reports
- Toby Thorrington
Tyman - Focus on US fix ahead of setting a new agenda
In the near term, Tyman’s new management team is tasked with rectifying production-related issues in North America that have caused us to reduce our earnings estimates in all three forecast years. A strategy update is scheduled for mid-2020 and a reduced target gearing range perhaps suggests greater focus on internal/organic performance for the time being. Tyman’s rating is now sub 10x on a P/E basis with a prospective 6.1% dividend yield for the current year.
- Toby Thorrington
Epwin Group - Making progress in soft markets
Epwin’s H119 update reiterated existing guidance. Markets remain soft but business improvement activities, including new facility and product development investment, are ongoing and should be reflected in earnings improvement. The company remains conservatively funded and in a good position to continue to develop. An excellent dividend yield and modest rating at an earnings low represent good entry points for investors.
- Toby Thorrington
Walker Greenbank - Maintained expectations, awaiting strategy update
Positive steps have been taken in the UK and US that will benefit Walker Greenbank in future periods and although the domestic market remains challenging, management’s full year expectations are unchanged. The upcoming strategic update may bring the prospects for re-building earnings and associated valuation metrics into sharper focus for investors.
- Toby Thorrington
Norcros - On track for expected progress in FY20
The Norcros management team is delivering against expectations and maintaining a stable outlook even though certain underlying markets have their challenges. In contrast to its market positions, the company’s rating is anything but premium as the building materials and, perhaps, buy and build strategies appear to be out of favour with investors. The track record is very good – as is the prospective dividend yield – and greater recognition of this is warranted in our view.
- Toby Thorrington
Renewi - Start to FY20 as expected
Year to date trading has been in line with management’s expectations, which are also unchanged for the year as a whole. Forward momentum in the important Commercial division is continuing and we see other noted actions as positive, logical moves. Investor sentiment appears to have waned since the FY19 results announcement, but the investment case is gradually strengthening in our view and from a single-digit P/E base.
- Toby Thorrington
Severfield - Converting orders into profitability
FY19 results were in line with guidance and our expectations, with the Indian JV performance a clear highlight, while investment and order book development in the year in both the UK and India bode well for future progress. In the near term, the dividend yield is an obvious attraction but we believe converting strong order positions into profitability represents the driver of share price progress from here.
- Toby Thorrington
Rubicon - Growth to come after FY19 challenges
FY19 represented Rubicon/ArborGen’s first full year as a unified company under single parent ownership. Some restructuring activity and extreme weather events held back in-year sales performance and the latter also have implications for mix in the next couple of years. Nevertheless, ArborGen’s market positions remain strong and we believe that this will translate to good earnings growth in each of our estimate years, albeit at a slower rate than we previously anticipated. Our core DCF is now...
- Toby Thorrington
Walker Greenbank - Year to date trading as expected
An in line AGM update is to be welcomed after a tough trading year in FY19. Market conditions have yet to show any marked improvement, but UK cost savings and some international progress support our existing estimates. The new management team expects to deliver a strategy update in the Autumn and this should provide insight regarding future growth prospects. The rating has increased in recent months though FY20 should represent trough earnings in our view.
- Toby Thorrington
Renewi - Exit from Canada announced
Selling the Canadian Municipal operations is consistent with Renewi’s strategy of simplifying its business portfolio and deleveraging the balance sheet. The completion of this transaction and possibly one other that has been flagged will allow investors to focus on the company’s positions, operational improvements and growth aspirations for its core markets. Progress here is likely to be reflected in a re-rating in our view.
- Toby Thorrington
Low & Bonar - Slow trading start to FY19, disposals underway
May trading newsflow causes us to lower earnings estimates significantly. Improvements to operational performance and further de-leveraging are firmly on management’s agenda and the disposal of the construction fibres operation will help in the latter regard. Metrics point to attractions for deep-value investors.
- Toby Thorrington
Telford Homes - Executing the Build to Rent strategy
FY19 results were in line with February guidance and the year ended with lower net debt than we had anticipated. The migration to a dominant Build to Rent (BTR)-led pipeline is well underway. The first developments of this type were handed over in the year and, together with the announced strategic partnerships, other live projects indicate good momentum in this sub-sector. As before, FY20 will reflect other project and open-market effects before earnings start to rebuild from FY21, consistent w...
