US Edition Bunzl
760½p -11½
Questor says BUY
The distribution group, which provides disposable items to the likes of Costa Coffee, Asda and cleaning contractors, said that group revenue for the third quarter had risen 6pc compared with the equivalent period last year. In the year to date revenues are up 3pc.
The UK market, which represents more than 20pc of group sales, remains difficult. Revenues remain below those seen in 2009 because of "persisting economic conditions" but margins have improved.
Mike Roney, chief executive, describes his business as "GDP-plus". This means that it grows slightly above GDP levels, so it is geared to any recovery in the UK.
The company does have some UK public sector exposure – it supplies consumables to prisons and certain items to the NHS, for example.
However, the public sector represents about 10pc of business in the UK.
The company has a tried-and-tested method of growth by acquisition. It tends to buy family-run businesses where the current management are looking for an exit strategy.
The company has made nine purchases this year, including a Dutch acquisition announced yesterday. The new acquisition is principally involved in the sale of cleaning and hygiene and catering disposable products, predominantly to the healthcare sector.
The current-year earnings multiple is 13, falling to 12.1 in the year to December 2011. The prospective yield is 3pc.
The shares were first recommended at 571p on December 21 2008 and they are now 33pc above their initial recommendation price, having hit an all-time high last week. This compares with a market also up 33pc.
The shares remain a buy, although they could be volatile until a Western economic recovery is clearly taking place.
This means that new investors may want to wait for a more attractive entry point but the medium-term outlook and strategy is sound.