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  • 18 Oct 18

Does sector weakness belie fundamentals?

Shares of housebuilders have fallen, possibly prompted by concerns about home prices and margins, potentially triggering weakness in the wider sector. We believe, however, that developers and basic material producers such as Forterra have limited exposure to those drivers and operate under very different dynamics. Their pricing power is underpinned by low inventories and a consolidated sector. The positive demand-supply situation could improve further due to new government housebuilding initiatives.

Companies: Forterra
  • 30 Jul 18

Stronger foundations?

Forterra’s guidance in its HY results today that FY 2018 results would be “in line” contrasts with this morning’s unscheduled trading update from larger rival Ibstock, warning on 2018 profits, due to production difficulties, needing more spending. We believe that Forterra, the UK’s number two, is reaping the benefits of several plant upgrades since the IPO and more aggressive rationalisation during the last downturn. We have kept our PBT, EPS and DPS estimates unchanged.

Companies: Forterra
  • 25 May 18

Outlook fair despite ‘beastly’ weather

Forterra’s AGM statement revealed that poor weather from the ‘Beast from the East’ had delayed production and deliveries during Q1 – in common with the rest of the sector – but predicted the shortfall would be made up during the rest of the year and that the outlook for the year remained in line with its expectations. It also outlined in detail its previously flagged plans to boost capacity by c. 100 million bricks.

Companies: Forterra
  • 19 Mar 18

Time to press the button

Two features stood out in Forterra’s first full year results since its IPO: another significant ‘beat’ on cashflow expectations; and the formal signal that Britain’s second biggest brickmaker was to ‘press the button’ on a new plant, having previously waited until there was clear evidence of sustainable housebuilding demand. We believe the time is right, but that the company will remain measured in its expansion, in keeping with what we believe is its conservative track record.

Companies: Forterra
  • 09 Mar 18

Mind the gap

Next week’s FY 2017E results from Forterra, we envisage, are likely to feature the continuing sector theme of the gap between demand and supply for bricks – an issue highlighted in rival Ibstock’s figures. Latest government data show stocks at almost the same lows as during the “shortages” of 2014, amid new recent highs in imports. Government policies to increase housebuilding supply indicates to us that there is scope for Forterra to move ahead with measured capacity increases.

Companies: Forterra
  • 25 Jan 18

Pump up the volume

Chancellor Philip Hammond’s Budget pledged to add 300,000 homes a year, up from 185,000 in 2016. This should support or even strain a favourable supply-demand balance, underpinning pricing of Forterra’s bricks, blocks and specialist products. The Bison deal may bring innovative systems to build homes faster. We have nudged up FY 17E estimates after the November trading update, but suspect the mid-term outlook could improve further, given this positive backdrop.

Companies: Forterra
  • 01 Aug 17

Solid H1 earnings and cash flow bode well for FY

Strong demand in the newbuild housing market helped towards a good first half result, in terms of meeting our FY 17 EBITDA and another strong cash performance. Although company guidance for the FY is unchanged, we sense there is scope for slight outperformance, since the H1 result represents 53% of our FY estimate. Net debt was c. £10m below our estimates, before the Bison acquisition, which we thought was a positive move

Companies: Forterra
  • 28 Jul 17

Bison deal concretes group growth ambitions

Brick and concrete products manufacturer Forterra has broadened its end markets and added to the group's growth prospects with what we see as the opportunistic £20m acquisition of the trade and assets of Bison Manufacturing from loss-making construction group Laing O'Rourke. Forterra states that it would have cost over £35m to build the business itself on a greenfield site and estimates that the deal will make returns in excess of its cost of capital during 2019. We estimate it will at least break even in 2018.

Companies: Forterra
  • 26 May 17

Building momentum

Strong housebuilding data, encouraging statements from leading housebuilders and the Conservative Manifesto’s pledge to build 1.5 million homes by 2022, reinforce, in our view, the robust tone of Forterra’s AGM statement. This indicated strong brick demand and overall trading in the first four months and, once again, impressive cash flow. Short-, mid- and long-term trends appear encouraging, in our view.

