Investment Column: Cookson cannot escape its market woes

Cookson

Our view: Sell

Share price: 12.5p (unchanged)

Nobody can accuse Nick Salmon, the chief executive of Cookson Group, of not doing everything he can to counter what he admits are poor trading conditions for the group. The problem is, it seems, that whatever he does is not going to make Cookson a viable investment proposition for some time.

The company, which supplies consumable goods to various industries, issued its full-year results for 2008 yesterday, saying that headline profits were up 18 per cent. The group's pension fund trustees have allowed it to miss a £22m top-up in 2009, and by paying back some unnecessary debt facilities early, its bankers have cut it some slack on its covenants. Add to that the fact that the company's £241m rights issue has worked well and it has cut £40m of costs from the business, and it is easy to get excited about the stock.

That is until you read the small print. Cookson's markets are becoming very soft, and Mr Salmon admits that 2009 is going to be tough, albeit with the group in better shape. Cookson's update yesterday said that the fourth quarter was bad, with Mr Salmon conceding yesterday that he was unsure when things were going to get any better. In steel, for example, one of the group's key markets, production is down 24 per cent in the last year, with no indication of when it might pick up.

Watchers at Numis say that there is now little for investors to worry about in debt terms and, with all the corrective action described above coupled with the undemanding valuation of the shares trading on 3.5 times earning per share, investors should buy.

We disagree. Yes, the group has worked hard in the last few months to do what it can, and the shares are cheap. However, its end markets are likely to be no better than woeful for the rest of the year at least, and the shares will suffer according. Sell.



Statpro

Our view: Hold

Share price: 43.5p (+0.5p)

A cursory glance at the data group Statpro, and investors would be eager to buy as much of the stock as possible.

The group, which reported its preliminary results yesterday, is going great guns: in the past 12 months the margin, balance sheet and costs have all performed in a way that the group would hope, and the only blip in the numbers is that adjusted pre-tax profits are down 9 per cent, reflecting moves that see costs in better shape than at the same time last year.

The chief executive, Justin Wheatley, says that now has never been a better time for the group, as asset managers, Statpro's primary clients, are seeking as much information as possible. The fact that the company has a renewal rate of more than 90 per cent suggests that he has a point.

Those thinking there is a "but" have waited long enough. The shares are down 50 per cent in the past year, and while there has been an improvement in recent weeks, yesterday's good news was met with silence by investors.

Mr Wheatley claims that its bankers at Kaupthing going bust in October did not help, and neither did the fact that Statpro raised £2m from investors at about the same time. Again, he no doubt has a point. However, while Statpro has resolved its debt issues by signing a new deal with Royal Bank of Scotland, the market is ignoring the other good news. It has shown little appetite for the stock in recent months, and while that may change, we would wait before assuming that the share price will improve. Hold.



Unite

Our view: Cautious hold

Share price: 46p (+7p)

Throughout this crisis, investors will no doubt be fondly remembering their carefree student days. For Unite, the property group that specialises in student accommodation, the last year has been somewhat less than carefree. Its share price has buckled under the weight of concerns about the valuation of Unite's property portfolio and its ability to stay within its debt covenants.

The company tried to put the market's collective mind at ease yesterday, saying that it was safely inside its covenants, while rental growth is up. It is planning not to develop some sites and will sell off what it can. Because of this, and despite a fall in full-year adjusted net asset value of 21 per cent and the adjusted loss recorded at £44.8m, the shares were up a stellar 18 per cent.

The question for investors is whether now is the time to buy. The stock was down 89 per cent on the year before yesterday and investor sentiment about all property groups, and especially small ones, is poor. Analysts at the house broker, Cazenove, say that property valuation is holding up well and that the group is performing despite the tough markets. We think, however, that being a small stock in a poor market will weigh badly on a group like Unite. Cautious hold.

