Building & Construction

Building & Construction equity research

Explore the most viewed and latest equity research and media content for companies within the Building & Construction sector. Stocks in this sector provide goods such as construction materials and offer services from contractors.

Building & Construction equity research

02 Jul 19

Where’s the Value?

Warren Buffett once said that as an investor, it is wise to be ‘fearful when others are greedy and greedy when others are fearful’. Fear is not in short supply right now.

Companies: OPM ALU ANCR BLV CONN CRC FDL GATC HAT LEK MMH MCB MWE NXR NTBR NOG PAF PEG RFX SRC TEF TEG TPT VTU WYN XLM

11 Sep 19

Interim results: Strong margin progression underpins FY19 outlook

Underlying operating profit (pre IFRS 16) of £8.3m is 11% ahead of the £7.5m reported in HY18 as margin improved 60bps to 5.9%. FY19 expectations of £20.1m are predicated on a £1.4m yoy improvement with the business having delivered £0.8m in H1. Further cost recovery, positive volume expectations and additional efficiency improvements in H2 mean that confidence in achieving FY19 estimates is increasing. Despite the UK RMI market remaining difficult, Epwin should continue to outperform in terms of market share and, having weathered material cost headwinds, has an opportunity to rebuild margin back towards the double digit achieved at the EBITDA level historically (pre IFRS 16). We leave forecasts unchanged but with increased confidence in achieving the FY19 estimates.

Companies: Epwin Group

18 Sep 19

Cenkos: Breedon Group Plc - Ireland – a gateway to growth

Breedon's recent CMD in Dublin showcasing the all-Ireland Lagan business demonstrated that (a) it is arguably a better business than initially given credit for, (b) the quality of its principal asset, the Kinnegad cement plant, is excellent, (c) the overall market positioning of Lagan is exceedingly strong and (d) most importantly, the opportunity to grow the business both organically and by acquisition is immense. At a time when most of Breedon's building products peers are grappling with how to find growth within a stuttering UK construction market, Lagan is providing the drive behind the group's estimated 8% CAGR in EPS through 2021. It is a differentiator scarcely recognised in a prospective (FY21E) rating of 6.3x EV/EBITDA, 11.5x PE, 5.6x price/GCF (with 90%+ cash conversion).

Companies: Breedon Group

23 Jul 19

Quarterly Research Outlook - Summer 2019

In January, we provided a list of 11 stocks for 2019 that we believed would perform strongly with attractive catalysts that could lead to material outperformance. In this Quarterly Research Outlook, we revisit these views, analysing what has happened and how the remaining six months of the year could play out.

Companies: AMS ANX ARS ATYM AVON BLVN PIER BUR CGS CAML CALL CSRT TIDE CYAN DTG DEMG ELM EMR FPO FST GTLY GENL GRI GEEC GKP HMI HAYD HEAD HILS HTG HUR HYR IBPO IOG INDI JHD JOG KAPE KEYS KCT KGH LAM LIT LOK MACF MANO PCA PANR PXC PHC PMO RBW RMM REDD RSW RNO RKH RBGP ROR SUS SCPA SHG SOLG SOM TWD TRAK TSG TRI VNET VTC ZOO ZTF

27 Aug 19

Foreign buyers gorging on UK stocks

Like whales feasting on Krill, overseas firms are today stuffing themselves silly with choice fillets of corporate Britain. Why? Well look no further than geopolitical tensions and Brexit, which have disproportionately impacted UK equities and the £. Indeed the FTSE100 has lagged the S&P500 by a hefty 19% over the past 2 years, with Sterling dropping to 34 year lows vs US$ (see below). That said to us, based purely on fundamentals, this period of underperformance appears over-cooked, leaving many quality British companies vulnerable to predatory interest.