Companies: Forterra
  • 21 Apr 17

Happy returns

A year to the day after the IPO, Forterra's US private equity owner has placed its entire remaining c. 53% holding at 195p – a 5% discount to yesterday's closing price. The placing was larger than initially proposed yesterday "due to strong investor demand". We believe the market may have viewed the 'overhang' as a concern and this might have partly explained the stock's discount versus larger rival Ibstock (IBST). The shares have reacted positively in early trading, rising to a new high. This comes against what we see as a positive backdrop for suppliers of bricks and other new housing products.

Companies: Forterra
  • 16 Mar 17

Glass (at least first) half full

The top three brickmaker’s FY 2016 results announcement gave an upbeat outlook, for at least the first half of the current financial year, driven by “strong” house-building levels and a reduction in the stock overhang among builders’ merchants. It maintained guidance for FY 2017E. We have trimmed back our estimates, which were slightly ahead of consensus, principally to reflect a higher depreciation charge than we had modelled. We continue to believe that Forterra offers long-term growth, fuelled by Government housing policy.

Companies: Forterra
  • 03 Mar 17

A tonne of bricks

Government aid to boost housebuilding could require at least half a billion more bricks by 2021, we estimate. This reinforces what we see as Forterra’s attractions to investors: a fundamental product, underpinned by long-term demand; a consolidated market; and conservative management. Forterra has, in our view, a particularly attractive risk-reward balance and an undemanding valuation relative to its peer group.

Companies: Forterra
  • 13 Dec 16

Brick stock overhang continues to abate

Latest building materials data from the government shows that the level of brick stocks held by manufacturers has fallen for five months and is now 11% below their recent peak in May 2016. Moreover, the more representative YoY rate of increase has narrowed almost every month for a year as manufacturers, particularly Forterra, have trimmed production, while imports have also normalised. This, in our view, could support pricing power and help dispel concerns among some investors about over-stocking by big customers.

Companies: Forterra
  • 24 Nov 16

Chill for agents, spring in housing volumes

Yesterday’s Autumn Statement appears to be: good for 'alternative' housing providers, UK-focused contractors and materials producers; potentially problematic for mainstream housebuilders; and bad news especially for lettings-dominated agents. Chancellor Philip Hammond’s key spending measures included an additional £3.7bn funding to boost new housing volumes and £1.1bn for roads. Shares in estate agents, however, have fallen in response to the threat to ban them from charging fees to tenants.

Companies: GFRD KIE FORT CWD FOXT WINK COST

  • 16 Nov 16

Solid statement. Stronger cash flow.

Brick maker Forterra has issued a reassuring trading update ahead of tomorrow’s investor day, highlighting “encouraging” trends in volume and industry stock levels. We are not changing our P&L estimates but have again trimmed our projected net debt, notwithstanding further modest capex signalled for 2017. The company, in our view, stands to gain from likely government action to boost housebuilding volumes and has continued to demonstrate its operational and financial focus, at a still attractive valuation.

Companies: Forterra

Research, Charts & Company Announcements

Research Tree provides access to ongoing research coverage, media content and regulatory news on Forterra. We currently have 21 research reports from 3 professional analysts.

Open
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Range Today
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52 Week
219/333p
Market Cap
£0m
Enterprise Value
£60.8m
Pension Liability
£0m
# Shares
0m
Latest PE (hist)
11.48
Div Yield
3.37

Latest News/RNS

(more news)
Date Source Announcement
17Oct18 08:49 RNS Holding(s) in Company
16Oct18 14:51 RNS Holding(s) in Company
09Oct18 09:34 RNS Director Declaration
05Oct18 14:07 RNS Employee Benefit Trust Share Purchase
04Oct18 08:58 RNS Grant of Options under 2018 SAYE Scheme
27Sep18 13:37 RNS Holding(s) in Company
18Sep18 16:29 RNS Holding(s) in Company
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  • 23 Oct 18

Flowtech Fluidpower - Q3 trading update: on track, no surprises

Overall trading was in line for the nine-month period, with revenue growth of 54%, of which organic growth was 6.7%, with a significant boost gained from the acquired Balu operations. Q3 was solid, but as previously signalled, the buoyancy seen at the start of the year has now settled to a steadier pace, with a cautious tone for the outlook for 2019. We reiterate our recently reduced forecasts. The shares remain deeply oversold, on a substantial discount to its peers. We see significant upside once growth is delivered on schedule, which should provide a catalyst to narrowing the current valuation gap.

