Hightex Group - Re: HTIG Stream Log - Hightex poised to kick on...

Hightex poised to kick on Tips of the week BULL POINTS: ■ Turnaround on track ■ Costs under control and company well funded ■ €150m pipeline of opportunities BEAR POINTS: ■ Reliant on large contracts ■ Foreign exchange risk The FIFA World Cup in South Africa is the perfect shop window for Hightex , a provider of architectural membrane roofs and facades for large scale projects. The company is responsible for the roofing on both the soccer stadiums in Johannesburg and Cape Town and is one of only a handful of companies worldwide with the experience of erecting such structures using membranes. It has already won a number of sizable contracts for upcoming sporting events including the UEFA European Championships in Poland and Ukraine in 2012. The market is worth €150m-€200m (£124m-165m) annually according to the company. IC TIP RATING Tip Style Growth Risk rating High Timescale Long term Membranes are increasingly favoured for high profile projects as they are lighter, more versatile, and more energy efficient than glass. For security reasons membrane is also preferred as it does not shatter. Hightex has a growing portfolio of different projects including the retracting roof that made its debut at Wimbledon last year. Hightex listed on the Alternative Investment Market (Aim) in 2006 but within two years had become bogged down with a series of small and marginally profitable projects. A revamp of the management team and a focus on margin, cash generation and larger contracts has resulted in a strong turnaround in the business. In the past year three contracts - the aforementioned deals for the Warsaw National Stadium and Kiev Olympic Stadium plus a €13.4m deal for BC Place Stadium in Vancouver, Canada - have added €45m to the company's order book. Hightex has identified a promising pipeline of €150m worth of business for the coming years as the global cycle of sporting events continues. The company has already formed a partnership in Brazil which is preparing bids for several of the stadiums, both new build and refurbishments, for the FIFA World Cup in 2014 and the Olympics in 2016. It is also targeting the UEFA European Championships in France in 2016. Away from sporting stadia, Hightex has garnered a reputation as a supplier to architectural projects such as Bankok International Airport, the Munich Olympic Hall and the Dolce Vita shopping centre in Lisbon. Prospects in the pipeline include further work on Bangkok's airport expansion, Heathrow Terminal East and King Abdullah's International Garden in Saudi Arabia. Two placings have put Hightex on a stable financial footing and the company is moving to a system where it pays out insurance for projects rather than putting up bonds, which should free up cash. Although it is in the running for high profile, and big ticket, projects, Hightex is also bidding for smaller schemes which it can turn around rather more quickly so there is potential for the pipeline of work to tick up between larger project wins. Risks remain, not least of all contracts slipping and not being recognised in the financial period they are forecast to contribute to. But Hightex's recent record of delivery is solid. There is also foreign exchange risk as Hightex does not hedge its exposure despite potentially operating in several different currencies.