Companies: VOD AV/ AGK CHG CNA ITV BRBY SMIN CTEC SXS OXIG MGAM IMI WEIR WMH KMK EYE GATC ULS INS ALFA RDT TSTL ELCO MBH BLTG IHC 9537 CSRT NBI

17 Sep 19

Great expectations

Scottish housebuilder Springfield Properties increased PBT by 69% in FY 2019, beating our estimate by 3% and undershooting our debt assumptions. We maintain our latest estimates but believe the group is investing in potentially greater mid-term growth, by strengthening management and systems, planning further progress in affordable housing and extending its regional footprint, including into the rapidly growing city of Inverness.

Companies: Springfield Properties

05 Jul 19

UK Housebuilding Sector in 2Q 2019

Dwight Barkley PhD is a Professor of Mathematics at the University of Warwick. He studies waves in excitable media such as the Belousov-Zhabotinsky reaction, heart tissue and neurons. In 1997, Dr Barkley and Dr Laurette Tuckerman, a Paris-based mathematical physicist, developed ‘bifurcation analysis for time steppers’, which is a technique for modifying computer codes to perform bifurcation analysis. More lyrical, perhaps, Dwight is also known for formulating an equation to estimate how long it will be until a child in a car asks the question “are we there yet?” And, it is shown on the image on page 3 of this report. Herein, there are three factors which decide the timing of this wearisome question i.e. one plus the number of activities, divided by the number of children in the car squared. That figure is then added to the time it took the family to get into the car and set off on its journey. Crucial in putting off the first query as to the proximity of the destination are onboard activities for children i.e. no activities equals a question before leaving the driveway. Dr Barkley says: “Mathematics can help answer many of life’s questions”. If only the Brexit journey were that simple. It is not. We are all children now stuck in the back seat; and, maybe, we are still on the driveway with a dearth of on-board activities. Yes, three years on Brexit-resolution-fatigue is making itself felt across the board, including the UK Housebuilding Sector, where the fall in value in 2Q’19 was 7%. Berkeley said something similarin its final results, on 20 June, when it lamented an uncertain operating environment and “a lack of visibility in the political outlook”; and its PBT is expected to fall by a further third this fiscal year. The daily Sector value chart is also lurching from top-left to bottom-right (as is the British Pound versus the Euro). Yes, there were two palpable positives in 2Q from the NHBC and UK Finance about building activity and mortgages; plus, on the third day of 3Q, CBRE’s bid for Telford Homes. Nonetheless, prospective earnings growth for the Sector is now flat in both 2019 and 2020. This is about the journey.

Companies: MCS TW/ PSN BDEV ABBY CSP WJG BVS TEF INL GLV GLE CRST BWY BKG

01 Aug 19

LIBERUM: Kier Group* - Debt lower than expected for FY19

Following this morning’s announcement, we leave revenues unchanged, given that we are already bottom of the consensus range, but reduce our underlying EBIT by £10m for FY19. Spot and average net debt are lower than expectations for FY19 at £167m and £422m, respectively.

Companies: Kier Group

02 Sep 19

LIBERUM: Costain Group* - Cheap even if HS2 were cancelled

H1 19 results were slightly ahead and showed further evidence of margin progression. The divisional margin increased from 3.5% in H1 18 to 4.0%.

Companies: Costain Group

03 Sep 19

THE MONTHLY September 2019

The challenges associated with value creation drive all investors. Any investment professional is eager to make their mark by picking organisations that are able to deliver superior returns. Increasingly investors look into how organisations are governed and how effective the top decision-making bodies of organisations really are. In this white paper, we shed light on research findings and reveal the seven hallmarks of effective boards. The seven hallmarks are proven to create more effective boards and are set to be the next lever in the value creation process. Better Boards has created advanced board evaluation tools designed to motivate and inspire and above all, contribute to superior value creation.

