Jefferies highlights new growth opportunities at Aggreko

6th Jun 2014 10:33

Jefferies has maintained a 'buy' recommendation for temporary power and temperature control group Aggreko, saying that it sees the company "developing future growth" after an analyst visit this week."There are a range of opportunities available to Aggreko with some new and different ways of working," the broker said."This bias felt skewed to Local [rental division] which we suspect is performing ahead of expectations with plenty of exciting opportunities in oil and gas, temperature control and further expansion into Latin America (LatAm)."Jefferies said analysts had not given the local business the same weighting as its power projects business despite making up 60% of group revenues and 50% of operating profits, with the Americas representing half the division.The broker said Aggreko normally targets growth at twice the rate of gross domestic product (GDP) expansion, "but we felt there was a high degree of confidence in this business at the moment".It added: "Australia aside, all regions are growing well and we suspect some of the best performing regions could be growing at many times GDP."Meanwhile, Jefferies highlighted opportunities in power projects in South America given the company's confidence that a new format in Panama will work elsewhere. "Faced with a less buoyant power projects market, Aggreko is getting on the front foot and creating completely new markets for itself. We saw interesting examples in cooling, remote monitoring, loadbank testing, microgrids, power projects (direct to market and direct to industry) and mini projects."There are also growth opportunities in natural gas, which could offer "attractive returns", and the potential to expand temperature control - largely a US business at the moment - into developing regions such as LatAm, Asia Pacific and Africa.Jefferies kept a 1,800p target price for the stock, which was trading 2% higher at 1,690p by 11:07 on Friday.BC