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The investment column: Hewden is ready to celebrate

HEWDEN STUART, the equipment hire group, is starting to celebrate the millennium earlier than most, judging by its figures yesterday. It is benefiting from a rash of millennium-related building projects across the country. Most are local authority projects which, though less ostentatious than the Dome, still mean useful work for construction companies, which are Hewden Stuart's biggest clients. Further projects, such as new stations for Railtrack or new stadia for football clubs, have added to the party.

Hewden Stuart is already the UK's leading equipment hire company and is beginning to prosper as a result. Profits in the year to 31 January grew by 31 per cent to pounds 38.6m as companies lined up to hire cranes, access platforms, excavators, and dumpers.

Hiring equipment rather than owning it is a growing trend among constructors. It used to be tax-efficient to own a crane and set the cost against tax. Since the reliefs were abolished five years ago, constructors have turned to hire companies. Equipment is used efficiently rather than lying idle between projects.

Alistair Napier, Hewden Stuart's chief executive, is gradually clearing out the debris from the 1990s property slump. Yesterday the company announced it would sell its merchandising division, which distributes JCBs, to its management for pounds 11m. Mr Napier also wants rid of Hewden's contracting and quarrying activities.

Charterhouse Tilney forecasts growth of over 20 per cent in 1998, bringing in pre-tax profits of pounds 47m. Prospects are good but much of this is already in the price. While the shares came off 1p to 187p yesterday, that still gives a forward p/e of 15, a significant premium to the sector. Hold for the long term.