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  • 20 May 19

Focus on cashflow pays dividends

Leading brickmaker Forterra has increased its dividend pay-out guidance, reflecting the strong cashflow that has been a hallmark of the group since it floated in 2016. Today’s AGM statement confirmed “in line” trading and highlighted: “encouraging” housebuilding; good progress on the planned new brick plant; and improved productivity at the temporarily constrained Bison Precast business, acquired in 2017. We are making no changes to our estimates at this point, other than to raise our dividends by 12.5%, giving a FY 2019E yield of 4.3%.

Companies: Forterra
  • 13 Mar 19

Steady state

Britain’s second largest brick producer beat consensus and our estimates, buoyed by continuing growth in housebuilding. Management maintained its outlook for FY 2019E. We have trimmed our EBITDA forecast into line with consensus but nudged up EPS. Our belief that brick demand will continue to outstrip supply is supported by a slew of data indicating that housebuilding and home extensions are holding steady despite the Brexit furore.

Companies: Forterra
  • 16 Jan 19

Cashflow beats expectations (yet again)

Forterra's year-end trading statement confirmed results are expected to be “in line” and the outlook for 2019 appeared to be benign. Once again, net debt declined faster than expected – a regular feature since the company floated in April 2016. We are not changing estimates, other than nudging down debt. We believe that increasing housing construction, across all tenures, and a constrained and consolidated supply base should continue to underpin prospects.

Companies: Forterra
  • 15 Jan 19

Small Cap Feast

Circassia Pharma (CIR.L) - specialty pharmaceutical company focused on respiratory disease transferring from the Main Market. No funds being raised. Due 4 Feb. Greenfields Petroleum (TSX-V:GNF) production focused company with operated assets in Azerbaijan seeking AIM dual listing including $60m private placement. Mkt cap $12.6m CAD. Expected late January 2019.

Companies: ITX GYM FORT SLN EDEN KAPE CLIN CALL TPG TLOU

  • 01 Nov 18

Electrical force majeure to hinder 2018 profits

Forterra has “marginally” pulled back profit guidance for FY 2018E due to the temporary closure of one of its brick plants, caused by a local power cut. We have cut our PBT estimate for the current year by £3m, at the high end of the company’s indicative £2 - 3m impact of the closure and repairs. This is the first profit warning since Forterra IPO’d in April 2016. The fact the shares rose on today’s announcement suggests to us the market interprets this entirely as force majeure.

Companies: Forterra
  • 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

Research, Charts & Company Announcements

Research Tree provides access to ongoing research coverage, media content and regulatory news on Forterra. We currently have 26 research reports from 4 professional analysts.

Open
285p
Range Today
282/285p
52 Week
208/316p
Daily Volume
2.0k
# Shares
0m
Daily Liquidity
0.0%
Pension Liability
£0m
Enterprise Value
£60.8m
Market Cap
£0m
Latest PE (hist)
11.48
Div Yield
3.37

Latest News/RNS

(more news)
Date Source Announcement
05Jun19 09:20 RNS Employee Benefit Trust Share Purchase
20May19 13:57 RNS Result of AGM
20May19 07:00 RNS AGM Trading Update
10May19 15:08 RNS Director/PDMR Shareholding
03May19 09:00 RNS Employee Benefit Trust Share Purchase
05Apr19 14:50 RNS Director/PDMR Shareholding
05Apr19 14:49 RNS Employee Benefit Trust Share Purchase
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  • 19 Jun 19

Somero - Move to Neutral on short-term view; FY20e risk remains

We upgrade to Neutral following the recent trading update which saw the shares close 23% in the red. Despite references to adverse weather conditions in the US suggesting a temporary setback for the group, we maintain our fundamental view that ongoing signs of industry and economic headwinds facing the US non-residential construction industry could have a material impact on FY20e earnings. However, with expectations for FY19e now rebased and valuation better reflective of late-cycle industry conditions, we see a short-term move to Neutral as being appropriate given little negative earnings catalysts over the next 3 months. We downgrade our earnings by 16% for FY19-20e, with FY20e earnings 15% below consensus, in line with our thesis. We lower our PT to 275p (from 300p) better reflecting fair value at this stage. Neutral (from Sell).

Companies: Somero Enterprises
  • 13 Jun 19

Significant momentum being generated

Volex had already signalled trading was ahead of expectations but with adjusted PBT increasing from US$9.6m to US$20.2m against initial expectations of US$18.3m, these results confirm the momentum generated by Volex. In addition, the cash balance of US$20.6m beat our estimate of US$15.7m and management now expects to reinstate the dividend in FY20. Trading on a FY20 PE rating of 9.6x, a FCF yield of 7.7% and offering a potential dividend yield of 2.3%, we reiterate our buy recommendation. We have also increased our price target from 130p to 140p to reflect increased contributions from the higher margin Cable Assembly division. Even then, at 140p the FY20 PE rating is still only 13x. Thus, with significant growth, net cash, a single digit rating and the expectation of a dividend, Volex offers substantial upside and remains undervalued.

Companies: Volex
  • 13 Jun 19

Rating has not caught up with recovery

Volex has delivered a strong recovery in earnings over the last three years, with adjusted PBT increasing from $5.3m in FY16 to $20.2m in FY19. The strategy is on track to deliver further material improvements in growth and profitability, supported by a strong balance sheet. Management confidence in prospects is reflected in its guidance of the likely reinstatement of a dividend in FY20. We believe momentum is accelerating, but has yet to be recognised in the group’s valuation multiples (EV/EBITDA 5.4x FY20, P/E 10.0x), which sit towards the bottom of the sector. The shares have potential for significant upside both from continued recovery in profits and cash and from re-rating. We initiate with a 140p intrinsic valuation.

