EUR 570.00 For Business Accounts Only

Augean (AUG LN, BUY, T/P 55p) - Initiation | Value remains - how will it be realised?

Following the announcement of a dispute with HMRC and a recent profit warning, the shares have fallen 47% to the point where significant value has now emerged. With the subsequent appointment of a new board (who own c25% of Augean), management will seek to improve shareholder value. Already, annualised cost savings of £3m have been identified and will lead to a reduction in the complexity of the business and a streamlining of reporting lines. We also argue that Augean could raise £18m to £24m from the sale of three underperforming divisions, which are dilutive to its main hazardous waste landfill activity. We initiate with a Buy and 55p T/P.