Charter tipped for re-rating as an engineering group

Charter’s £380m acquisition of industrial fans and tunnelling equipment maker Howden, brings it close to being quoted in the engineering sector. Broker Albert E Sharp has now welcomed the former conglomerate as `a wholly independent, balanced engineering group’. Charter is listed under diversified industrials stocks, reflecting its previous involvement with South African mining and industry. […]

Charter’s £380m acquisition of industrial fans and tunnelling equipment maker Howden, brings it close to being quoted in the engineering sector. Broker Albert E Sharp has now welcomed the former conglomerate as `a wholly independent, balanced engineering group’.

Charter is listed under diversified industrials stocks, reflecting its previous involvement with South African mining and industry. Rating the shares a buy, Sharp looked for a `substantial’ market re-rating on its re-classification.

The broker said an engineering company should command a higher rating than a diversified industrial, and should attract support from fund managers keen to switch from more exposed sector players.

Charter is priced in the market at around 817p a share or a total of £783m.

Last year it made £96m pre-tax. With Howden included for 8.5 months, Sharp looks for £107m profit this year, rising to £123.5m in 1998. Earnings over the period are forecast to rise from 70.9p to 82.1p and dividends from 31.5p to 33.5p.