Investment Column: Aggreko will continue to shine brightly

PartyGaming; Intandem

Our view: Hold

Share price: 1040p (-2p)

All the stars are seemingly aligned for the emergency power group Aggreko. Not only has the company recently made it into the top flight, having been promoted to the FTSE 100 last December, its full-year numbers, published yesterday, show that the group is going from strength to highly charged strength.

Underlying pre-tax profits jumped to £246.5m from £191.6m last year, which was ahead of expectations, while the group gained kudos from helping to power the recent winter Olympics in Vancouver. It will also be responsible for making sure the lights stay on at the forthcoming football World Cup in South Africa. So at least there will be one English team in the final.

While these deals capture headlines, however, it is the broader demand from the emerging markets that is energising the group. Rupert Soames, chief executive, argues that as emerging economies grow, domestic infrastructure will not be able to cope with the extra demand: judging by the company's performance, it is rather difficult to disagree with him.

Investors have had field day with Aggreko in the last 12 months. Not only was there an uplift in the shares when the stock reached the FTSE 100, a string of positive results and statements has sent the shares up by an eye-watering 198 per cent – good job we backed the shares when we looked at Aggreko last April.

We are not going to buy today, however. While we think that Aggreko is a great punt, we would be tempted to take a breather and wait for a little bit of softening. The shares eased 0.19 per cent yesterday, despite the good results and positive noises on the future. They already trade on a fairly spicy 2010 multiple of 16.3 times forecast earnings, according to analysts at Collins Stewart, and while the dividend was increased yesterday, there are still more attractive yields available elsewhere (Aggreko's yield is not much more than 1 per cent). The experts also express concerns that the group may have benefited disproportionately from the relatively weak pound.

We would be happy to recommend Aggreko as a core part of anyone's portfolio, but wait for the shares to soften a little before buying more. Hold.


Our view: Avoid

Share price: 310.1p (+7.1p)

PartyGaming is a remarkably resilient beast given all the legal troubles it has been through and the way it has survived, and even thrived, after being kicked out of the world's biggest poker market – the US, where internet gaming has been left to privately owned operations whose offshore investors feel more comfortable with flouting the country's internet gaming ban than Party's respectable institutional shareholders. Yesterday the company reported trading in line with forecasts, with flat pre-tax profits of $84.6m (from continuing operations), although a settlement with the US authorities over its former US business pushed Party into loss post tax.

Getting into bingo has proved a good idea (the business is storming) and weakness in poker appears to have stabilised. Still, at 16 times Daniel Stewart's forecast 2010 earnings the shares are not cheap, and at 24 times the more sceptical Collins Stewart estimates they look very pricey. M&A speculation has pushed the stock up in recent weeks, together with hopes of favourable regulatory change in Europe. We're not totally negative on Party, but for us there's too much uncertainty to justify the shares' rating. Avoid for now.


Our view: Buy

Share price: 3p (+0.62p)

Butch Cassidy scriptwriter William Goldman has an old adage about film-making that in Hollywood "nobody knows anything" about whether a movie will be a hit. For the AIM-listed producer Intandem Films, it doesn't really matter. A blockbuster is always nice, but it isn't crucial to revenues – the group sorts out financing for projects looking to get off the ground as well as international sales and distribution deals further down the line. The group hedges risk – more than covering its costs with pre-sales while picking up extra bonus commissions on hits.

Intandem failed to deliver a film in the first half, and revenues suffered accordingly. This should change by the end of the year, with potentially five ready, including Blown starring Samuel L Jackson. The group's numbers are moving in the right direction – it slashed pre-tax losses 71 per cent to £179,000 in the first half, and has wiped out its £6m debt pile.

Gary Smith, chief executive, is confident that the current slate will see revenues rolling through the coming year, and at a price of 12 times next year's earnings – according to Growth Equities & Company Research – this looks worth a punt. Buy.

