Insider: ex-FTSE 100 chief buys stock with re-rating potential

Former BAE Systems boss Ian King has spent £130,000 on Senior (LSE:SNR) shares after seeing the engineering business he has chaired for seven years slump to a six-month low.

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His dealings were at a price 12% below where shares started November, even though a fortnight ago Senior said its performance had been “comfortably” ahead of previous expectations.

Despite the boost of strong trading in aerospace, FTSE 250 investors focused on tougher conditions in Senior’s other division of flexonics and uncertainty over the timing and final price of its previously announced aerostructures disposal.

Shares fell as far as 164p, which compares with more than 200p in July and King’s purchase price last Wednesday at 173.9p. The shares closed last week at 182.6p.

City firm Berenberg, which reiterated its price target of 275p following the update, continues to see re-rating potential as Senior’s improving aerospace profitability drives cash generation.

The division, which serves both the commercial and defence sectors with components for fluid conveyance and thermal management, grew sales by 9.4% during the 10 months to 30 October.

This is faster than the 7.2% rate of the first half as Senior benefits from increasing production rates of commercial aircraft, higher defence spending and improved pricing.

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Berenberg lifted its aerospace revenue and earnings estimates for this year and next but cut its 2026 numbers for the flexonics division, which makes a range of high technology products including for vehicle emission control and industrial processes.

Land vehicle markets have been softer and are predicted to remain under pressure in 2026, offsetting strong aftermarket demand for nuclear and downstream oil and gas products.

Broker Peel Hunt said the market reaction to the update appeared to be overdone as its updated forecasts are little changed at a group level, albeit with some differences in the mix.

The broker has a new price target of 215p and described the medium-term picture as compelling, with Senior on track to deliver mid-single-digit compound revenues growth as well as improving margins and 15–20% return on capital employed.

Deutsche Numis lowered its profit forecast for next year by 10% and cut its price target by 5p to 215p, reflecting the softer market outlook in land vehicles.

The update in mid-November disclosed that the Senior is still aiming to complete the sale of its aerostructures businesses by the year end, despite the impact of the US government shutdown on the regulatory approval process.

The initial consideration is £150 million, with an additional sum of up to a maximum £50 million dependent on earnings in 2025.

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Senior said: “Whilst we continue to make progress, certain external supply-chain disruptions are impacting deliveries. We are diligently working with suppliers and customers to mitigate the impact and position the business to optimise the earn-out outcome.”

The proceeds from the aerostructures transaction will be used to reduce net debt and undertake a £40 million share buyback programme.

King joined the board of Senior in November 2017 and became board chair the following April. He was chief executive of BAE from September 2008 until June 2017, having originally joined its board as chief operating officer.

Other Senior directors have bought shares in recent weeks after non-executives Graham Oldroyd and Zoe Clements disclosed transactions worth £100,000 and £29,000 respectively.

A share about to motor?

The boss of Halfords Group (LSE:HFD) has backed up his upbeat tone in half-year results by spending £100,000 in his first purchase of the company’s shares since taking the helm in April.

The dealings by Henry Birch took place on Thursday at a price of 139.8p, having seen the shares drift from June’s 170p in the early weeks of his tenure to 132p in early September.

Birch, who is the former chief executive of Very Group, last week reported “good” financial, strategic and operational progress in results for the six months to 26 September.

Cycling was the stand-out performer with like-for-like sales growth of 9%, while the 498-strong garage network also posted a strong result despite the weaker consumer tyres market.

Underlying profit edged up to £21.2 million, keeping the company on track to meet the City consensus of between £36 million and £40.7 million. The company, whose shares yield more than 6%, said an unchanged dividend of 3p a share will be paid on 16 January.

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Birch told investors he believed there were significant opportunities for Halfords to make further inroads through its use of technology and data capability.

Whilst the operating environment is unpredictable, he said needs-based products and services and market leading positions in motoring and cycling were reasons for confidence in prospects.

Peel Hunt reiterated its Buy recommendation and 200p target price following the results. It said an increased focus on cash generation and returns meant that income funds as well as growth ones should be looking hard at Halfords.