- Toby Thorrington
Renewi - Commercial progress offsets other areas in FY19
FY19 was a mixed year for Renewi with variable portfolio performances and two particular external challenges faced (at ATM and Derby). Despite this, the company still delivered profitability in line with the prior year. Net debt reduction and operational improvements will be key focus areas for FY20 and beyond and these remain key near-term sentiment drivers in our view. The share price has started to recover over the last couple of months although the rating suggests this has further to go.
- Toby Thorrington
Tyman - Guidance unchanged
In the first four months of FY19, Tyman’s headline revenue increased by 15% y-o-y and was flat in underlying terms (excluding FX and acquisition effects). While activity levels were slightly lower than management expected, full year operating profit guidance and our estimates are unchanged. Earnings multiples remain in single digit territory and Tyman now offers a prospective 5.6% dividend yield also.
- Toby Thorrington
Epwin Group - Improving ongoing business footprint
Steps were successfully taken by Epwin to consolidate its ongoing operational footprint in FY18, a challenging trading year. We expect growth to resume this year with a small contribution from PVS (acquired after the year-end) also. It is too soon to call a significant uptick in market conditions but the start to FY19 has been encouraging according to management comments. An 8.3x P/E multiple offers a reasonable entry point and investors can collect a 3.9% yield with the final dividend payment (...
- Toby Thorrington
Renewi - ATM prudence and debt management actions
Management flagged stronger Q4 trading, in line with its expectations. Netherlands soil remediation activities require regulatory approval and a prudent stance has been taken over resuming shipments there, which is the primary driver of our significant estimate reduction. In this light, the steps being taken for debt management, including a proposed dividend reduction, are entirely logical. Renewi’s rating is at depressed levels – we feel due to earnings uncertainty and higher debt levels â€...
- Toby Thorrington
Severfield - Good end-FY19 order book momentum
Higher order books in the UK and India are a positive way to end FY19, which concluded in line with previous guidance. UK market conditions appear to be stable while India is continuing to strengthen. Year-end net cash is similar to H1, and slightly below where we had previously expected, but Severfield retains its conservative balance sheet position. Save for the net cash adjustment, our estimates are unchanged; the P/E rating reduces from 11.1x for the trailing year to 10.3x for FY20 with EV/E...
- Toby Thorrington
Norcros - Making good organic and acquisitive progress
FY19 ended in line with management’s expectations following a good H2 sales performance. Momentum here is to be supplemented by the post year-end acquisition of RAP Plumbing Supplies, which enhances earnings estimates by c 3%. Norcros is executing well against its strategy but the rating suggests that this is being overlooked by the market.
- Toby Thorrington
Accsys Technologies - EBITDA milestone achieved, Hull build delay
FY19 performance at the Arnhem Accoya facility has been robust with successful delivery of higher volumes from raised capacity. Construction delays at the new Hull Tricoya facility outside Accsys’s control are a near-term frustration and dampen EBITDA progression over our forecast horizon. That said, achieving a positive group EBITDA outturn in FY19 is a significant milestone. The current valuation is underpinned by Arnhem.
- Toby Thorrington
Walker Greenbank - Tough FY19, dividends rebased
A new CEO appointment follows other board changes; with tough UK conditions set to persist, operational improvements, international growth and brand development are all firmly on the agenda and a refreshed strategic update will come from the new team later in the year. With a broadly maintained payout ratio in FY19, lower earnings drove a similar reduction in dividends. With lower earnings anticipated in FY20, the company is trading on a prospective 3.8% dividend yield and a 7.8x P/E.
- Toby Thorrington
Premier Technical Services - Earnings growth undervalued
FY18 results met market expectations but PTSG’s share price performance over the last six months has been weak, in contrast with rising earnings estimates over this period. Acquisitions have been a good fit in our view and with a prospective net debt:EBITDA below 1x we still consider the company’s financial position to be set conservatively. A PEG of c 0.7x and FY19 P/E of 7.2x provide a gauge of the weakness of sentiment for PTSG, which we expect to deliver a double-digit three-year earning...
Unfortunately, this report is not available for the investor type or country you selected.
Report is subscription only.
Thank you, your report is ready.
Thank you, your report is ready.