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Company spotlight: Ennstone


ENNSTONE is the only option for investors interested in a listed UK aggregates business other than Hanson. But, like many firms with a relatively small capitalisation, it suffers from a lack of coverage.

Ennstone is valued at around £170 million. Not tiny, but Hanson's market capitalisation is over £5 billion. House broker Altium has a 'buy' recommendation and a 56p target price.

That is not unreasonable given that the shares were motoring towards the 60p mark this spring until a placing of new stock at 46p to raise £27.4 million stopped that rise.

Any buyers who took advantage of a share price weakness at the end of last year would still have been pretty pleased, though. Back then, the stock dropped below 40p. Despite retreating since this spring the current price is well ahead of last year's low of 37.5p.

With the placing oversubscribed, Ennstone still has supporters in the City and this was repaid by the recent interim results. Turnover rose £17 million to £97.8 million with pre-tax profits edging up £571,000 to £5.6 million.

Ennstone has a spread of operations in the UK, USA and Poland that offer protection from a regional downturn - not that any is likely at present.

The strategy of buying UK surfacing contractors to provide a route to market for Ennstone's aggregates was beneficial and extended into precast concrete manufacturing in August with another acquisition.

That takeover spree has subsided but Ennstone is determined to stay in the minds of investors. Worth a punt.