Northbridge Industrial Services - 170.5p

Northbridge Industrial Services was established in January 2005 for the purpose of acquiring companies that hire specialist industrial equipment such as generators.

Chief executive Eric Hook and other experienced directors look to identify, acquire and consolidate complementary businesses in the sector that have significant growth potential.

The group's results for 2007 showed a useful increase in revenues, profits and earnings per share over the previous year, and the recent AGM confirmed that trading in the current year had continued this trend with order books standing at record levels.

Much of Northbridge's business in both the UK and abroad is in the power reliability and oil and gas sectors and means a growing demand and solid growth prospects are expected.

In the year to December 31 2007, the group reported revenues of £11.2 million, up 62.3 per cent, whilst pre-tax profits rose to £1.6 million, up 45.5 per cent. Earnings per share increased by 20 per cent to 15.3p and the dividend for the year was raised from 2.0p to 3.0p. The group ended the year with net cash of £1.1 million, unchanged from the year before, even after spending on acquisitions and equipment.

The main subsidiary, Crestchic, also reported record levels of trading, with an excellent performance across the whole of the company's activities.

Northbridge has three operating businesses. Crestchic Limited is the world's leading load bank specialist. Load banks are primarily used for testing independent power supplies, such as diesel generators. Major users include off-shore oil and gas installations and ships and therefore include South Korean shipyards (Daewoo, Samsung and Hyundai) and the oil and gas industry. Other customers are those that have independent standby or backup power systems such as hospitals or banks. Northbridge (Middle East) FZE (NME) was incorporated in 2007 and focuses on the Middle East and Caspian gas and oil regions, providing equipment to buy or hire. RDS (Technical) Ltd provides generators and related products to the Caspian region from its office in Azerbaijan.

The AGM confirmed that trading continued to be strong in the first months of 2008 and, given the current strength of the oil price, this demand seems set to increase yet further. Operations in the Middle East have made promising starts and further acquisitions can be expected going forward.

Despite encouraging prospects, the shares stand on a modest p/e ratio of just 9.3x, providing scope for re-rating.

Recent share buying by directors adds to our confidence and so we rate as 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.