Voices
The Sumatran tiger, endemic to the Indonesian island of Sumatra, is an endangered species
voicesJonathon Porritt: The wild tiger population is thought to have dropped by 97 per cent since 1900
Arts and Entertainment
Beast would strip to his underpants and take to the stage with a slogan scrawled on his bare chest whilst fans shouted “you fat bastard” at him
musicIndie music promoter was was a feature at Carter gigs
News
news
Arts and Entertainment
Story line: Susanoo slays the Yamata no Orochi serpent in the Japanese version of a myth dating back 40,000 years
arts + entsApplying the theory of evolution to the world's many mythologies
PROMOTED VIDEO
News
Performers dressed as Tunnocks chocolate teacakes, a renowned Scottish confectionary, perform during the opening ceremony of the 2014 Commonwealth Games at Celtic Park in Glasgow on July 23, 2014.
news
Life and Style
Popular plonk: Lambrusco is selling strong
Food + drinkNaff Seventies corner-shop staple is this year's Aperol Spritz
News
Gardai wait for the naked man, who had gone for a skinny dip in Belfast Lough
newsTwo skinny dippers threatened with inclusion on sex offenders’ register as naturists criminalised
News
Shake down: Michelle and Barack Obama bump knuckles before an election night rally in Minnesota in 2008, the 'Washington Post' called it 'the fist bump heard round the world'
newsThe pound, a.k.a. the dap, greatly improves hygiene
Arts and Entertainment
La Roux
music
Arts and Entertainment
Graham Fellows as John Shuttleworth
comedySean O'Grady joins Graham Fellows down his local Spar
News
people
News
ebookA unique anthology of reporting and analysis of a crucial period of history
News
Ross Burden pictured in 2002
people
News
Elisabeth Murdoch: The 44-year-old said she felt a responsibility to 'stand up and be counted’'
media... says Rupert Murdoch
Arts and Entertainment
tv
Extras
indybest
Sport
Arsenal signing Calum Chambers
sportGunners complete £16m transfer of Southampton youngster
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

Data Governance Manager (Solvency II) – Contract – Up to £450 daily rate, 6 month (may go Permanent)

£350 - £450 Per Day: Clearwater People Solutions Ltd: We are currently looking...

Java Developer - Banking - London - Up to £560/day

£500 - £560 per day: Orgtel: Java Developer FX - Banking - London - Up to £560...

HR Business Analyst, Bristol, £350-400pd

£350 - £400 per day + competitive: Orgtel: My client, a leading bank, is curre...

Account Manager - (Product & Account Management, Marketing)

£26000 - £30000 per annum + Benefits: Ashdown Group: Account Manager - (Produc...

Day In a Page

The children were playing in the street with toy guns. The air strikes were tragically real

The air strikes were tragically real

The children were playing in the street with toy guns
Boozy, ignorant, intolerant, but very polite – The British, as others see us

Britain as others see us

Boozy, ignorant, intolerant, but very polite
Countries that don’t survey their tigers risk losing them altogether

Countries that don’t survey their tigers risk losing them

Jonathon Porritt sounds the alarm
How did our legends really begin?

How did our legends really begin?

Applying the theory of evolution to the world's many mythologies
Watch out: Lambrusco is back on the menu

Lambrusco is back on the menu

Naff Seventies corner-shop staple is this year's Aperol Spritz
A new Russian revolution: Cracks start to appear in Putin’s Kremlin power bloc

A new Russian revolution

Cracks start to appear in Putin’s Kremlin power bloc
Eugene de Kock: Apartheid’s sadistic killer that his country cannot forgive

Apartheid’s sadistic killer that his country cannot forgive

The debate rages in South Africa over whether Eugene de Kock should ever be released from jail
Standing my ground: If sitting is bad for your health, what happens when you stay on your feet for a whole month?

Standing my ground

If sitting is bad for your health, what happens when you stay on your feet for a whole month?
Commonwealth Games 2014: Dai Greene prays for chance to rebuild after injury agony

Greene prays for chance to rebuild after injury agony

Welsh hurdler was World, European and Commonwealth champion, but then the injuries crept in
Israel-Gaza conflict: Secret report helps Israelis to hide facts

Patrick Cockburn: Secret report helps Israel to hide facts

The slickness of Israel's spokesmen is rooted in directions set down by pollster Frank Luntz
The man who dared to go on holiday

The man who dared to go on holiday

New York's mayor has taken a vacation - in a nation that has still to enforce paid leave, it caused quite a stir, reports Rupert Cornwell
Best comedians: How the professionals go about their funny business, from Sarah Millican to Marcus Brigstocke

Best comedians: How the professionals go about their funny business

For all those wanting to know how stand-ups keep standing, here are some of the best moments
The Guest List 2014: Forget the Man Booker longlist, Literary Editor Katy Guest offers her alternative picks

The Guest List 2014

Forget the Man Booker longlist, Literary Editor Katy Guest offers her alternative picks
Jokes on Hollywood: 'With comedy film audiences shrinking, it’s time to move on'

Jokes on Hollywood

With comedy film audiences shrinking, it’s time to move on