Start your day with The Independent, sign up for daily news emails
election 2015The 10 best quotes of the campaign
A caravan being used as a polling station in Ford near Salisbury, during the 2010 election
election 2015The Independent's guide to get you through polling day
David Blunkett joins the Labour candidate for Redcar Anna Turley on a campaigning visit last month
voicesWhat I learnt from my years in government, by the former Home Secretary David Blunkett
ebooksA celebration of British elections
  • Get to the point
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating

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

iJobs Job Widget
iJobs Money & Business

Ashdown Group: Editor-in-chief - Financial Services - City, London

£60000 - £70000 per annum + benefits : Ashdown Group: A highly successful, glo...

Ashdown Group: Junior Application Support Analyst - Fluent German Speaker

£25000 - £30000 per annum + benefits: Ashdown Group: A global leader operating...

Guru Careers: Management Accountant

£27 - 35k + Bonus + Benefits: Guru Careers: A Management Accountant is needed ...

Guru Careers: Project Manager / Business Analyst

£40-50k + Benefits.: Guru Careers: A Project Manager / Business Analyst is nee...

Day In a Page

General Election 2015: ‘We will not sit down with Nicola Sturgeon’, says Ed Balls

'We will not sit down with Nicola Sturgeon'

In an exclusive interview, Ed Balls says he won't negotiate his first Budget with SNP MPs - even if Labour need their votes to secure its passage
VE Day 70th anniversary: How ordinary Britons celebrated the end of war in Europe

How ordinary Britons celebrated VE Day

Our perception of VE Day usually involves crowds of giddy Britons casting off the shackles of war with gay abandon. The truth was more nuanced
They came in with William Caxton's printing press, but typefaces still matter in the digital age

Typefaces still matter in the digital age

A new typeface once took years to create, now thousands are available at the click of a drop-down menu. So why do most of us still rely on the old classics, asks Meg Carter?
Discovery of 'missing link' between the two main life-forms on Earth could explain evolution of animals, say scientists

'Missing link' between Earth's two life-forms found

New microbial species tells us something about our dark past, say scientists
The Pan Am Experience is a 'flight' back to the 1970s that never takes off - at least, not literally

Pan Am Experience: A 'flight' back to the 70s

Tim Walker checks in and checks out a four-hour journey with a difference
Humans aren't alone in indulging in politics - it's everywhere in the animal world

Humans aren't alone in indulging in politics

Voting, mutual back-scratching, coups and charismatic leaders - it's everywhere in the animal world
Crisp sales are in decline - but this tasty trivia might tempt back the turncoats

Crisp sales are in decline

As a nation we're filling up on popcorn and pitta chips and forsaking their potato-based predecessors
Ronald McDonald the muse? Why Banksy, Ron English and Keith Coventry are lovin' Maccy D's

Ronald McDonald the muse

A new wave of artists is taking inspiration from the fast food chain
13 best picnic blankets

13 best picnic blankets

Dine al fresco without the grass stains and damp bottoms with something from our pick of picnic rugs
Barcelona 3 Bayern Munich 0 player ratings: Lionel Messi scores twice - but does he score highest in our ratings?

Barcelona vs Bayern Munich player ratings

Lionel Messi scores twice - but does he score highest in our ratings?
Martin Guptill: Explosive New Zealand batsman who sets the range for Kiwis' big guns

Explosive batsman who sets the range for Kiwis' big guns

Martin Guptill has smashed early runs for Derbyshire and tells Richard Edwards to expect more from the 'freakish' Brendon McCullum and his buoyant team during their tour of England
General Election 2015: Ed Miliband's unlikely journey from hapless geek to heart-throb

Miliband's unlikely journey from hapless geek to heart-throb

He was meant to be Labour's biggest handicap - but has become almost an asset
General Election 2015: A guide to the smaller parties, from the the National Health Action Party to the Church of the Militant Elvis Party

On the margins

From Militant Elvis to Women's Equality: a guide to the underdogs standing in the election
Amr Darrag: Ex-Muslim Brotherhood minister in exile still believes Egypt's military regime can be replaced with 'moderate' Islamic rule

'This is the battle of young Egypt for the future of our country'

Ex-Muslim Brotherhood minister Amr Darrag still believes the opposition can rid Egypt of its military regime and replace it with 'moderate' Islamic rule, he tells Robert Fisk
Why patients must rely less on doctors: Improving our own health is the 'blockbuster drug of the century'

Why patients must rely less on doctors

Improving our own health is the 'blockbuster drug of the century'