Brokers' Views – WH Ireland

WH Ireland has reiterated its buy recommendation on two corporate clients, one of them Wynnstay, which makes and supplies agricultural products and owns specialist retail chains. The company recently delivered record annual results, ahead of forecasts, with sales increased by 49 per cent to £234.6 million and pre-tax profits moving 63 per cent higher to £5.87 million.

The broker says the company appears to be ‘relatively resilient to the current economic difficulties, though this is not reflected in the share price’, recently 175p. This valuation is not only undemanding from an earnings angle, it also leaves the shares trading at a significant discount to the group’s 252.5p net asset value – hence the broker’s 250p price target.

High-flying CLA
The research team sticks with its recommendation on another house stock, aircraft lessor Capital Lease Aviation (CLA). The shares, at 64.5p, remain a speculative rather than an outright buy, despite half-time figures showing solid progress against a difficult aviation sector backdrop. Pre-tax profits soared from £400,000 to £3.6 million as revenue increased to £7.1 million (2008: £600,000.)

All aircraft performed well during the period and the broker considers that ‘further growth in the fleet, and lease rentals, is achievable as aircraft valuations continue to come under severe pressure’ and rivals ‘scale back or exit the market’. While believing the current strategy could yield returns, WH Ireland doesn’t shy away from the ‘many’ shorter-term risks – including the timing of delivery of extra aircraft – hence its speculative stance.