Shares digital

SIG (SHI) 802.5p

The roofing group is confident of a sharp increase in insulation sales as the UK drives forward energy efficiency programmes. (Read the full story: www.sharesmagazine.com/node/2879)

Shares says: Positive financial performance but until sentiment improves on the stock the share price will stay weak – having halved in latter 2007. Last year, SIG attracted widespread attention on prospects in new government-related insulation schemes, but it was a short-lived fanfare. The latest trading statement appears to be having a longer-lasting upward effect on its share price, but there are risks to the equity growth. SIG is still exposed to the fragile construction sector. Until market conditions improve, this negative factor will restrain a full share price recovery. HOLD

The Times says: SIG’s exposure to insulation – where demand is being driven by ever-stricter building regulations on energy efficiency – means that its growth should continue to outpace its sector. It typically takes at least two years for the full effects of new laws to take hold, so the benefits of UK regulations introduced in 2006 are still coming through. At 752p, SIG trades at nine times current year earnings, a modest premium to the US-exposed Wolseley but too low for the biggest player in its niche. BUY

The City - Numis says: SIG has suffered in the recent sell-off because of its exposure to the commercial office market. Regulation change is likely to be at least an offset. On 8.8 times PE going forward, the shares hold short-term fundamental attractions, coupled with longer-term growth prospects. We are therefore positive on the group. (Rating under review)