Hargreaves Services (HSP) was established in 1994 and has become the most rapidly expanding minerals support services groups in the UK. Hargreaves sources, produces, processes and handles carbon based and other bulk minerals throughout the UK and within Europe.
In September 2008 the group released record preliminary results with revenues up 69% to £404m and operating profit up 118% to £23.6m, underlying eps rose 77% to 51.1p putting the group on a current year p/e of under 10X.
The results can be read in pdf form here... http://www.hargreavesservices.co.uk/lse/#
Brokers have recently been upgrading forecasts - Brewin Dolphin increasing their forecast to 65.6p for 2009, and 80p for 2010 as HSP has been experiencing buoyant conditions in it's markets. Newer parts of the group have been performing well, importing coal from Russia it supplies it to power stations, handling the transportation and loading, and disposing of the mountains of waste ash at the other end. HSP has also bought Monckton Coke Works and the Maltby Colliery.
Owning the only Coke Works in the UK has significant benefits. The price of coal has been soaring recently with prices in 2008 rising dramatically. http://www.eia.doe.gov/cneaf/coal/page/coalnews/coalmar.html HSP has been able to negotiate key long term contract price rises with it's major customers, having a near monopoly on UK Coke production and brokers seem to be behind the curve with upgrades.
There are huge barriers to entry regarding imports as there is no spare capacity at ports nationwide. There are only nine ports with the capacity to bring in coal and HSP is currently operating from two of them importing 1.9 million tonnes.
The prospective p/e is low at around seven times, and there could be significant upgrades to come with growth pencilled in at 35-40% annually. With the credit crunch hitting and green issues seemingly taking a back seat, now would appear to be good times for HSP.
