MARKET COMMENT
Shares For Tree Huggers

By David Kuo (TMFDragon)
December 16, 2003

Environmentalists get a pretty raw deal from the media most of the time - but why should they? Environmentalists are, after all, only concerned about the impact that man and industry has on environmental quality.

Thanks to the environmentalists, businesses are slowly waking up to green issues. Even the much-criticised oil companies are working on alternative sources of energy. These include wind power and fuel cells, which could one day replace the oil that we put into our much-loved oil guzzlers.

Apart from the integrated oil outfits, lots of other businesses are now climbing on board the environmental bandwagon. These include Mayflower (LSE: MFW), which designed, and now manufactures and operates the Mayflower Resolution, an offshore windfarm installation vessel. Ironically, Mayflower is better known for designing and manufacturing coach and car bodies!

The engineering set up FKI Group (LSE: FKI) is also involved in wind power through its recent acquisition of DeWind. Wind turbine activity is still only a tiny part of the group's overall business accounting for just over 2% of total turnover.

Clean Diesel Technologies (LSE: CDT) is an American-based company with a listing on the London Stock Exchange. The company recently signed a deal with Coca-Cola Enterprises (NYSE: CCE) to retrofit a fleet of beverage delivery trucks with its Platinum Plus Purifier System. However, this loss-making speciality chemicals outfit has racked up losses of some $2.2m in the first nine months on sales of $0.5m this year already,  and could be one to leave alone.

RPS Group (LSE: RPS) is an environmental consultancy that offers professional advice and technical support to small and large companies. Its Health, Safety and Environment division, for example, conducts site visits to ensure that chimney emissions comply fully with Environmental Protection regulations. 

Revenues at RPS have been improving steadily over the last half-decade. Turnover this year is expected to rise a further 15% to £120m. A pre-tax profit of £21m has been forecast for 2003, representing an 18% increase from last year. With earnings per share estimated at 8.25p, the shares, which stand at 146p, value the company at 18 times prospective profits. At this rating, the shares look fully priced. Its dividend yield of 1.4% is not especially enticing either.

Symphony Plastic Technologies (LSE: SYM) has a new technology that could revolutionise our blasé attitude towards the use of plastics. Symphony has developed an additive, d2w, that allows for the controlled degradation of plastics. Depending on the quantity of d2w that is added, polythene can degrade into water and carbon dioxide from as little as 60 days or as long as 6 years.

Symphony is expected to report a three-fold jump in revenues this year to £12m, which should help it swing into a profit of £0.3m. Turnover is expected to rise again next year to £16m and pre-tax profits are expected to improve to £0.9m. Earnings per share of 0.6p have been pencilled in for 2003 rising to 2.1p per share for 2004. The shares, which trade at 25.8p, value the business at 12 times 2004 profits. This is not particularly expensive, though perhaps a bit risky given that this is essentially a "one-product" company.

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