Interior Services Group

International construction services counter ISG is performing robustly in spite of the downturn and says its hard-hit London fit-out services are showing recovery signs.

In its latest trading missive, ISG said current trading was in line with expectations, with the AIM-quoted company benefiting from its strategic diversification in terms of activity, sector and location, with operations spanning Asia, the Middle East and Europe.

In an encouraging bit of news, chairman Roy Dantzic said demand for fit-out activity in the capital is now ‘starting to recover’, with work levels for 2010 under its numerous framework agreements with food and banking clients being ‘strong’. However, although ISG’s regional construction businesses are expected to have traded positively in the current year to June 2010, activity levels are likely to reduce ‘going into the next financial year’.

Overseas, ISG has seen some order delays, but crucially, blue-chip clients in both Western and Eastern Europe are beginning to reinvest, albeit at a slower rate than originally predicted. Over in its key Asian markets, ISG insists that economic recovery should drive organic growth.

ISG is a business with a strong balance sheet and high levels of earnings visibility. Of its current £755m order book, a very healthy £500m is set for delivery this year, with £240m earmarked for the year to June 2011. Furthermore, ISG expects to close the interim period to December with circa £27m cash in its coffers.

Profits of £12.37m, earnings of 28.3p and an improved 13.86p dividend are forecast this year, leaving the shares selling for less than six times earnings and offering a yield of 8.5%. North of 350p before the credit crunch hit and having pulled back from a 52-week peak of 195.5p, they are well worth buying and stashing away.