Asfare Group - 121.5p

THE Asfare Group is an AIM listed company which is split into two operating divisions. Fire, Search and Rescue is principally made up of AS Fire and Rescue Equipment and Collins Youldon.

AS Fire and Rescue manufactures ladders and other equipment which is sold to the emergency and rescue services. Collins Youldon produces hosereels and related products for fire-fighting and oil tankers.

The Protection and Detection division is basically Todd Research Limited. Todd Research has a strong history, having manufactured the first commercially available X-ray mail screening equipment.

The company is currently growing strongly, both organically and as a result of having made two significant acquisitions recently. The terms on which these deals were done look attractive and appear to have added value to the business and this may not be fully reflected in the share price yet.

In November 2005, Todd Research was bought for £1.65m, plus some deferred consideration. This purchase included a freehold property which has since been sold for £1.3m.

Then in June 2006 Collins Youldon, which was seen as a natural partner for AS Fire and Rescue, was acquired. The total consideration was £912,000, which looks cheap for a business which made an adjusted pretax profit of £320,000 in the year to 30 June 2005 and £285,000 in the 10 months ended 30 April 2006.

The most recent set of interim results, released in late November, was accompanied by bullish comments from the company.

The order book is strong, including a £1.1 million order for supplying equipment to the new fleet of London Fire Brigade appliances, and there has been continuing improvement in the company's operating markets. An interim dividend of 1p per share was declared.

Asfare Group should deliver record figures for the current financial year and pre-tax profits are expected to be around the £1m mark.

Further progress is already anticipated next year and this would be very impressive for a company currently valued at around £6m. Indeed, the shares trade on an exceptionally low P/E ratio taking into consideration the fact that both turnover and profits are growing rapidly.

Since joining AIM in December 2003, the company has made significant progress. Having floated at 100p per share, the shares have been as high as 146p and as low as 71p.

At the current price we rate the shares as a BUY.

WARNING: Opinions expressed are the writers' judgments at the time of writing. The information does not constitute a personal recommendation and readers should seek their own professional advice as to the suitability of the investments.