Shares digital

The tide seems to be turning for waste to fertilizer company TEG (TEG) with investors finally acknowledging the potential deals it has in the pipeline. The shares rose 43% last week to close at 64.5p Friday (5 April) even though it posted a widening of pre-tax losses to £3.1 million from £1.3 million the year before.

The excitement has been generated because of the company’s involvement in the PFI project in Manchester to treat waste from the region. TEG’s portion of the contract, which is being over seen by construction manager Costain is valued at around £35 million for three years work.

The company’s share price has floundered as financial close on the project has taken longer than expected but recent advanced works orders have given rise to greater optimism that this will soon be concluded. ‘While we would not be surprised if financial close slips into May, we cannot see the deal going away, due to the contract size, the goverment’s commitment to PFI, and a £0.5 million order ahead of the deal closing,’ says Canaccord Adams analyst Mark Thompson. Despite the recent share price jump he believes there is plenty more upside potential. ‘Overall, we believe TEG remains exceptionally attractive at current prices,’ he says giving it a buy rating and setting a 168p target price, some 160% above its current level.

Shares says: After a few false dawns the company looks set to prosper this year on the back of the Manchester contract and shares should recover.