ACM Shipping Group

Robustly-performing tanker broker ACM says it is benefiting from earlier-than-expected upturn in its markets.

Following strong trading in the year to March (ACM will sail in with the numbers in June), the market leader in oil transportation, whose activities include spot brokerage freight, time charter and vessel sale and purchase, says annual results will ‘moderately’ exceed expectations.

Sales and profits bettered management budgets thanks to growth in the sale and purchase business, where the market picked-up as more vessels changed ownership, as well as improved spot fixture activity. Moreover, 'the market has begun to recover from the downturn earlier than anticipated’, insists CEO Johnny Plumbe, adding that ‘signs of global economic recovery and strong crude demand from Asia have seen better markets in 2010’.

With offices in London, India, China and Singapore and a healthy client roster that includes oil producers, oil traders and ship-owners, ACM is one of the most profitable players in the ‘wet’ tanker broking space. Back in December, the cash-generative concern docked with better-than-expected interims, showing profits maintained at a healthy £3.3m (2008: £3.4m), despite recessionary waters. ACM finished the half with £6.4m cash and no debt and upped its half-year dividend by 10% to 2.75p.

Based on forecasts for March 2010 from highly respected Charles Stanley analyst Peter Ashworth, who envisages a £6.3m profit, earnings of 26.14p and a 9p dividend, ACM shares are swapping hands for only 7.6 times earnings and offer an attractive 4.5% yield.

Enthusiastically backed by Growth Company Investor at 187.5p in July, they are significantly undervalued and should navigate north over the medium-to-long term. Strong buy.