Shares digital

Hargreaves Services (HSP:AIM) PTP: £6.6m (£4.1m) Divi: 3.3p (3p)

Diversification has paid off as pre-tax profit rises 59%. Last February the industrial services group bought UK Coal’s (UKC) Maltby Colliery, having already used this deposit to feed its Monckton coke plant. Income from Maltby was less than expected because of equipment problems, but Monckton increased its revenue by 20% after introducing a new tyre shredding operation. Coal prices have risen sharply in recent months. Although this aids Hargreaves’ small spot market sales, it prefers to lock into long-term supply deals to increase earnings predictability. Wider benefits are seen on rising coal demand. Power stations keep Hargreaves’s hauliers busy, in addition to growing volumes for its European import business. A recent acquisition made Hargreaves a top-five player in the UK chemical tanker sector. The shares jumped 6% to 552p.

Shares says: The shares look cheap on 11.6 times earnings, a 15% discount to sector.

by: Dan Coatsworth