Companies: DHP    INB    TRAC   

Number crunchers expect a meaningful profits increase to £7.8 million (2007: £2.4 million) and in earnings to 1.8p (2007: 1p) during the year to September 2008 from £25 million logistics counter InterBulk. Bulked together by acquisition, the company, whose client roster includes Bayer, BP and BASF, deploys sophisticated tanks and containers for the delivery of both dry and liquid bulk materials ranging from fly ash to sugar. Next year, InterBulk should haul in profits of £9 million and earnings of 2.1p.

Those estimates place the 8.25p shares on budget forward price-to-earnings ratios of just 4.6 and 3.9, which reflect prior acquisition-related teething problems, as well
as the relatively high gearing of the business. But, having met with colourful chairman Bill Thomson, I think the market could be missing a trick, based on buoyant global demand for InterBulk’s services and trends towards ‘containerisation’ and the flexible and cost effective ‘intermodal’ transportation, meaning the use of multiple types of transport in any given journey.

Thomson and his finance director, Scott Cunningham, are enthused by these trends, sharpening in part because of the rapid development of China, where InterBulk has set up an operation to tap monstrous domestic demand. ‘We started in Europe, but we have a global business and China is an enormous growth area for us,’ says Thomson, adding that ‘the substitution towards intermodal is a big growth driver for us.’ As well as China, he sees the Middle East and Eastern Europe as key growth areas. Boasting terrific market positions in markets with high entry barriers, I like the look of InterBulk as a share price recovery play.

Tech group gains traction
‘Blue sky’ (and green) is Traction Technology, an £8.76 million minnow that reversed into cash shell Catalyst New Opportunities in 2006 and gathers ever-growing market momentum. The company is a designer and deliverer of low-emission diesel electric
hybrid engine systems for the transport sector.

Chairman Nick Brayshaw informs me that, as well as slashing CO2 emissions and saving on diesel fuel, hybrid technologies are perfect for use in buses, which have to stop and start frequently within city centres. Brake-wear reduction and reduced maintenance requirements add to the appeal of hybrid technologies.

Traction recently stoked up investor interest with the unveiling of an agreement to supply its technology to ‘hybrid’ buses run by Merseytravel, part of transport giant Arriva. Brayshaw tells me that this contract showed the market ‘our technological leadership in this area’ and has set the business up well for forthcoming trials in London, where the UK government has ambitious CO2 reduction targets.

Traction, whose technology continues to gather experience on Transport for London and Arriva routes and which is jointly developing a range of single-deck hybrid vehicles with bus-maker Optare, is unloved at 24p, down from a 52-week peak of 56.5p.

This pre-revenue concern is high-risk but, based on the ambitions of its management and EU and government drives, shares in Traction, which will need to tap investors for further cash, offer longer-term green appeal.

Darwen’s green drivers
The same drivers should benefit £18.2 million newcomer Darwen, a vehicle manufacturing concern led by chief executive Andrew Brian.

The company designs, assembles and supplies single- and double-deck buses to UK bus service operators and, alongside the core diesel model production business, plans to develop a line of low-emission hybrid vehicles (see page 3). Again it’s very early days, but keep your eyes peeled for developments.