UK Business Post Group will deliver
City investors are slowly warming to the ground-breaking deal between Business Post Group, the parcel delivery firm headed by Paul Carvell, and the Royal Mail.
The deal, which opens up the postal network to the private sector, initially went down like a lead balloon as investors failed to work out how it would benefit BPG. The shares have dropped by about 15 per cent over the past few weeks, but now Arbuthnot, BPG’s stockbroker, has run the numbers.
It says the deal should contribute to group profits by 2006, reaching pounds 12.2m by 2010 on revenues of pounds 200m – compared with BPG’s total pounds 156m turnover last year.
Arbuthnot also estimates the venture’s net present value at pounds 93m, valuing the whole group at between 548p and 762p a share.
The group is also benefiting from booming consumer spending through its contract with Dell, the US computer giant that has lifted demand by cutting prices. This puts BPG (488.5p) on course to boost profits by about 16 per cent to pounds 18.75m this year, rating the shares at an attractive 19 times earnings.
