Investment Column: Mersey Docks thinks long-term

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The Independent Online
THE INFAMOUS strike by 329 dockers has cast a shadow over Mersey Docks' share price for the past few years. But now it has been settled, albeit at a cost of pounds 10m, attention has turned to a port business which has been doing rather well despite the disruption.

Underlying profits rose 10 per cent to pounds 48m thanks to record cargo volumes and a continued improvement in productivity. The shares responded by jumping 24p to 536.5p, a four-year high.

An ambitious pounds 65m capital expansion programme should reap long-term rewards. New roll-on, roll-off and freight facilities and a redevelopment of its vast property holdings are sensible investments, although the expansion will have the effect of dampening short-term earnings growth.

Mersey has deserved its re-rating. Charterhouse Tilney forecasts full- year profits of pounds 46.5m, putting the shares on a prospective p/e ratio of 15, in line with rivals such as AB Ports and Forth Ports.

However, given that port stocks have been treading water for some time now over fears of an economic slowdown and shockwaves from the Far East crisis, Mersey's share price now looks about right.