Brokers views: Arden Partners

Add to your holdings in Park Group, says Arden Arden has maintained its buy recommendation on Park Group following a solid set of results from the hampers business.   

In the six months to September 2010, sales surged 49 per cent to £50.9 million, with a swing to a pre-tax profit of £541,000 (H1 2009: £4.17 million loss). The first half is typically loss making, but a £4.4 million VAT rebate helped the bottom line performance significantly.   

Park has sold a piece of land in Liverpool for housing realising £1.8 million and recently acquired Dublin-based Ireland Celtic Hampers and Family Hampers for up to e1 million. The recent launch of flexecash, a prepaid card, has been well received and is winning plenty of new retail clients such as the BBC, Superdrug and Barratt Homes.   

Before the one-off benefit of the VAT refund, Arden predicts 2011 pre-tax profits of £6.5 million and EPS of 2.7p. There is also a prospective yield of 5 per cent on offer.

Avon Rubber bounces back

Elsewhere, Arden highlights forecast-busting finals from Avon Rubber, where profits came in ahead of its 

£6.5 million estimate at £7.1 million, driven by ‘a much stronger performance in Dairy as well as an 18.5 per cent sales increase in the core Protection & Defence (P&D) business’.  

This year, Arden forecasts a profits surge to £8.8 million and earnings of 20p, placing the 173.5p shares, which have returned to the dividend list, on a prospective p/e of 8.7. While the market has ‘clearly started to appreciate’ Avon’s growth story, Arden believes that this rating ‘significantly undervalues the shares’ and flags up the potential for further upgrades.