Companies:
ROK

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09/05/2007
An upbeat AGM and an acquisition have shone the market spotlight on property services star Rok once more, with Numis Securities’ analyst Colette Ord declaring the company ‘a core holding in the construction sector’.
Led by indefatigable chief executive Garvis Snook, the building, maintenance and development group has racked up a rock solid reputation among City followers, and continues to perform well across all divisions. AGM highlights include the news that sales for the first quarter of 2007 were up more than 50%, quarter for quarter, from 2006, with like-for-like growth burgeoning 20%.
Rok Building is going gangbusters, benefiting from framework wins and boosting order books with new long-term framework deals in social housing and education. Rok Maintenance enjoyed a 14% rise in first-quarter sales, and Snook insists Rok Development continues to benefit from its focus on low risk industrial and commercial property development, mainly in the regions outside London.
On the acquisitions front, the addition of SOL Construction, a regional building and maintenance company bought for up to �21m in cash and shares, will enhance earnings. Snook said the acquisition would help Rok grow its presence in the Midlands in line with its stated mission of becoming ‘the nation’s local builder’.
Analysts also welcomed news of an improved cash position, with average debt in the first quarter being less than �15m, versus �27m in the second half of last year. For 2007, Ord expects Rok to deliver a strong rise in profits to �32.8m (�22.4m) and 64p of earnings from sales approaching �980m, ahead of �37.8m and 72p of earnings for 2008.
Adjusting the EPS figure following a five-for-one share split to ensure ongoing liquidity in the shares – giving earnings of 12.8p and 14.4p – Rok trades on forward multiples of 18.6 and 16.5, which look undemanding for a business with a great record and growth path ahead.
James Crux
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