Shares digital

Aero Inventory (AI.) – Interims PTP: $22.7m ($14.5m) Divi: 6p (4p)

Good results with the ACTS (Air Canada) stock contract, won last year, progressing 50% faster than expected.

This will boost earnings for the next few years with Numis forecasting 103.5c this year, 140c next year and 169c in 2010.

Some extra profit should accrue from improving spare parts usage now that the inventory has almost doubled. The stock turn of 0.83 times might double by 2011.

This will also help cut bank borrowings needed to finance the stocks. Debt has trebled to just over $300 million but Lloyds TSB has increased its overdraft limit to $425 million.

AI has only a 3% share of the consumable aircraft parts market worth $15 billion. Another major contract is unlikely this year but 2009 could prove interesting.

Shares says: After recent falls the shares look cheap on a prospective PE of eight for the coming year.

by: Timon Day