Companies: AVO AJB AGY CLIG DNL DPP FLTA GTLY GDR KOOV MUR NSF OXB PCA PHP RE/ RMDL STX SCE TRX TON SHED VTA W7L

17 Sep 19

Significant growth, compelling valuation

Springfield has reported another year of significant growth, slightly ahead of our expectations. Excellent progress continues to be made against all targets, the acquisitions of Dawn and Walker have bedded in well and the outlook is positive, reflecting the strength of the land bank, positive market fundamentals in Scotland and good progress at the Village developments. We make no changes to our forecasts, which see Springfield growing earnings faster than peers over the coming years. We consider Springfield’s current valuation compelling (7x current year P/E, 5%+ dividend yield, 1.0x P/B).

Companies: Springfield Properties

01 Aug 19

THE MONTHLY August 2019

The introduction of IFRS 2 in 2004 generated considerable debate about the best approach for handling ‘share-based payments’ (SBP). While it is clearly a cost to shareholders, which should be included in the statutory reporting lines through the P&L account, the question arose as to whetherit should be part of our underlying EBIT calculation.

Companies: AVO AJB AGY ARBB CLIG DNL DPP FLTA GTLY GDR KOOV MCL MUR NSF OXB PCA PHP RE/ REDX RMDL STX SCE TRX TON SHED VAL VTA W7L

30 Jun 16

AIMing for income

So what is the profile of a typical AIM quoted company? The market’s detractors may argue that London’s junior market is peppered with cash consuming companies that are not sufficiently advanced in their route to profitability nor corporate governance regimes to justify their listing. Supporters of the London Stock Exchange’s growth market would say that the Alternative Investment Market is the world’s most successful market for growing companies rewarding investors prepared to brave the risks of earlier stage funding, and driving innovation and job creation. Neither view suggests that AIM would be a fertile hunting ground for income generating stocks. However a glance at the FTSE AIM All Share constituents (Source: Fidessa) suggests that over 250 of its members or circa a quarter of the market’s members pay dividends.

Companies: BVXP BOTB ITQ SHOE CGS DX/ HSP JIL IBEX PRP CAML GTC JIM CCAP ENTU FXI NAH ASY HGM PEN PEG AVG NXR

02 Jul 19

Strong conclusion to FY19, well placed for continued growth

Springfield has confirmed a strong conclusion to FY19, in line with expectations. Scottish housing market conditions remain positive with good demand in both private and affordable/ social housing sectors. The year end update highlights strong sales rates, sustained prices and an improvement in gross margins in line with management’s targets. Good progress is being made on the Villages, notably at Dykes of Gray (Dundee) and Bertha Park (Perth). We make no changes to forecasts, which show Springfield growing faster than any of its peers, supported by a clear organic growth strategy, an annualised contribution from Walker Group in FY20 and a supportive market backdrop (particularly Edinburgh and Glasgow). Despite this, Springfield trades on a discount to peers on a P/E and P/B basis. In our view, a current year P/E rating of 7.3x undervalues Springfield’s growth prospects and unique positioning.

Companies: Springfield Properties

30 Jul 19

Sound trading statement with record earnings

James Halstead’s pre-close trading statement reflects underlying resilience within the group’s business, suggesting “modest growth” in sales and earnings (now at record levels) despite “difficult trading conditions.” Of significance, UK revenues are up 7% y/y (vs. our 5% estimate), which in the context of wider market uncertainty and a declining retail environment, demonstrates the benefits from a diverse customer base and growing momentum within the healthcare flooring sector. Despite competition in Europe (particularly in Germany), the group is confident of maintaining regional market share going forward. In line with our expectations, gross margin headwinds experienced in the prior year appear to have dissipated with input costs now stable and capacity for new product launches well-maintained.

