CURRENT ACCOUNT: Shares in Cavan-based building materials group Kingspan remain under pressure with AIB Investment Managers (AIBIM) the latest shareholder to offload the stock. It sold more than 1.2 million shares in the company last Friday to cut its stake to 5.98 per cent from 6.7 per cent.
The shares are currently trading at five-year lows below €2, a long way off last year's all-time high of €4.80. The ill-judged acquisition of US flooring company Tate last year and the spate of profit warnings that followed have undoubtedly hit the company.
What one analyst described as its "weakness at corporate governance" hasn't helped either. The Irish Stock Exchange is understood to be looking into heavy trading in Kingspan shares ahead of the profit warning last March. The firm recently issued a statement, saying first-half results would be in line with market estimates, in response to volatility in the share price. With the previous furore over share dealings that led to the resignation of director Mr Brendan Murtagh, such volatility was unlikely to reassure shareholders.
The focus now is on the half-year results, due on September 10th. But the latest statistics on US construction spending do not provide much grounds for optimism. US office statistics, which are most relevant to Kingspan, have been awful for some time with spending down 33 per cent year-on-year in June. Nonetheless, with forecast operating profits this year of €78 million to €92 million and strong cashflow, the shares look oversold.
At levels well above the current share price, analysts described the company as an acquisition target. There has been no sign of an offer, which would need the backing of chief executive Mr Eugene Murtagh, who holds 24 per cent of the shares. As management controls some 28 per cent of the company, an MBO must surely come up for consideration if things don't improve.
