Investment column: MB earnings hit new high

SOMETIMES BUSINESSES that outwardly appear rather boring provide the best investment returns. In Britain, though there may be no shortage of worthy, stolid - some might say boring - companies to invest in, few have been able to show sales and profit growth in the double digit percentage range year after year. But small-cap business to business publisher Metal Bulletin is an exception.

MB yesterday unveiled its 23rd consecutive half-year earnings increase, a record that extends unbroken back to 1988. Interim pre-tax profit grew 18 per cent to pounds 2.8m, while sales expanded 15 per cent to pounds 12.4m from year earlier levels. The steady performance came despite a year-on-year downturn in circulation and advertising revenue for the company's eponymous semi-weekly flagship magazine. Growing demand for financial information helped MB's series of titles catering to hedge funds and derivative markets. A further off-setting factor was the contribution from last year's pounds 8m acquisition of Energy Information Centre.

Yesterday's 47.5p fall in MB's share price to 1750p, reducing its market capitalisation to pounds 186m, reflects concern about the latest, if somewhat deeper than normal, cyclical downturn in the metals sector. During the sector's last downturn in the early 1990s MB still managed to grow earnings. This time round group sales are yet more diversified; meanwhile management has pounds 8m in cash on the balance sheet to make earnings-enhancing bolt-on acquisitions. The group will not rule out a bigger deal if something attractive becomes available at the right price.

The MB success story is, of course, well known in the City, not to mention amongst its media industry peers. Emap continues to retain its 19 per cent stake; institutions have been tucking away shares as MB's founding shareholders have cut their interest by half to around 26 per cent in recent years. Having risen six-fold over the past decade MB shares are fully valued on a prospective p/e of around 40. But the group's steady growth record plus the long-standing attention of Emap make any decline in the stock a long-term buying opportunity.