MS international and Hydro International

Two further companies from the value portfolio.

Firstly, MS international which is already up by 12% since I included it in my January 5th blog.

On first glance this is a company that appears to have been hit by difficult trading conditions in the Defence sector, and a move from the main market to AIM which can cause institutional investors to become forced sellers of the stock.

After a cursory look, the financials do look attractive, and this could prove to be a good recovery stock. At the current share price of 195p, the company is backed by 143p of tangible assets and pays a dividend yield of 4.1%. The current p/e ratio is around 8, and since 1998 they have clearly implemented a progressive dividend policy.

Whilst earnings for the current year will be below expectations, encouragingly they have maintained the interim dividend and the longer term prospects appear quite positive:-

"the structure of the 'Defence' division's order book provides a solid base load of business stretching out to the end of the decade. This means that, despite any current market slackness, the division not only has contracts to be completed within the current year, but also has the positive benefit of a continuous stream of business, scheduled by customers for delivery in each successive year through to 2020."

A recent purchase of the shares by the Finance Director (around £20,000) may give rise to further confidence.

Hydro International (AIM: HYD) describes itself as a leading provider of environmentally sustainable and innovative products for the control and treatment of water.

Dealing with the financials first; it has a market cap. of £16m, a yield of 3.2% and a historic p/e ratio (based on last year's figures) of 9. The net tangible asset value is 50p. Again the dividend policy has been progressive.

Although the interim results were slightly ahead of last years with revenues up 6%, the company states :- "Our view remains, therefore, that both revenue and profitability in 2013 will be materially lower than 2012 levels, and that results for the year will again be weighted significantly to the second half-year." Hence the currently low p/e. As far as I can see there is no indication of their intention on the dividend policy this year.

In November the new Chief Executive announced a Global Leadership Team to drive forward growth. The shares have remained fairly static since earlier in the month.

As ever, no advice intended or given