The Investment Column: Give Experian credit for its promise as a long-term holding
Uniq; SSL International
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Your support makes all the difference.Our view: Buy
Share price: 619.5p (+19.5p)
The credit expert Experian published its first set of results since its demerger from GUS yesterday, meeting analysts' expectations and sending its shares up more than 3 per cent. Next month, it will become one of the newest recruits to the FTSE 100, but having been owned by a company which was best known for its retailing enterprises (Argos and Homebase), it is a business which few British investors yet know much about.
The group is best known for its credit services division - collating credit scoring data from financial institutions, and reselling it to them when they want to decide whether or not to lend money to an individual.
This part of the company's business accounts for around half of its revenues and, given the high barriers to entry in its core US and UK markets, provides a stable backbone to the group. Having been in the market for some 30 years, Experian has become a brand which financial institutions trust.
The reputation which the company has built up on the credit services side has also helped to grow two of its other arms - Decision Analytics and Marketing Solutions, in effect providing credit consultancy and database management solutions for corporate clients.
The final leg for the business is its interactive division, which includes websites such as PriceGrabber.com and LowerMyBills.com, and provides much of the organic growth for the business.
As a well diversified company, with strong management - which has made its intention clear to pursue acquisitive as well as organic growth, but has shown it has enough discipline to not overpay - Experian is a solid, relatively low-risk stock.
One to tuck away for the long run.
Uniq
Our view: Avoid
Share price: 194p (-6p)
The news coming from Uniq over the past few weeks has been the most encouraging in years. This month the convenience food maker raised £280m from disposals. The lion's share came from the sale of its French spreads business to Dairy Crest, with the money raised far exceeding the expectation of most City analysts.
Uniq, which supplies most supermarket chains in Europe with ready meals, has seen its balance sheet transformed by the deals. The company's pension fund deficit has gone from £85m to just £22m, while its debt burden has disappeared and it can now boast a net cash balance of more than £70m.
There was more good news for its shareholders yesterday. It posted a drop in first half losses from continuing operations to £8.4m from £12.2m. Revenues rose 2 per cent to £352m.
To underline the management's confidence in Uniq's recovery, it unveiled an interim dividend of 2.5p a share. The only real disappointment was the performance of Uniq's UK desserts business, Minsterly. It delivered an operating loss of £6.8m. Geoff Eaton, the chief executive, said he had launched an aggressive turnaround plan which should see the business breakeven next year.
Clearly, Uniq is now on a sound footing. However, a full recovery is far from guaranteed. The food maker still has a lot of hard work ahead of it. Analysts predict it will move to breakeven by March and that it should be able to post a modest profit for the year ending December 2007.
Given Uniq's £220m market valuation, the shares are probably best avoided at current levels.
SSL International
Our view: Hold
Share price: 343p (+10.75p)
SSL International, the maker of Durex condoms and Scholls footcare products, is on the lookout for acquisitions in Europe and Asia. The latter seems to be a particularly attractive region for SSL to invest in, given its abundance of 18- to 30-year-olds, the age group most likely to buy one of its condoms.
The company is in the process of taking full control of its joint venture in China. Further deals in the country are a distinct possibility. India is also on the SSL acquisition hit list.
The company has enjoyed growing use of its Durex brand in the country, in line with India's increasing prosperity.
Nevertheless, Europe looks set to remain its key market for some time to come. At the last count SSL generated 74 per cent of its sales from the Continent. It is among Europe's older generation that the group's sex toys are most popular.
Thanks to this portfolio, SSL was able to unveil a 9.2 per cent jump in first half pre-tax profits yesterday to £18.9m. Its new vibrating ring, a sex aid, has proved very popular, particularly in Spain where SSL has managed to sell a staggering 3 million since the end of last year. The group hopes to boost its UK sales of the ring via a television advert which will start being aired before the end of the year.
Although SSL shares trade at a hefty 17 times forward earnings, the prospect of expansion in Asia, and the possibility of a bid for the company, makes them now worth holding.
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