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
sportWWE latest including Sting vs Triple H, Brock Lesnar vs Roman Reigns and The Undertaker vs Bray Wyatt
Arts and Entertainment
Louis Theroux: By Reason of Insanity takes him behind the bars again
tvBy Reason of Insanity, TV review
Arts and Entertainment
Cassetteboy's latest video is called Emperor's New Clothes rap
videoThe political parody genius duo strike again with new video
Arts and Entertainment
tvPoldark, TV review
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

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

iJobs Job Widget
iJobs Money & Business

Recruitment Genius: Retirement Coordinator - Financial Services

Negotiable: Recruitment Genius: To provide a prompt, friendly and efficient se...

Recruitment Genius: Annuities / Pensions Administrator

Negotiable: Recruitment Genius: You will be the first point of contact for all...

Ashdown Group: HR, Payroll & Benefits Officer - Altrincham - up to £24,000.

£18000 - £24000 per annum + benefits: Ashdown Group: HR, Payroll & Benefits Of...

Ashdown Group: Learning and Development Programme Manager

£35000 - £38000 per annum + benefits : Ashdown Group: A highly successful, int...

Day In a Page

Election 2015: How many of the Government's coalition agreement promises have been kept?

Promises, promises

But how many coalition agreement pledges have been kept?
The Gaza fisherman who built his own reef - and was shot dead there by an Israeli gunboat

The death of a Gaza fisherman

He built his own reef, and was fatally shot there by an Israeli gunboat
Saudi Arabia's airstrikes in Yemen are fuelling the Gulf's fire

Saudi airstrikes are fuelling the Gulf's fire

Arab intervention in Yemen risks entrenching Sunni-Shia divide and handing a victory to Isis, says Patrick Cockburn
Zayn Malik's departure from One Direction shows the perils of fame in the age of social media

The only direction Zayn could go

We wince at the anguish of One Direction's fans, but Malik's departure shows the perils of fame in the age of social media
Young Magician of the Year 2015: Meet the schoolgirl from Newcastle who has her heart set on being the competition's first female winner

Spells like teen spirit

A 16-year-old from Newcastle has set her heart on being the first female to win Young Magician of the Year. Jonathan Owen meets her
Jonathan Anderson: If fashion is a cycle, this young man knows just how to ride it

If fashion is a cycle, this young man knows just how to ride it

British designer Jonathan Anderson is putting his stamp on venerable house Loewe
Number plates scheme could provide a licence to offend in the land of the free

Licence to offend in the land of the free

Cash-strapped states have hit on a way of making money out of drivers that may be in collision with the First Amendment, says Rupert Cornwell
From farm to fork: Meet the Cornish fishermen, vegetable-growers and butchers causing a stir in London's top restaurants

From farm to fork in Cornwall

One man is bringing together Cornwall's most accomplished growers, fishermen and butchers with London's best chefs to put the finest, freshest produce on the plates of some of the country’s best restaurants
Robert Parker interview: The world's top wine critic on tasting 10,000 bottles a year, absurd drinking notes and New World wannabes

Robert Parker interview

The world's top wine critic on tasting 10,000 bottles a year, absurd drinking notes and New World wannabes
Don't believe the stereotype - or should you?

Don't believe the stereotype - or should you?

We exaggerate regional traits and turn them into jokes - and those on the receiving end are in on it too, says DJ Taylor
How to make your own Easter egg: Willie Harcourt-Cooze shares his chocolate recipes

How to make your own Easter egg

Willie Harcourt-Cooze talks about his love affair with 'cacao' - and creates an Easter egg especially for The Independent on Sunday
Bill Granger recipes: Our chef declares barbecue season open with his twist on a tradtional Easter Sunday lamb lunch

Bill Granger's twist on Easter Sunday lunch

Next weekend, our chef plans to return to his Aussie roots by firing up the barbecue
Joe Marler: 'It's the way I think the game should be played'

Joe Marler: 'It's the way I think the game should be played'

The England prop relives the highs and lows of last Saturday's remarkable afternoon of Six Nations rugby
Cricket World Cup 2015: Has the success of the tournament spelt the end for Test matches?

Cricket World Cup 2015

Has the success of the tournament spelt the end for Test matches?
The Last Word: Justin Gatlin knows the price of everything, the value of nothing

Michael Calvin's Last Word

Justin Gatlin knows the price of everything, the value of nothing