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

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

10 May 19

Positive start to 2019 and European expansion announced

TClarke’s update confirms that trading in the year to date has continued to be in line with expectations, having upgraded forecasts as recently as March. The statement reiterates management’s 3% sustainable operating margin target for FY19 and beyond. The order book at £403m (May 2018: £368m, Feb. ’19: £430m) continues to support a strong outlook for the Group and, notwithstanding Brexit uncertainties, TClarke is seeing no lack of opportunities across its end markets. A new venture in Europe is an exciting development and could present upside to forecasts in future periods. We expect strong earnings momentum and revenue visibility to continue to drive the share price and we continue to believe that a premium rating is justified, reiterating our 150p intrinsic value.

Companies: TClarke

09 Apr 19

UK Housebuilding Sector in 1Q 2019

Y2K is a numeronym and was the common abbreviation for the year 2000 software problem; and, for the benefit of millennial readers, the abbreviation combines the letter ‘Y’ for year and ‘K’ for the SI unit prefix kilo, meaning 1000. Hence, 2K signifies 2000.

Companies: WJG CSP CRST BDEV RDW PSN SPR TW/ BVS TEF GLV CRN INL BKG BWY

03 May 19

The Monthly May 2019

How small- and mid-cap quoted companies make a substantial contribution to markets, employment and tax revenues.

Companies: OPM AVO AJB ARBB CMH CLIG DPP FLTA GTLY GDR HAYD KOOV LWRF MCL MUR OXB PCA PHP RE/ STX SIXH TRX TON VTA W7L

08 Apr 19

LIBERUM: Kier Group* - Risks discounted on a P/E of 4x

Kier’s H1 19 results were below expectations as Resi suffered from a slowdown in sales and central costs spiked. A £220m working capital outflow was a cause for concern, but we expect to see a large part of this unwind in H2.

Companies: Kier Group

19 Feb 19

‘Even a monkey sometimes falls from a tree’

South Korea has been a winning primate for Titon since 2008 and last year contributed more than two-thirds of its PBT. International and domestic events have conspired to impact the Nation, generally, and Titon specifically. In December, these were nascent but have since matured. The Company alerted the market on 14 February and we have reduced our current-year PBT forecast by £1m and rebased the rest. We have also borrowed a South Korean proverb to sum it up, believing this event to be a one-off i.e. it is a genuine ‘monkey’ and ‘tree’ moment; and Titon will soon be aloft once more.

Companies: Titon

26 Feb 19

Strong growth and positive outlook

Springfield’s interims confirm another period of strong revenue growth, margin enhancement and a positive outlook. Highlights include an initial contribution from the Dawn Homes acquisition and strong growth in the Affordable division. Market conditions remain supportive and our forecasts are essentially unchanged (EPS +1%), following significant upgrades upon the Walker Group acquisition (01/02/19). Springfield continues to deliver on the strategy set out at IPO and, in our view, remains attractively valued, given its sector leading growth profile.

Companies: Springfield Properties

03 Apr 19

The Monthly April 2019

Although the focus of Hardman & Co is predominantly on companies in the smallto mid-sized market capitalisation range, when writing research reports, it is important to position them relative to the industry in which they operate. Apart from Japanese companies, all the major global pharmaceutical companies have reported full-year results for 2018 over the past few weeks; therefore, we have taken the opportunity to update our industry database and generate the first cut of global rankings for 2018. For an industry that requires a long investment cycle – it still takes, on average, 10 years from discovery to launch of a new drug – decisions made many years ago have important consequences on current financial results. Therefore, looking back at operational performance over 20 years reveals how different company strategies have panned out.

Companies: OPM AVO AJB AGY ARBB CMH CLIG CSH DNL GTLY HAYD KOOV LWRF MCL MUR NSF OXB PCA PHP RE/ REDX STX SCE SIXH TON VAL VTA W7L

01 Feb 16

Support Services, a cornucopia of companies

Support services can mean many things to many organisations but essentially the sector can be seen as a lubricant that helps the wheels of the economy continue to turn. A common thread is outsourcing activities that are most economically and effectively performed by a specialist rather than keeping in house. Companies in the sector tend to provide business critical services to their customers, thereby providing an element of stickiness. The sector benefits when the economy grows, but also offers an element of defensiveness as client companies and public sector bodies strive to keep their own fixed cost bases down. However given the broad range of businesses within the industry it is difficult to apply a broad brush description, and stock selection according to one’s investment criteria is vital.

