Skip to content

Advertisement
OOPS. Your Flash player is missing or outdated.Click here to update your player so you can see this content.
Cleantech magazine, a Cleantech Investor publication
UK QUOTED COMPANY COMMENT: HAMWORTHY PDF Print E-mail

 by Andrew Hore

First published in Cleantech magazine, January/February 2008. Copyright Cleantech Investor 2008


Hamworthy was formed in 1911 and used to be part of Powell Duffryn before its management bought the business. More than 90% of Hamworthy’s turnover is generated outside of the UK and growth is coming on the back of the booming shipbuilding market.

The business is split into four divisions: pump systems, gas systems, inert gas systems and water systems.

 

The water systems business, which is based at the company’s headquarters in Poole, has five main products including two new product lines brought into the group with recent acquisition Serck Como.

Membrane bioreactor systems combine aerobic sewerage treatment with filtration and micro-membrane separation. Cruise ships are the main customers for these products.
Sewerage treatment plants, production of which has been transferred to China, treat water from toilets on merchant vessels so that they can comply with overboard discharge regulations. Oily water separators reduce the pollutant level of a ship’s bilge water. New regulations have helped to increase demand for more advanced versions of the plant. The two product lines that Serck Como introduced to the group are fresh water generators, including desalination equipment, and condensation plants.
 
Although the pump and gas systems businesses are larger in turnover terms, the water systems division is growing fastest. Its turnover grew by 143% to £21.7 million and operating profits increased by 134% to £2.6 million in the interim figures to September 2007. To be fair, those figures include Serck Como, which was not included in the comparative figures. Even so, organic operating profits growth was 45% - still much higher than the other divisions. Although the water systems division generated one-fifth of revenues at the interim stage, it contributed one-third of operating profits. The order book for water systems was worth £44.7 million at the end of September 2007. Strong demand for new cruise ships is creating the need for desalination and waste water systems.

Hamworthy was named 2007 AIM company of the year at last October’s AIM awards. However, disappointment with the interim results sparked a decline in the share price, which has fallen by one-third in the past three months. This looks overdone because earnings per share forecasts for the year to March 2008 have been cut by around 8% during the past six months. In fact, they have increased slightly over the past month. Earnings per share forecasts for 2008-09 have barely changed in recent months.

The shares were very highly rated because of the strong track record of the business. At 410p, they are currently trading on just over 15 times 2007-08 earnings. That is still a relatively high rating given the weakness of smaller companies, but Hamworthy continues to deliver earnings growth.

Hamworthy joined AIM in July 2004 via a placing at 109p a share: the shares are still nearly four times that price.
 
[ Back ]