Brokers Hargreave Hale gave the following Valuation for HMY

VALUATION
The nearest comparisons to this Group are Sondex, trading on a current year multiple of 14 and Weir Group which typically trades on multiples of 12 plus. We would argue that Hamworthys prospects are brighter than both these companies in view of the strong order book and the global positioning. Fully taxed earnings of 13p this year and 16.5 p for the 2005/6 end March, suggests a current year PE of 9.9x and a prospective PE of 7.8x. There is a prospective yield in excess of 4%. If trading on a similar PER to Sondex the shares would be valued at in excess of 180p. We would argue that a premium to Sondex is justifiable, in particular because of the potential ramp up to sales as a result of the new product pipeline now gaining client acceptance in what is in any event one of the fastest growing markets in the world.

"Shares" Article relating to Hamworthy (HMY) posted below for info.

With a following wind these shares should double over the next year or so.

Some catty folk in the City say the flotation last month by Collins Stewart
could have been handled better, i.e. at a higher price. It was certainly over
subscribed but the rating is half that of similar oil sector service companies
including Sondex.

Todats tip from UK analyst.com............

Buy Hamworthy at 171p
Rob Cullum of TrendWatch.co.uk
When you think of big, successful, world-class engineering companies, what springs into your mind? Germany, perhaps? Or maybe one of the giant Far East trading houses such as Hyundai, Mitsubishi or Hitachi. Despite our proud post-industrial revolution heritage, you don't normally think of engineering and Britain in the same breath, except perhaps for Rolls-Royce.

But we do have many world-class engineering businesses. One of them surprisingly only floated on AIM in July. Even more surprising, it's a business that the average person on that other engineering marvel, the Clapham omnibus, has probably never heard of.

The company is Hamworthy. Its speciality is marine engineering, with the emphasis on fluid handling. So, for example, it makes pumps and equipment for getting crude oil and natural gas onto and off tanker ships. It also makes systems for handling dry cargoes. It makes the refrigeration systems for liquid petroleum gas (LPG) and liquid natural gas (LNG) carriers. It's the world's leading manufacturer of marine sewerage treatment systems, fitted to ferries all the way up to the world's biggest cruise liners. It supplies specialised equipment to military naval fleets worldwide, where requirements in terms of reliability, shock resistance and fire resistance are especially onerous. It supplies equipment for all types of vessels involved in offshore oil exploration, including seismic vessels, drill ships, oil rigs, shuttle tankers and pipe-laying craft.



The company has major establishments in the UK, Norway, Denmark, Singapore and a modern assembly plant in China, which helps to keep its products highly competitive.

Given the recent flotation on AIM, it may come as a surprise that the company's history goes back nearly a century, to 1911. It was acquired by engineering conglomerate Powell Duffryn in 1962. Powell was the subject of a private equity takeover in 2000. Its owners refloated Hamworthy in July via a placing at 109p.

These days, you should never be put off by the fact that this is an AIM company. Many AIM companies are bigger than their fully listed brethren. Hamworthy is capitalised at 60 million pounds and rising. Its annual turnover has risen from 64 million pounds in 2002 to almost 100 million pounds now; pre-tax profit rose from 4.0 million pounds to 5.8 million pounds over the same period and in May its order book stood at a record 98 million pounds.

There are several drivers for this growth:

The ever-tightening environmental, safety and noise regulation. The days when ship operators could treat the sea with contempt as their private cesspit and waste oil dump have long gone.

The demand for oil and gas transportation is growing.

The market for cruise tourism is expanding.

There is a growing trend to utilise FPSOs (floating production, storage and offshore loading) vessels, which are full of the sort of equipment in which Hamworthy specialises.



Furthermore, thanks to the extreme conservatism of the marine industry, there are serious barriers to entry for would-be competitors. Given the potential for disaster at sea involving explosive cargos, it isn't surprising that Hamworthy's customers often require extensive lists of user references and evidence of years of successful operation before they'll even consider ordering a particular marine system.

Despite that fact, this is a fragmented industry, giving Hamworthy plenty of opportunities to grow via acquisitions as well as organically.