Companies: James Halstead

23 Aug 19

Henry Boot - Interim Results 2019

25 Jan 19

Capital Goods Value trap – 2019 Outlook

Premium

22 Mar 19

Henry Boot - 2018 Final Results

23 Mar 18

Henry Boot - Full Year Results 2017

17 Jun 19

T Clarke (CTO) Presentation at Mello May 2019

07 Mar 18

Breedon Group - Full-Year Results 2017 Interview

25 Aug 17

Henry Boot - Interim results

07 Dec 17

Capital Network's Ed Stacey on Morgan Sindall Group PLC

06 Mar 19

Breedon Group - Full-Year Results 2018 Interview

16 Nov 17

Norcros PLC - Half year results for the six months to 30 September 2017

30 Nov 17

Capital Network's Ed Stacey on Norcros PLC

29 Aug 17

Henry Boot - Analyst interview, WH Ireland

12 Jun 19

Norcros plc - Full Year Results 2018/2019

14 Jun 17

Norcros PLC - Executive interview with CEO Nick Kelsall

15 Nov 18

Norcros plc - Half year results for the six months to 30 September 2018

Latest Content

Breedon Group

Cenkos: Breedon Group Plc - Ireland – a gateway to growth

View

18 Sep 19
-
-

Delignit

Delignit - Missing a gear

After further positive guidance in April, Delignit’s H119 earnings shortfall (EBITDA down 16%) and full-year profit warning are all the more disappointing. In mitigation, the company has arguably been a victim of its own successful Automotive OEM business in ramping up for special call-offs that may yet materialise, while incurring higher costs than planned for a still potentially transformative motor caravan order. Management now expects 2019 revenue of €64m (ahead of last year but below the original forecast of €70m) and an EBITDA margin between 6% and 7% (originally 9.3%, as in 2018). Its confidence in Delignit’s strategic direction and long-term prospects appears to remain undimmed.

View

18 Sep 19
-
-

Springfield Properties

Great expectations

View

17 Sep 19
-
-

Springfield Properties

Significant growth, compelling valuation

View

17 Sep 19
-
-

Epwin Group

Interim results: Strong margin progression underpins FY19 outlook

View

11 Sep 19
-
-

Alumasc Group

Full-year results in line

Results were slightly ahead of our forecasts, reduced earlier in the year, due to known project delays at Levolux. Management has taken action to restore profitability with the integration of Solar Shading with Roofing operations together with other actions leading to annualised cost saving of £2m, which provides a decent bounce to profits in the current year. No change to forecasts. The shares remain on a lowly P/E rating of 5.1x, dropping to 4.6x in 2021. We maintain our 122p price target, which offers upside as profit recovery occurs.

View

05 Sep 19
-
-

ALT ALU MPE PPH MCL

Morning Note – 5 September 2019

Altitude Group (ALT): Corp Trading update – growing up in public | Alumasc (ALU): Corp Full-year results in line | M.P. Evans (MPE): Corp Purchase of minorities accretive to sum of parts | Morses Club (MCL): Corp Strong position confirmed | PPHE Hotel Group (PPH): Corp Returns from investment programme growing

View

05 Sep 19
-
-

LSAI MCL ALS CWR ALU KIBO IHC BOO EVG ZAM

Small Cap Feast

Bracken Trading — The Group undertakes its main trade of lending as well as electricity generation through the operation of two solar farms. Admission on the 09/09/2019 WORLD HIGH LIFE—The Investment Vehicle is to identify investment opportunities and acquisitions in legal Medicinal Cannabis, Hemp and CBD wellness sectors. The Company has raised £2,398,309 through three issues of Ordinary Shares to private subscribers.

View

05 Sep 19
-
-

Koninklijke Boskalis Westminster

H1 19: better H2 expected, H1 impacted by provisions in offshore energy

A significant provisioning impacted the results in H1 19. Offshore Energy remains spot market dependent, while the Dredging & Inland Infrastructure division remains the key contributor to the group’s performance. All in all, management gave a solid outlook for H2 19. Following this earnings release, we will revise our EBITDA forecast downwards by some 9%. This should result in a decrease of our target price by more than 10%. Despite this downward revision, we should stick with our Buy recommendation.