Redhall Group

Recommended by Growth Company Investor at 248.5p in 2007, engineering support services star Redhall is going from strength to strength in spite of a recent blip.

In a positive AGM update, chairman David Jackson flagged up a strong first quarter of the current year to September, with pre-tax profits coming in ahead of expectations. He also reiterated that the second half would be affected by the unforeseen loss of a fit-out contract for the ‘Sea Dragon semi-submersible drilling rig’, news recently resulting in downgrades.

However, compensation for this lost work, brought into the fold through last year’s compelling Chieftain acquisition, is likely, Redhall has ‘several’ opportunities in the pipeline for replacement work and annual trading should meet revised expectations.

Fast-growing Redhall remains a long-term winner in our view, being a leader in defensive, regulated markets ranging from nuclear to oil and gas, petrochemicals, defence and food. Robust of balance sheet – there was net cash of £5.6m in the coffers at the end of December – Redhall delivered a powerful performance last year. Turnover increased more than 50% to £86.7m, pre-tax profits increased by 95% to £4.6m and the total dividend was lifted by 78% to 4p. Investors were also treated to growth in the forward order book to £110m.

Moreover, even the downgraded pre-tax profit forecast shows growth from £4.6m to £6.8m and significantly improved earnings of 16.5p, leaving shares in the business looking dramatically undervalued on a p/e of less than ten times.

Growth Company Investor is the UK’s leading authority on small-cap and AIM companies. You can gain immediate access to all the recent share recommendations with no obligation, with a free 30-day trial. Click here to join today.