Insider: Aggreko, Pinewood Shepperton

Aggreko NED backs return to power

Aggreko's first-half results have done nothing to repair the deep division among City analysts. The numbers were largely irrelevant as the struggling provider of power generation and temperature control solutions had already issued a profits warning two weeks earlier. This was more about chief executive Chris Weston's business review. But while the share price kept falling, one insider spied a buying opportunity.

Six months after joining the board as non-executive director, Uwe Krueger has snapped up 3,000 Aggreko shares at 1,102p each. The shares have more than halved in value since the end of 2012 and haven't been this cheap since early 2010. Physicist Krueger is currently chief executive at engineering consultancy WS Atkins.

But is this a smart move? Weston has just announced plans to focus more on the customer, technology and efficiency. It's in reaction to a decline in emerging markets and fierce competition, but the strategy will take time to bear fruit and Andrew Gibb at Investec Securities is impatient.  

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He still rates the shares a 'sell' and has put his estimates under review, admitting that "a further downward reset is likely". He says: "We do not disagree with the CEO's view that Aggreko remains a strong business in a market which still offers attractive growth prospects. However, there are clear near-term trading headwinds and there are also risks attached to the new strategy. With forecasts uncertain at present, a FY15E PE of c.16x looks a full rating in relation to a potential FY17 recovery. We remain cautious. We place our target price and estimates under review."

However, Barclays reckons the bad news is already priced in. It has upgraded Aggreko from 'equalweight' to 'overweight', although the price target drops by 25% to a more modest 1,700p. At that price, and even on forecasts below management's expectations, Aggreko would trade on multiples below the long-term average.

"We believe the majority of possible bad news has materialised, the revised strategy is sensible and that this is likely to prove one of the lowest valuations relative to the market investors will experience across the economic cycle."

Pinewood head backs studio growth

It's been six weeks since Pinewood Shepperton's full-year results revealed the film studio increased operating profit by 18% to £5.8 million on revenue up 17% at £75 million. An costly expansion programme is also underway as the company - which has worked on the new Star Wars film and 24th Bond movie Spectre - has been unable to meet all the demand from large films. 

"We are encouraged that the current financial year has got off to a strong start with good visibility into the coming year," said chief executive Ivan Dunleavy. Now, the boss has put his hand in his pocket and bought 50,000 shares in the company at 440p each.

That's about in the middle of the trading range for the past 18 months, a consolidation phase following an impressive rally from about 115p in 2009. It takes Dunleavy's stake to 177,884, worth almost £800,000 at today's prices.

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But that's nowhere near the 2.32 million shares owned by Crystal Amber. In April, the activist investor, which five years ago tried unsuccessfully to force out Pinewood chairman Lord Grade of Yarmouth, took its stake above 4%, but there are reports it has concerns about the business. It is said to have argued that profits were flattered by tax credits and joint ventures, and that management should implement some of its ideas to improve the business.

Dunleavy is clearly optimistic about prospects.

This article is for information and discussion purposes only and does not form a recommendation to invest or otherwise. The value of an investment may fall. The investments referred to in this article may not be suitable for all investors, and if in doubt, an investor should seek advice from a qualified investment adviser.