This combination of a long history, major growth drivers and barriers to entry has resulted in Hamworthy becoming the world's number 1 in deepwell pumps (for pumping gas and oil cargoes), with 95% of the global market. It's also no.1 in gas reliquefaction systems and in water treatment systems. It's the global no.2 or no.3 in most of the other products that it supplies.

Its new gas reliquefaction system could turn out to be a real winner. Exxon and Conoco are currently testing it. Some gas boils off from the LNG cargo during the voyage. Currently, liquid gas carriers use this boiled-off gas to power steam generators to power the vessel. This is actually an inefficient use of energy. Hamworthy has developed an on-board gas reliquefaction system, enabling the ships to use more efficient, low maintenance diesel engines. The reliquefaction system costs 2 million pounds - 5 million pounds but should save 3 million pounds p.a. for each LPG vessel.

We don't yet have the benefit of broker research for this company, though no doubt that will change quite quickly, given the attention the flotation attracted from institutional shareholders (the placing was oversubscribed). House broker Collins Stewart reckons that profits will rise from 5.8 million pounds to 7 million pounds this year and to 9 million in 2005-06. If correct, this puts the shares on a lowly p/e of under 7 for 2005-06. We'd expect to see a share like this rated at more like 12 at the very least.

It also suggests that the company was floated too cheaply. This is the earliest opportunity we've had to recommend the share, which has performed strongly since flotation. There's a window of opportunity here to pick up the share while they still look seriously underpriced. Don't delay too long, though. At the rate the shares are rising, the window won't be open that much longer. BUY

Key Data

EPIC: HMY
NMS 5,000
Spread 169p - 173p
Market Cap 62.16 million pounds

cheers GF.

Good write up -a long term hold for me. Thanks GF

I'm in for the long term. I reckon these shares will rise for quite a while.

Nice to have you guys aboard.

cheers GF.

Just joined you with a few of these boy's.
Got out of Cambridge Mineral Resources (at a loss i'm afraid') and rolled into HMY, hoping for steady med. to long term growth.

Good Luck......... Rob

This is another one the market has been slow to notice. Good recommend from one of the tipsters on HMY. can't remember which one but it was good to read!!

Told you lads, me and Jason in from way down, I dare not look, but its still way undervalued and trades on a lowly historic P/E never mind forward P/E.

The Broker floating it made a 'right cock up' and thats the truth I have heard from the city, should have floated at 180p, but who cares know what I mean.

cheers GF.

Hi GF. Finally returned from my travels to see HMY has been doing nicely in my absence. Can't believe how much these have gone up over the past few weeks and they still have plenty of upward movement by the look of the chart. Sticking my neck out, but I can honestly see us reaching 2 by Christmas. We should be due some results on the 22nd of November which will spark a few brokers into life. In the meantime, enjoy the ride!!

Ian, if your reading this, could you have another look at the header of this thread for me?

jason,

No problem - what would you like it changed to? Post here and I will get JT to chnage it when he comes in,

Ian

Cheers Ian, if we could revert back to "Hamworthy global oil services leader with rapid growth potential" that would be great.

Thanks again, Jason.

Will get it done as soon as JT is here.

Ian

Jason,

Sorry about this, but we now have a policy of not chnaging thread titles - we believe it could be open for abuse - obviously not by you, but we have to maintain policy, so if you want the new thread title, you can start a new thread, or carry on with this one.

Apologies for confusing the issue - hope you understand,

Ian

Ian

Ok, no problem, will stick with this thread for now but may start a new one later in the year. Thanks for trying.

Cheers, Jason.

What a nice little earner this is. Any idea's for the long term?

MS

Moving up nicely, still way undervalued Mickey on a P/E of around 13 now.

cheers GF.

mickeyskint - future growth prospects for HMY look extremely good especially if they get major orders from Exxon and Conoco who are testing the LNG prototype plant aboard their LNG carriers. Should be a small div paid next year so add that to the growth we have already seen and you should be looking at a few extra quid in the bank!!

Have a read through some of the earlier posts to get a better picture of the companies prospects.

Another move upwards, it just gets better and better.

Could be 2 by bonfire night at this rate! It's good to be home, lol!

Now what colour shall I have my new DB9 in?

lol

MS