Companies: Volex
  • 17 Jun 19

LIBERUM: Staffline* - Pathway to stability and avoidance of resuspension

Underlying results are in line with expectations and planned to be published on the 27th June, preventing re-suspension. The HMRC provision has been increased by £7.2m from £7.9m to £15.1m.

Companies: Staffline Group
  • 12 Jun 19

Turbo-charged growth at a modest price

“If it ain't broke, don't fix it” is synonymous with corporate life. However ‘laurel resting’ is not in Elektron’s lexicon, even after producing a 10-fold rise in the stock price over the past 5 years. No instead, the firm’s DNA is based on ‘continuous improvement’ and maximising shareholder returns, as characterised by this morning’s bumper results and encouraging outlook.

Companies: Elektron Technology
  • 18 Jun 19

Cenkos: Marlowe Plc - FY19A results

Marlowe has released a strong set of results for FY19A, reflecting a successful year for the group. Eight acquisitions were completed, which together have significantly strengthened the group's service offering, and which are already yielding synergies. Buy.

Companies: Marlowe
  • 17 Jun 19

LIBERUM: Kier* - Accelerated restructuring

Kier has annnounced an accelerated strategic review. Future Proofing Kier has been increased and should yield £55m of gross savings in FY2021.

Companies: Kier Group
  • 13 Jun 19

LIBERUM: Equiniti* - Expect a strong operational performance despite tricky markets

We expect the 1H19 results to demonstrate the virtues of Equiniti’s business model. The highly recurring nature of its revenues combined with an attractive margin profile should help the group deliver 4% EBITDA growth, despite the challenging market environment.

Companies: Equiniti Group
  • 14 Jun 19

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.

Companies: Low & Bonar
  • 04 Jun 19

THE MONTHLY June 2019


Companies: AZN AVO AJB AGY ARBB CLIG DNL DPP FLTA GTLY GDR HAYD KOOV MCL MUR PCA PHP RE/ REDX STX SIXH TON SHED VAL VTA W7L

  • 12 Jun 19

Confirmation of strong FY’19

FY’19 results confirmed positive performance from all three businesses. Group sales grew 13%, whilst Bulgin delivered strong operating margin momentum (Bulgin +350bps) leading to FY’19 PBT up 77% (5% ahead of expectations). We have upgraded FY’20E forecast Adj FD EPS by 4%, and introduce FY’21E forecasts targeting growth of 50% (underlying: 14%) in sales, and 87% (underlying: 62%) in adjusted operating profit versus FY19. We have increased our SOTP implied valuation range to 68p – 76p including Next (from 62p – 65p), offering strong upside potential.

Companies: Elektron Technology
  • 14 Jun 19

LIBERUM: SThree* - STEM exposure supports an encouraging first half performance

With growth in Continental Europe and the US continuing to exceed our expectations, underlying gross profit growth of 9% in 2Q19 was marginally better than we had hoped. Whilst the UK performance was weaker, the strength in the group's core STEM markets suggests that the outlook for FY19 remains encouraging.

Companies: SThree
  • 14 Jun 19

Year-end trading update

The year-end trading update highlights that the majority of the group continues to trade well, outperforming the somewhat challenging UK construction markets. Levolux, however, has seen a weaker H2 than previously expected due to customer project delays. As such, adjusted PBT for the year is expected to be below expectations and a restructuring programme to deliver an additional £1.0m cost savings is underway. We are consequently reducing FY 2019 EPS by 12% to 12.2p. We also cut the PT to 122p, although we highlight the 7% yield attractions.

Companies: Alumasc Group
  • 11 Apr 19

Quarterly Research Outlook

We’re just over three months in to 2019 and we’ve seen a 10% UK market rally, retracing much of the Q4 decline, such is the nature of fickle market sentiment. That said, many of the issues we wrote about three months ago that were impacting markets remain: notably Brexit, trade wars, geopolitics and global monetary policy. The 2019 rally thus far feels somewhat fragile, with competing forces of optimism on a potential trade deal which could underpin the rally, against the deterioration in underlying economic data that could ultimately undermine the recent market gains. In this context, we look at what the lead indicators and the market are telling us about the industrial cycle and the stocks most exposed to various industrial trends. The Q4 derating in short cycle industrials and autos had been vicious and while these sectors have seen a more solid footing in 2019, with earnings downgrades being priced in, it will likely take a trough in lead indicators before short cycle stocks can start to perform again and re-rate relative to the market.

Companies: ARS CYAN HYR LIT SOM ABBY AMS AMER ANX ATYM AVON BLVN PIER BUR CGS CAML CALL CSRT TIDE DTG DEMG EMR FPO FST GTLY GENL GOR GRI GEEC HDY HMI HAYD HEAD HILS HTG HUR IBPO INDI JHD JOG KEYS KCT KGH LAM LOK MACF MNO MANO MOD MKLW OXIG PCA PANR PARK PGM PHC PMO RBW RMM REDD RSW RNO RKH RBGP ROR SUS SCPA SHG SOLG TRAK TRI VNET VTC ZOO ZTF

  • 06 Jun 19

Investing for growth

The AGM update from Xpediator provides further strong evidence of investment in management better able to support the Group’s rapid growth in revenues. The Group’s enhanced infrastructure should enable further acquisitions sourced from a strong pipeline of bolt-on opportunities. They can again be rapidly integrated and enhanced post-deal. Trading YTD has performed in-line with expectations, benefitting from strong progress within Freight Forwarding. The free cash flow (FCF) yield has risen to a hefty 10.9%. In our opinion, this factors in an excessive Brexit-related discount. In fact, our valuation models suggest a fair value of 74p/share, slightly reduced from 78p because of the impact of US-China trade talks on the global logistics operators based in America. Our fair value is still materially above current share levels.

Companies: Xpediator