Investment Column: Hogg Robinson is risky but worth a punt

Halma; Real Good Food Company


Our view: Buy

Share price: 34p (-0.75p)

We were nervous about the business travel company Hogg Robinson back in May, not least because it is the sort of business that has very limited visibility. However, we felt it was worth a speculative punt at 29p, and the company has justified our faith both in terms of its results and its share price.

The company yesterday produced a sparkling set of interim numbers with sales up 9 per cent at £169.2m, but pre-tax profits quadrupling to £13.3m. Underlying profits were up a slightly more sober 104 per cent to £15.3m, but whichever way you look at it, these are good numbers. Another important point to note is the 25 per cent dividend rise to 0.5p a share, which is four-times covered by earnings. Management were keen to stress that they are operating a progressive dividend policy and we think there could be a similar rise at the full year, all being well.

Hogg Robinson has benefited from management getting the business ready to fire into an upturn during the recession. As such, it has been able to cope with a good increase in sales volumes with very little increase in costs. But is it sustainable given that the majority of earnings come from Europe (with a large minority in North America)? That's a difficult question to answer in the throes of a sovereign debt crisis in Europe that, if the worst comes to the worst, could throw the Continent into a nasty downward spiral.

On the plus side however, the global economy is recovering, driven by emerging markets. The company doesn't have a big presence there, but ought to benefit from businessmen from the US and Europe going out in search of opportunities. Business travel volumes are still 10-15 per cent off where they were a couple of years ago and the shares trade on just five-times forecast full-year earnings and with a healthy prospective yield of 4 per cent. Hogg Robinson isn't without risks but we retain our buy.

Halma

Our view: Hold

Share price: 313.6p (-15.4p)

Halma says its businesses is to develop products that "protect lives and improve the quality of life for people worldwide". The stock has also been improving the quality of investor's portfolios during the downturn: since March 2009, the share price has more than doubled.

Halma's history stretches back over a century, starting as a tea company in Sri Lanka before moving to rubber. Despite a complete shift in operations, it remains in rude health. Today's specialism is technology sensors; everything from fire detection to lift safety to devices that assess eye health. Halma put out interims yesterday, showing pre-tax profits up 29 per cent in the first half to £49.3m, with sales up 12 per cent to £249.1m and strength across all three main divisions – infrastructure sensors; health and analysis; and industrial safety. Management also highlighted particularly strong growth in Asia since establishing more of a local presence in 2006. Plans are in hand to expand further in China.

The interim dividend is up 7 per cent, and chief executive Andrew Williams said momentum built during the downturn continues to rumble on. The stock looks strong, and is certainly worth having in a portfolio. Yet as Investec pointed out, its price of 16.8 times estimated full-year earnings runs at a 25 per cent premium to the electronic and electrical equipment sector. Pricey, but still worth holding.

Real Good Food Company

Our view: Hold

Share price: 23.5p (+0.75p)

Real Good Food Company (RGFC) has cooked up some tasty numbers since its interims on September 22. It was particularly positive about bakery business, Renshaw, which is "having an exceptionally good year," driven by substantial demand in the home baking and sugar-craft sectors.

RGFC also made encouraging noises about Haydens, which makes cakes for Waitrose, Marks & Spencer and Costa Coffee, saying sales growth remains on budget, as it continues to deliver on a turnaround plan.

Arguably more significant was the "strong growth" at the Napier Brown sugar business, the biggest division by sales. This is being fuelled by a global shortage, which has driven prices to a 30-year high and the division appears was well positioned for growth next year and beyond.

Shore Capital saw enough sweeteners in the update to upgrade full year forecasts. Certainly, the company's earnings multiple of 5.4 for 2011 looks tempting. But given that we tipped them at 27p earlier this year and there is no sign of a dividend, we say hold.

News
Ross Burden pictured in 2002
people
News
scienceHad asteroid hit earlier or later in history, the creatures might have survived, say scientists
Life and Style
Upright, everything’s all right (to a point): remaining on one’s feet has its health benefits – though in moderation
HealthIf sitting is bad for your health, what happens when you stay on your feet for a whole month?
News
President Obama, one of the more enthusiastic users of the fist bump
scienceBumping fists rather than shaking hands could reduce the spread of infectious diseases, it is claimed
PROMOTED VIDEO
Voices
voices
Arts and Entertainment
Peter Griffin holds forth in The Simpsons Family Guy crossover episode
arts + ents
Sport
Laura Trott with her gold
Commonwealth GamesJust 48 hours earlier cyclist was under the care of a doctor
Arts and Entertainment
Gal Gadot as Wonder Woman
arts + entsFilmmaker posted a picture of Israeli actress Gal Gadot on Twitter
News
Bryan had a bracelet given to him by his late father stolen during the raid
people
Arts and Entertainment
Chris Pratt stars in Guardians of the Galaxy
arts + ents
Arts and Entertainment
Pedro Pascal gives a weird look at the camera in the blooper reel
arts + entsPrince Oberyn nearly sets himself on fire with a flaming torch
News
Danny Nickerson, 6, has received 15,000 cards and presents from well-wishers around the world
newsDanny loves to see his name on paper, so his mother put out a request for cards - it went viral
News
ebookA unique anthology of reporting and analysis of a crucial period of history
Sport
France striker Loic Remy
sportThe QPR striker flew to Boston earlier in the week to complete deal
News
Orville and Keith Harris. He covered up his condition by getting people to read out scripts to him
People
Arts and Entertainment
Zoe Saldana stars in this summer's big hope Guardians of the Galaxy
filmHollywood's summer blockbusters are no longer money-spinners
Arts and Entertainment
O'Shaughnessy pictured at the Unicorn Theatre in London
tvFiona O'Shaughnessy explains where she ends and her strange and wonderful character begins
Life and Style
Workers in Seattle are paid 100 times as much as workers in Bangladesh
fashionSeattle company lets customers create their own clothes, then click 'buy' and wait for delivery
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

Training/Learning and Development Coordinator -London

£28000 - £32000 per annum: Ashdown Group: Training/Learning and Development Co...

Training Programme Manager (Learning and Development)-London

£28000 - £32000 per annum + benefits: Ashdown Group: Training Programme Manage...

.NET Software Developer (.NET, C#, ASP.NET, front-end)

£30000 - £45000 per annum: Harrington Starr: A Global Financial Service Organi...

C# Web developer (C#,MVC,ASP.NET,SQL)

£30000 - £40000 per annum + Bonus+Benefits+Package: Harrington Starr: C# Web d...

Day In a Page

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
It's the best of British art... but not all is on display

It's the best of British art... but not all is on display

Voted for by the British public, the artworks on Art Everywhere posters may be the only place where they can be seen
Critic claims 'I was the inspiration for Blanche DuBois'

Critic claims 'I was the inspiration for Blanche DuBois'

Blanche Marvin reveals how Tennessee Williams used her name and an off-the-cuff remark to create an iconic character
Sometimes it's hard to be a literary novelist

Sometimes it's hard to be a literary novelist

Websites offering your ebooks for nothing is only the latest disrespect the modern writer is subjected to, says DJ Taylor
Edinburgh Fringe 2014: The comedy highlights, from Bridget Christie to Jack Dee

Edinburgh Fringe 2014

The comedy highlights, from Bridget Christie to Jack Dee
Dame Jenny Abramsky: 'We have to rethink. If not, museums and parks will close'

Dame Jenny Abramsky: 'We have to rethink. If not, museums and parks will close'

The woman stepping down as chair of the Heritage Lottery Fund is worried