One to Watch: Discount 'unjustified'

The Asia-Pacific region is the group's largest market in terms of profitability (about 47 per cent of operating profit), while the company also has sizeable operations in the Middle East (about 34 per cent) and Europe (about 19 per cent).

Following the retirement of Hyder's long-standing management team, Ivor Catto – formerly head of design and engineering solutions at WS Atkins – was appointed as chief executive in December 2008.

By focusing on the company's core sectors and improving operational efficiency, he has sought to improve Hyder's cash-flow profile and profitability.

Initial impressions, formed after strong recent results, are positive. Hyder's order book has remained robust throughout the downturn and it has continued to win numerous significant contract awards, particularly in the Asia-Pacific region.

International demand for Hyder's services has remained healthy and is likely to more than offset any deterioration in UK public-sector spend, which at present only accounts for about 15 per cent of revenues.

Within the Middle East, the group has limited exposure to Dubai and is continuing to gain market share in the region.

Despite one-off restructuring costs, Hyder's net debt remains low and is expected to be around 11 million at year-end. Operating on a significantly reduced cost base, and with improving demand from its international markets, we expect Hyder to deliver earnings upgrades over the upcoming year.

We believe the group's current valuation, at a discount to its peer group, is unjustified.

• This article is for information and discussion purposes and does not form a recommendation by the manager to invest or otherwise.

BAT

2,289p +0.5p

Broker says BUY

BRITISH American Tobacco is in "good shape" for 2010, according to Evolution Securities.

The broker says: "Organic volumes in 2009 did disappoint, but hopefully Q3-09 was the decline trough.

"The recent bout of sterling weakness provides BAT with useful flex."

Informa

350p -0.4p

Broker says SELL

EXECUTION Noble calls publishing and conference firm Informa's full-year profits "disappointing", saying: "Organic rev-enue growth deteriorated in the second half and 'below-the-line' restructuring charges doubled."

The company is now a less attractive takeover target, the broker adds.