Sell off appears way over done
In their trading update yesterday, VP says that the domestic homebuilding and infrastructure markets were “supportive” in H1’22, with construction “stable”. Here the Group experienced “good” power transmission demand (re renewables & offshore wind) augmented by AMP7 water & civil engineering which both “picked up” in Q2.We reiterate our FY’23 adjusted PBTA & EPS forecasts of £41.4m & 78.1p respectively on revenues up 4.2% to £365m, with net debt (pre IFRS 16) closing Mar’23 at £130m (ie flat YoY), equivalent to a comfortable 1.4x EBITDA.
This in turn puts Vp on attractive 4.5x EV/EBITDA and 9.2x PE multiples, whilst paying a 5.4% dividend yield and generating a 15% ROCE. Consequently, we think the stock is materially undervalued and instead estimate its worth (at least) £11.30/share – offering more than 50% potential upside from current levels.
Vp is involved in rental business. Co. provides products and services to range of end markets including infrastructure, construction, housebuilding and oil and gas. Co. comprises a U.K. and an International Division. Co.'s U.K. division comprised of: Hire Station, which provides tools for industry, construction, and DIY; Torrent Trackside, which is engaged in railway plant; Groundforce, which is engaged in construction solutions; TPA, which is engaged in portable roadways; and U.K. Forks, which is engaged in material handeling. Co.'s International division compsrised of: Airpac Bukom, which is engaged in oildfield services; and TR Group, which is engaged in technical equipment rental.
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