Companies: Flowtech Fluidpower
  • 19 Oct 18

Cenkos: Smart Metering Systems Plc - Landmark contract win

Yesterday, SMS announced that it has extended its relationship with First Utility and signed an exclusive agreement until 31 December 2021 to be its fully integrated domestic smart meter installer and Meter Asset Provider (MAP). This agreement provides SMS with an initial access to up to 1 million meter points, significantly underpinning our forecast of 2.5 meters installed by end 2020. Based on our assumed average supply and install cost (SMETS2 dual fuel), we estimate that SMS will be investing at least another £175m in smart meter assets for First Utility. By the end of August 2018 SMS had installed 748,000 smart meters in total, with index linked annualised recurring revenue (ARR) of £71.4m. The 5-year ARR CAGR to end 2017 was 39.5%. SMS offers investors exposure to recurring index linked earnings which will grow significantly over the next two to three years as the smart rollout accelerates towards completion.

Companies: Smart Metering Systems
  • 23 Oct 18

Q3 trading update

Today’s trading update reassuringly states that trading is in line with market expectations following a solid performance in Q3. Group revenue growth for the nine-month period to the end of September was 54%. This was driven by the acquisition of Balu (20th March 2018) and three additional acquisitions in Q3 and Q4 2017. Importantly, organic growth continues to show good momentum at 6.7%, albeit, this is down on the 9% reported for the six months of the year as the strong growth in H1 has moderated. Net debt at £17.6m is in line with that reported at the HY and in line with the FY18 forecast. We leave forecasts that were revised at the time of the interim results (18th Sept) unchanged on today’s trading update. The short-term focus of the business is to drive synergies from the acquired businesses through operational and procurement improvements. The recent derating offers investors an interesting entry point with the shares trading on a single digit PER of just 7.7x and yielding 5.3%. This is a material discount to its listed peers (page 2). The shares should re-rate as management de-gear the balance sheet and the growth from the acquisitions becomes increasingly apparent.

Companies: Flowtech Fluidpower
  • 16 Oct 18

Positive conclusion to FY18, ahead of forecast

Driver continued to trade positively throughout H2, with FY18 results expected to be ahead of expectations. As a result we have increased our EPS forecasts by 9%/12% in FY18/19 (0%/16% including share based payments). The outperformance was driven primarily by higher utilisation rates (80% in FY18 vs. 76% in FY17) and a focus on higher margin work (e.g. growth in services provided by Diales). Driver’s management team has successfully delivered on its turnaround plan. Since the February 2017 placing, we have cumulatively upgraded our EPS forecasts by 56% and 53% respectively. The focus is now on delivering continued revenue and profit growth. We believe earnings momentum will continue to drive the share price higher and we expect a positive reaction to today’s trading update.

Companies: Driver Group
  • 17 Oct 18

October investment case review

The current liquidity squeeze on UK small cap has had a disproportionate impact on the Gateley share price and presents an attractive entry point. Gateley generates a high quality earnings stream given the organic growth record from a broad service offering and significant litigation expertise that implies meaningful defensive characteristics. Revenue CAGR of 12.3% and PBT CAGR of 14.3% in the three years since IPO highlights a management team delivering to a clear growth strategy. This is not reflected in a rating that is now at a meaningful discount to comparable professional service groups; attributing a sector average rating infers 31% upside from current depressed share price levels.

Companies: Gateley
  • 19 Oct 18

Solid State - Positive H119 pre-close trading update

Solid State’s pre-close trading update notes that group H118 revenues will be c 4% ahead of prior year levels. Moreover, the 64% year-on-year increase in order book at end H119 leads management to believe the group will exceed FY19 market expectations. Consensus EPS estimates have risen by 7.9% and 5.0% for FY19 and FY20 respectively. Despite a favourable response to the news, the shares continue to trade at a significant discount to peers.

Companies: Solid State
  • 15 May 18

Financial sector holds back progress elsewhere

A customer in the Financial sector has experienced a downturn in activity in H1 which has offset strong progress in the Gaming sector. After a poor H1, Financials has seen an improvement in demand and a generally stronger H2 is expected. Exciting opportunities remain in Gaming and elsewhere, and with more normal Financial sales, the outlook remains positive. We have reduced our PBT forecast in FY18 from £5.6m to £5.2m and await updates as the year progresses. Year end net cash is expected to be £14.8m. Given the expected improvement in H2, an ex cash P/E of c.13x and a dividend yield of over 5% are still strong attractions.