Companies: XCH CSC CPI VP/ DSCV EQN WPG BILB PTSG PNA MACF AUK VIP MPAY UNG PEG PEN

01 Jul 15

Housebuilders & Contractors- Hong Kong contracts - Balfour Beatty, Kier

Hong Kong government and transport organisations have announced major cost overruns and delays to the region’s ambitious rail project to link the territory and mainland China. We believe this could have implications for both Balfour Beatty and Kier, the quoted two out of three UK companies working on the programme. The cost of the project was last night announced to have risen from an original HK$65bn to an estimated HK$85.3bn (£7bn) and the scheduled completion is now Q3 2018 (originally August 2015).

Companies: Balfour Beatty Kier Group

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

08 Jun 17

N+1 Singer - Small-cap quantitative research - Value screen periodic refresh and 9 focus stocks

We have completed another refresh of the value style screen, first established as of 12 May 2015. As usual the screen selected the 25 stocks exhibiting the most extreme value characteristics from our universe, and we have chosen 9 stocks to focus on. Since the last refresh as of 8 November 2016, the day before the US presidential election result was known, the screen has performed strongly (outperforming the small-cap index by 12.9pp on a weighted basis) with our focus stocks doing even better. The indication is that smaller value stocks perform well in a steady “risk on” environment. The new basket contains many UK consumer demand and emerging market plays. We find the latter exposure interesting at this juncture.

Companies: RAV GOAL VTU BILN INL AEP MAYA IPF OPM

23 Apr 18

Value screen refresh and 10 focus stocks

We have completed another refresh of our value style screen, first established as of 12 May 2015. As usual the screen selected the 25 stocks exhibiting the most extreme value characteristics from our universe, and we have chosen 10 stocks to focus on. Since the last refresh, two days before the last general election, which resulted in a hung parliament, the screen has performed a little better than the small-cap index with our focus stocks outperforming by about 500bps. The weighting to UK consumer stocks noted last time detracted from performance, which came as little surprise given our cautious stance, much discussed in our other strategy work this year. One might have expected more consumer exposure in the refreshed screen given this year’s severe underperformance, but it appears forecasts have been similarly downgraded, keeping much of the sector outside our value criteria

Companies: AUG EHG GOAL MMH RTHM SDY TEF VANL

14 Jan 19

Opportunity knocks

We are introducing our Best Ideas for 2019 and also review the performance of last year’s picks. We suggest ten solidly financed stocks with good business dynamics that ought to be considered for core portfolio holdings and six UK domestically focused stocks that our analysts believe should perform strongly in the event that uncertainties unwind. We also introduce a new style of research from N+1 Singer which presents a Company’s dynamics and metrics in a clear and concise manner and concentrates on the pivotal issues affecting that Company and an investment decision.

Companies: BCA CLIN CLG CBP DNLM EAH FDL FCRM FUTR GTLY INS GLE NICL SDL SPR TRI

31 Jan 19

Strategy delivering with record order book

TClarke continues to deliver on its strategy, with strong momentum in earnings and the order book, whilst maintaining a healthy balance sheet (the Group carries no debt). Both revenue and operating profit are expected to be in line with expectations after the upgrades in November (EPS estimates increased 12%/15% in FY18/19). The order book hit another record high at £411m in December 2018. This is a 22% increase year on year and a 2% increase on the figure reported in November. The Technologies sector, a key growth area for the Group, has been the main driver of this increase. Our FY19 revenue forecast is now 88% covered by the order book. The outlook statement is confident and we believe that positive earnings momentum will continue to drive the share price. We also see the rating as undemanding, with the shares trading on a substantial discount to peers.

Companies: TClarke

22 Mar 19

Henry Boot - 2018 Final Results

25 Jan 19

Capital Goods Value trap – 2019 Outlook

Premium

10 Dec 18

T Clarke (CTO) Presentation at MELLO London November 2018

06 Dec 18

Executive Interview - Delignit

13 Jun 18

Norcros plc - Preliminary Results, Year Ended 31st March 2018

24 Aug 18

Henry Boot - Interim Results 2018

17 Nov 16

Norcros - Half year results

23 Mar 18

Henry Boot - Full Year Results 2017

20 Apr 18

Bitesize briefing – AJ Lucas Group

30 Nov 17

Capital Network's Ed Stacey on Norcros PLC

15 Nov 18

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

14 Jun 17

Norcros PLC - Executive interview with CEO Nick Kelsall

16 Nov 17

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

17 May 17

finnCap - Henry Boot, The ultimate scarce resource - land

Premium

06 Mar 19

Breedon Group - Full-Year Results 2018 Interview

Latest Content

ACS Actividades de Constrccn y Srvcos

Q1 19: strong start to the year

The company posted a rather good set of results for Q1 19, which make us believe in the ability of management to deliver low double-digit growth in EPS over the FY19 and c.€1.1bn net profit. The Buy rating is confirmed.

