Investors are overlooking disappointing full year results at building products distributor SIG (SHI) as Brammer (BRAM) boss Meinie Oldersma is appointed as its new CEO.
The stock is 10.8% higher at 118.8p. Meinie has a track record of turning around struggling business and driving sales upward.
In January, SIG enjoyed a small rally despite reporting a tough 2016.
Underlying operating profit has declined 8.6% from £99.9m to £91.3m in the year to 31 December, while the dividend was cut from 4.6p to 3.6p.
NEW BROOM
SIG has been hit by supplier price inflation and competition, and admitted implementing its strategy has been challenging.
Canaccord Genuity analyst Aynsley Lammin says: ‘Overall the market should be relieved that things have not worsened with recent trading showing some signs of improvement and management already taking action on the balance sheet and leverage.’
The analyst is optimistic that the new management can potentially deliver higher margins and sales performance over the medium term.
'EARLY SIGNS ENCOURAGING'
Broker Panmure Gordon & Co analyst Adrian Kearsey says the turnaround will take time, but that ‘early signs are encouraging’ as management focuses on boosting sales.
He welcomes the company’s strategic change from targeting internal issues to focusing on selling its products to clients.
UBS analyst Miguel Borrega does not share this positive view, recommending investors ‘sell’ as he believes that underlying weak trends and the dividend cut will put pressure on the shares.