Companies: Zytronic
  • 04 Oct 18

THE MONTHLY October 2018

We are in the midst of the Conference season for political parties and trade unions in Britain. We all have a lot on our minds, with generational constitutional issues to the fore, but these have come to the fore after many years of concerns building up about citizens’ ‘place in the world’.

Companies: OPM AGY ARBB AVCT DISH BNO BUR CMH CLIG DNL DPP GTLY GDR HAYD KOOV MCL MUR NSF OXB PHP RE/ REDX SCE SIXH TRX TON VAL VTA W7L

  • 16 Oct 18

SolarWinds Partnership update

Following its recently announced selection by US-based SolarWinds, to be its first and only Threat Monitoring Service Provider (TMSP) in the UK and South Africa, the Group announces its collaboration is now an exclusive partnership. In addition, Falanx has released further information on commercial pricing, quantifying the potential financial benefits of the partnership over the near term. Although we leave estimates unchanged at present, the release underscores the potential for Falanx to capture material benefits from its partnership with SolarWinds through the delivery of managed security services in partnership with SolarWinds TMSPs and also through the opportunity to cross sell its own product and service portfolio to SolarWinds’ extensive network of clients. We look forward to further updates.

Companies: Falanx Group
  • 18 Oct 18

Life in the fast lane

The interim results to end of June demonstrated very strong progress, with revenues and operating profits rising 61% and 133% respectively, and underlying growth of 30%. Organic operating profit was 61% ahead y-o-y. Current trading remains in-line with expectations, and demand for freight management services across all core markets is high. To underline this confidence, the interim dividend was increased 21% y-o-y to 0.42p / share.

Companies: Xpediator
  • 08 Oct 18

XP Power - Q3 trading supports FY18 outlook

XP Power’s Q3 trading update confirms strong revenue growth, despite currency headwinds, and good progress in design wins across all end markets. Q3 bookings growth has moderated slightly, partially reflecting uncertainty in the semiconductor sector over capex plans, but management is confident of achieving expectations set at its recent interim results; we leave our forecasts unchanged.

Companies: XP Power
  • 18 Oct 18

Norcros - Positive progress in H1

The Norcros H119 pre-close update reiterated management’s expectations for progress in FY19. Trading newsflow was similar to that reported in Q1 – with a good uplift to UK EBIT anticipated for H119 and a growing South African top-line – albeit with an implicitly slightly quieter second quarter. Brand presence, coupled with product and channel diversity, appears to be supporting ongoing progress in variable market conditions. Our estimates are unchanged and H119 results are scheduled for 15 November.

Companies: Norcros
  • 23 Oct 18

1Spatial - Building a platform for sustainable growth

H1 results showed good progress and financial discipline, significantly expanding EBITDA and reducing operating losses. A strong pipeline should support a return to growth in H2 and our estimates are unchanged. There is still work to do on the transformation, but by focusing on delivering repeatable spatial solutions based around the company’s core 1Integrate IP, we believe that the company is laying the foundations to deliver sustainable growth and margin expansion.

Companies: 1Spatial
  • 03 Sep 18

The Monthly September 2018

September’s Hardman Monthly features an article from guest contributor, Tim Ward. Tim is the Chief Executive of the Quoted Companies Alliance (QCA), an organisation that champions the interests of small to mid-size quoted companies.

Companies: OPM AVO AGY APH ARBB AVCT BNO CMH DNL EVG GDR INL KOOV MCL MUR NSF OXB PHP RE/ REDX SCLP SCE SIXH TRX TON VAL W7L

  • 15 Oct 18

HCM UPDATE - 15.10.18 (HAS.L; PAGE.L; RWA.L)

Hays plc (HAS.L, 162p/£2,359m) Q1 trading update | PageGroup plc (PAGE.L, 526p/£1,690m) Q3 trading update | Robert Walters plc (RWA.L, 630p/£465m) Q3 trading update

Companies: HAS PAGE RWA