Pilkington makes breakthrough

A WEIGHTY piece of research from stockbroker Societe Generale Strauss Turnbull states that Pilkington, the glass manufacturer, has changed dramatically over the past year, and the shares are undervalued. A sleeping giant, it says, is finally awakening.

One of the significant changes it highlights is Pilkington's move into developing markets. It is constructing or acquiring plants in Brazil, Argentina, Chile, Poland and China, which will leave it with over a quarter of its production coming from emerging markets.

Analyst Howard Proctor also highlights the retirement of chairman Sir Anthony Pilkington, bringing to an end five generations of family involvement. His replacement, Nigel Rudd, will bring a further dynamism to play. The shares, at 193p, are attractive for long-term investors, while there is scope for continuing dividend growth.

INVESTORS lucky enough to buy into Zotefoams when it floated at 145p in March have had an extraordinary ride. The former BP subsidiary, bought out from its parent three years ago, now stands at 263p.

With that sort of gain, the results announced by the company last week are probably not enough to ensure continuing institutional support. The foam-maker made pre-tax profits of pounds 3.5m, up from pounds 2.39m. Despite this healthy growth, a current price/earnings ratio of 26 suggests the shares are ripe for profit-taking. Sell now, while good profits are still to be had.

RESULTS from Royal Insurance (348p) shone in comparison with mixed figures from its peers, after it announced record interim profits - pre-tax up 26 per cent to pounds 241m - suggesting every chance of a swollen final dividend. According to calculations by broker BZW, a projected net asset value of 388p by the year-end means the shares are still cheap on this basis alone. On a strong US earnings bounce, it says, they look even cheaper. Buy.

BESPAK, a maker of medical devices such as drug inhalers and tools for keyhole surgery, has attracted positive notices for its new dry-powder inhaler, developed especially for Glaxo. The gizmo allows a more accurate dosage of particular drugs to be delivered to the patient, in a less wasteful fashion than with previous inhalers.

While the company has been busy gearing up on this product, it should also be helped by an improvement in the US healthcare market, as it comes to terms with President Clinton's reforms, and stocks are wound down.

Disappointing results from the US business should be behind management by now, and the shares, at 333p, have good recovery potential. Buy.

NEXT WEEK it is the turn of the ageing lion Hanson to report its third- quarter figures. They will give the markets important clues as to whether the company is back on song, or if it remains less than the sum of its parts. The remedy for companies like this in the old days was to bid for them and break them up, selling off overvalued assets, and keeping those with strong cashflows.

NatWest Securities forecasts pre-tax profits of pounds 325m for the third quarter, against pounds 282m last year. The market expects little to change the shares' underperformance over the past year or so, however. The bid for Eastern makes sound financial sense, especially for the tax breaks, but is otherwise only more of the same: safe earnings, with some potential of reasonable growth. There is little resemblance to the classic Hanson break-up play of old. Buy for the safe income.

PROFITS warnings are nearly always gruesome affairs, for shareholders and management. Rexam's announcement last week that it was suffering from customer destocking was no exception. Management credibility took a further knock, and although Rexam has issued unduly pessimistic forecasts in the past, this is no consolation for investors, who saw the value of their holdings plummet by almost 20 per cent.

The company meanwhile is taking some long-overdue action to improve customer liaison, and will have to run down its own stocks in turn. The question is, do the shares have scope for some recovery, or do they remain a sell? There will almost certainly be a speculative bounce in the next few weeks, but there is little to suggest the risks have been fully accounted for at 425p. Avoid.

Start your day with The Independent, sign up for daily news emails
ebooks
ebooksA special investigation by Andy McSmith
  • Get to the point
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Ashdown Group: Treasury Assistant - Accounts Assistant - London, Old Street

£24000 - £26000 per annum + benefits : Ashdown Group: A highly successful, glo...

Ashdown Group: Business Analyst - Financial Services - City, London

£50000 - £55000 per annum: Ashdown Group: Business Analyst - Financial Service...

SThree: Trainee Recruitment Consultant

£18000 - £23000 per annum + OTE £45K: SThree: At SThree, we like to be differe...

SThree: Trainee Recruitment Consultant

£20000 - £25000 per annum + competitive: SThree: Did you know? SThree is the o...

Day In a Page

General Election 2015: Chuka Umunna on the benefits of immigration, humility – and his leader Ed Miliband

Chuka Umunna: A virus of racism runs through Ukip

The shadow business secretary on the benefits of immigration, humility – and his leader Ed Miliband
Yemen crisis: This exotic war will soon become Europe's problem

Yemen's exotic war will soon affect Europe

Terrorism and boatloads of desperate migrants will be the outcome of the Saudi air campaign, says Patrick Cockburn
Marginal Streets project aims to document voters in the run-up to the General Election

Marginal Streets project documents voters

Independent photographers Joseph Fox and Orlando Gili are uploading two portraits of constituents to their website for each day of the campaign
Game of Thrones: Visit the real-life kingdom of Westeros to see where violent history ends and telly tourism begins

The real-life kingdom of Westeros

Is there something a little uncomfortable about Game of Thrones shooting in Northern Ireland?
How to survive a social-media mauling, by the tough women of Twitter

How to survive a Twitter mauling

Mary Beard, Caroline Criado-Perez, Louise Mensch, Bunny La Roche and Courtney Barrasford reveal how to trounce the trolls
Gallipoli centenary: At dawn, the young remember the young who perished in one of the First World War's bloodiest battles

At dawn, the young remember the young

A century ago, soldiers of the Empire – many no more than boys – spilt on to Gallipoli’s beaches. On this 100th Anzac Day, there are personal, poetic tributes to their sacrifice
Dissent is slowly building against the billions spent on presidential campaigns – even among politicians themselves

Follow the money as never before

Dissent is slowly building against the billions spent on presidential campaigns – even among politicians themselves, reports Rupert Cornwell
Samuel West interview: The actor and director on austerity, unionisation, and not mentioning his famous parents

Samuel West interview

The actor and director on austerity, unionisation, and not mentioning his famous parents
General Election 2015: Imagine if the leading political parties were fashion labels

Imagine if the leading political parties were fashion labels

Fashion editor, Alexander Fury, on what the leaders' appearances tell us about them
Phumzile Mlambo-Ngcuka: Home can be the unsafest place for women

Phumzile Mlambo-Ngcuka: Home can be the unsafest place for women

The architect of the HeForShe movement and head of UN Women on the world's failure to combat domestic violence
Public relations as 'art'? Surely not

Confessions of a former PR man

The 'art' of public relations is being celebrated by the V&A museum, triggering some happy memories for DJ Taylor
Bill Granger recipes: Our chef succumbs to his sugar cravings with super-luxurious sweet treats

Bill Granger's luxurious sweet treats

Our chef loves to stop for 30 minutes to catch up on the day's gossip, while nibbling on something sweet
London Marathon 2015: Paula Radcliffe and the mother of all goodbyes

The mother of all goodbyes

Paula Radcliffe's farewell to the London Marathon will be a family affair
Everton vs Manchester United: Steven Naismith demands 'better' if Toffees are to upset the odds against United

Steven Naismith: 'We know we must do better'

The Everton forward explains the reasons behind club's decline this season
Arsenal vs Chelsea: Praise to Arsene Wenger for having the courage of his convictions

Michael Calvin's Last Word

Praise to Wenger for having the courage of his convictions