Trading in-line and delivering strategic progress
Today’s AGM update confirms that Vp continues to perform well, reiterating full year expectations despite challenges in certain markets (notably construction). Meanwhile, the new management team is progressing the refreshed strategic priorities set out in June.Broad market trends are consistent with those reported in recent periods. Infrastructure remains supportive, with good momentum and strong demand in transmission, water and civil engineering, although rail has seen a slower start to the year at the beginning of Control Period 7 (UK’s regulated five-year rail programme). The energy market is positive in the UK and internationally, whilst construction remains mixed (non-residential challenging, housebuilding subdued).
The new management team remains focused on the strategic priorities set out at June’s full year results: cross divisional collaboration, simplifying the Group’s operating model, and developing the digital roadmap.
Vp has an excellent track record of earnings and dividend growth over the long term, underpinned by the specialist focus of its activities and the diversity of its services and end markets. In our view, this track record warrants a premium rating.
We therefore consider the current valuation (a P/E of 9x and a 25% discount to peers) an anomaly and an attractive entry point for this high-quality business. We make no changes to our forecasts and maintain our 1110p Fair Value estimate.
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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