Share watch: WYG down 68%, Lavendon price doubles

Contract Journal's monthly look at whats going up and what's going down on the London Stock Exchange

Pounding for White Young Green

White Young Green shares have been taking a right old pounding, dropped by 68% in the space of just four weeks.

Worth 400p-450p throughout 2007, WYG’s share price went down big-time throughout 2008. The sad story continued this year and shares are now worth next-to-nothing, trading at 8p currently.
 
Richard Rae, analyst with stockbroker RBS, said: “The new management team is addressing the legacy of an acquisition-driven strategy which had left the group too broadly spread and with a trail of sub-scale and uneconomic local offices.

“The elimination of drag on business performance and the concentration of the business in centres of excellence are likely to be positive for staff morale and customer service.”

Fellow analyst John Cummins, at WH Ireland, said: “Discussions with lenders have begun due to the risk that banking covenants will be breached later this year.”

WYG debt is big….and it is in euros. So not only has the group paid over the odds for its string of recent acquisitions, but that burden is rising as the sterling-euro exchange rate slides in the wrong direction.

WYG’s penny-share value gives the group a market capitalisation of just £5m which stands badly against debts running to £95m.

Lavendon’s share price more than doubles

Lavendon’s share price rocketed by a staggering 116% last month.

Nick Spoliar, analyst with Altium, takes the view that “stronger businesses will grow even stronger during the downturn”.

Lavendon is strong: for example Laing O’Rourke, ranking as a Top 3 hirer of rental equipment, Lavendon’s largest client.

Capacity is being taken out of the UK powered access market and this helps Lavendon’s prospects – the departure of SGB’s business alone removed 2% of the total.

Lavendon has itself helped this tightening as a result of the cancellation of more than £50m-worth of equipment orders since its acquisition of the Platform Company in March 2008.

Taylor Wimpey benefits from reports of more buyers

With Taylor Wimpey (TW) swimming close to the penny-share level these days, prices only need to move by a fraction of a penny for the earth to move.

They managed that sort of momentum last month and enjoyed a 12% share price rise as a result. Anyone who has lost their shirt on TW will still be full of anger as they still only up to 21p from an all-time low of 17p. Still they haven’t gone bust.

Why the improvement? Chris Millington, analyst with stockbroker Numis, said the house builders generally are slightly off the rack thanks to news that reservations on the rise as more people want to buy.

TW has been the subject of endless talk of refinancing packages, the worst scenario being a full-on debt-for-equity swap. That option would pretty well wipe out existing shareholders. The latest view is that salvation can be achieved by way of the issue of 10% warrants. At worst that means a relatively minor wobble in the value of shares.