simply, investors are more interested in the group's lead cancer drug, AS1404.

It is in the end stages of trials. Initial results have been encouraging, showing that the formula is effective in shrinking tumours, and the City expects fuller trial data in the next six months. If all goes to plan, AS1404 could end up as a billion-dollar drug. Given that the biotech is valued at just £55m presently, this would send its shares soaring. However, that is a big if.

Antisoma has disappointed in the past. In 2004 late stage tests of another of its cancer drugs failed. Yet, should the same happen this time around, it has three other drugs to fall back on. There has been a raft of share purchases by the group's directors since July. Antisoma shares are probably worth a punt at current levels, just don't bet the ranch on them.