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16 May 19
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Bouygues

Still an impressive trend for Bouygues Telecom

Hats off to Bouygues which, after two years of recovery with global revenues up by 6.5% yoy, kicks off 2019 with even stronger growth that suggests that Iliad still has to worry about its own recovery. We maintain our opinion at Add on the stock.

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16 May 19
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Eiffage

Q1 19: good start to the year thanks to Contracting, but Concessions disappoint

Contracting businesses registered an outstanding growth in Q1 19. However, concessions, the biggest contributor to EBITDA generation, disappointed us, because of mainly stable traffic figures. As this is a trading update, information was limited. Overall, we believe that this first quarter is a good millesimal and that it reinforces the probability of the company to meet consensus for FY19. We expect little change to our model.

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15 May 19
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Lafargeholcim

Q1 19: strong start to year with over-proportional increase in lfl recurring EBITDA

LafargeHolcim posted a strong start to the year with an over-proportional increase in lfl recurring EBITDA. As expected in our model update of 2 April 2019, India and Europe posted strong performances. We continue to believe that North America has reached a high point in the cycle and, with the inversion of the yield curve, which is a good indicator of the possibility of a recession over the next 18 months, we will keep our negative view on the US.

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15 May 19
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CPT BKS AOR MBH TEK EYE IDEA HDD PYC

Small Cap Feast

Essensys plc—a provider of mission-critical SaaS platforms and on-demand cloud services to the high growth flexible workspace industry, plans to join AIM. Offer TBC, expected 29 May 2019. Induction Healthcare Group plc—a healthcare technology company focused on streamlining the delivery of care by Healthcare Professionals looking to join AIM. Expected raise of £14.58m at 115p, market cap of £34.07m. Expected 22 May 2019. SDX Energy plc—a North Africa focused oil and gas company, announces its intention to complete a Canadian plan of arrangement under section 192 of the Canada Business Corporations Act and will have shares de-listed from the TSX-V and admitted to trading on AIM. Expected 28 May 2019, anticipated market cap of £76m Renold plc—a leading international supplier of industrial chains and related power transmission products, announced that it will cancel the listing of the Company from the premium segment and apply for admission on AIM. Expected 06 June 2019. Alumasc Group plc, the premium building products, systems and solutions group, has announced its intention to move from the Premium Segment of the main market to AIM. Expected market cap of £33.4m. Expected 25 June 2019

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14 May 19
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AJ Lucas Group

AJ Lucas Group - Drilling recovery, but a growing debt pile

AJ Lucas (AJL) has benefited from a material recovery in profitability from its Australian onshore drilling division, with underlying EBITDA in H119 (31 December 2018) of A$13.1m (17.2% margin), up from A$5.5m (9.7% margin) in the previous year. High rig utilisation and strong coal mine degassing demand support our forecast of revenue sustained at close to H119 levels (A$76.2m). AJL’s track record and tier 1 client relationships support management guidance of FY19 drilling underlying EBITDA in excess of FY18’s A$19.7m (Edison FY19 forecast: A$22.5m). Valuing Lucas Drilling Services (LDS) at 6x Edison adjusted EBITDA (after associated overheads) equates to A$0.15/share or A$0.03/share after consideration of group net debt. This excludes our net P50 UK shale valuation of A$0.91/share. We intend to update our probabilistic value of UK shale based on an improved understanding of key inputs including initial production rate (IP rate), estimated ultimate recovery (EUR) and well costs.

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13 May 19
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TClarke

Positive start to 2019 and European expansion announced

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10 May 19
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Koninklijke BAM Groep

Q1 19: despite very poor results, the vague guidance is maintained

The results are clearly disappointing and reflect a very slow start to the year in Civil engineering, which includes the Ijmuiden sea lock’s further cost overruns. We expect to cut our EPS forecast by more than 10%, which should result in a lower target price. We expect to keep a negative recommendation on the stock.

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10 May 19
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Lafargeholcim

Divestment of Holcim Philippines is a very positive step

With the divestment of its activities in Indonesia, Malaysia, Singapore and the Philippines, LafargeHolcim exits South East Asia with a total enterprise value (EV) of $4.9bn, representing a 2018 EV/recurring EBITDA multiple of…above 21x, which is outstanding for the cement sector. Following this divestment, we expect to revise our target price upward by a low to mid single-digit figure.

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10 May 19
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Acciona

Q1 19: disappointing EBITDA but very satisfactory bottom line

EBITDA disappointed us but the bottom line was especially good thanks to higher income from associated companies (up from €4m in Q1 18 to €24m in Q1 19). Following this earnings release, we will lower our EBITDA forecast by a low single-digit. This should have a similar impact on the target price and we expect to keep our Buy recommendation unchanged.

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