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 May 18

The Monthly

Prior to the financial crisis of 2008/09, it was widely believed in the stock market that certain sectors – most notably utilities, pharmaceuticals, food retailing and tobacco – were far less vulnerable to market downturns.

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

09 Apr 18

UK Housebuilding Sector

This ominous-sounding term originated from the work of famed Swedish meteorologist, Tor Bergeron (1897-1977), but it only entered popular vernacular this year – and there have been ample opportunities in 2018 to use it.

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

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

27 Mar 18

High quality focus paying dividends

T Clarke achieved good growth in revenue, profits and cash generation in FY17, working on some of the very highest profile projects. It was also a year of investment in technology (Eton Associates) and new capacity. In the current climate, management’s disciplined approach to tendering is serving the business well and margins have strengthened in most regions. A new 3% operating margin target has been announced, which looks very achievable (FY17: 2.3%). While revenue is likely to moderate, profits are expected to increase by 8% and then 7% over the next two years. In our view, this is a very well managed business with a focus on quality that is not reflected in the current rating (6.0x P/E, 5.2x EV/EBITDA, 4.6% yield). We see intrinsic value at 106p, based on a blended average of peer group multiples.

Companies: TClarke

22 May 18

Trading in line with FY18 expectations

Trading in the first five months of the year has been in line with expectations despite the impact of adverse weather in the January to April period. As expected, the UK RMI market remains stagnant, weighing on the operating environment across the building products industry. This is being exacerbated by continuing cost input pressures, particularly in PVC resin. The reiteration of FY18 guidance should be viewed positively in the face of these headwinds. With one of the customer issues encountered last year resolved, and the other being worked through, forecast visibility has improved relating to the wider market back drop. Whilst lacking in growth, the underlying market does not appear to have deteriorated materially YTD. FY18 estimates have taken a realistic assessment of the potential impact from the issues faced in FY17 assuming a c. 14% decline in profitability before growth of c. 15% in FY19. On current forecasts the shares trade on 7.6x earnings, 4.9x EV/ EBITDA, have less than 1.0x net debt/EBITDA and yield 6.5%.

Companies: Epwin Group

25 Nov 16

Sector leaders

The 15 November update pointed to unchanged FY16 expectations and Polypipe’s share price responded positively to this. In our view, the recent trading performance highlights the attraction of the company’s strong UK market positions when other sector updates have shown greater variation.

Companies: Polypipe Group

02 Dec 16

AGM Update

On 30 September 2016, when the company announced its full year results, it reported that the UK business had seen a slow start to the year, with particular weakness in repair and renewal spending by the NHS as well as “reticence” in the education sector. However, with the UK only representing about a third of the business, this weakness was expected to be more than offset by the positive effect of a weakened sterling on its overseas business, given the benefits for competitiveness and margins.

Companies: James Halstead

28 Mar 17

N+1 Singer - T. Clarke - Strong conclusion to FY16, record order book

After significant upgrades at the time of the full year update (PBT forecast +43% FY16; +14% FY17), today’s results are c.4% ahead of our expectations at the PBT level and show strong growth on the prior year (PBT +48%). All regions achieved positive growth in revenue. The outlook statement refers to a still growing order book (£350m at the end of February vs. £330m at the year end) and the strength of recent trading, with London & the South East and Scotland said to be particularly positive. The Group has reiterated its ambitions to improve margins, but we have not incorporated this into our forecasts at this stage. We have nudged up our FY’17 forecasts (PBT +5%) and introduced FY’18 forecasts that imply 2% PBT growth. Despite the well justified bounce in the share price, the shares still trade at a significant discount to the peer group (7.6x FY17 PE, 4% yield).

Companies: TClarke

31 Jan 18

Significant change

Not for the first time Low & Bonar is subject to significant change. The Civil Engineering division is being reorganised, a cost reduction programme is underway, a defined plan to reduce debt by £15m is also underway and Philip de Klerk has been promoted from FD to Chief Executive. We now expect a flat year in FY18, having previously expected good growth. We see the management change as positive and if the debt can be successfully managed down, we continue to see value within the Group. However, confidence rebuilding is clearly required and we await further detail at the analyst presentation and then later in the year. For now we remain at Hold with a reduced 56p price target.

Companies: Low & Bonar

27 Mar 18

Robust interim results

James Halstead reported a robust set of interim 2018 results with another record half-year of revenue and profit. The company reported Interim revenue of £126m (+5.4% YoY) and operating profit of £23.9m (+1.6% YoY). Reported EPS was 8.8p (+3.5% YoY) and the interim dividend has been increased to 3.85p, up 2.7% YoY. Net cash was £47.5m.

Companies: James Halstead

04 Apr 18

The Monthly

This month’s feature article is the first publication of the 2017 global pharmaceutical industry statistics from which the global and US rankings of the top 15 drug companies are derived. Comparisons are made with historical data to show how different company strategies have evolved. In addition, an analysis of the evolution of biopharmaceuical drugs has been made, together with a key sub-set, namely drugs derived from antibody technology, which now represent 12% of the entire market. Two more drugs joined the $100bn club in 2017.

Companies: OPM ABZA AVO AGY APH ARBB AVCT BNO BUR CMH CLIG COS DNL EVG GTLY GDR INL KOOV MCL MUR NSF OBT OXB NIPT PHP RE/ REDX SCLP SCE SIXH TRX TON VAL

24 Apr 18

Small Cap Breakfast

Rosenblatt Group -specialist litigation and contentious restructuring law firm established in 1989 based in the City of London. Offer TBC. Due 8 May. Supreme, a leading manufacturer and supplier of branded consumer batteries, a manufacturer and supplier of branded and licensed consumer lighting and a leading manufacturer and supplier of vaping products in the United Kingdom, is looking to join AIM. Offer TBC, expected early May 2018 KRM22, a closed-ended investment company with a particular focus on risk management in capital markets, is looking to join AIM. Offer tbc, expected 30 April 2018 Serinus Energy -international upstream oil and gas exploration and production company. Its principal assets are located in Romania (development phase) and Tunisia (production phase). Raising c.£10m. Offer TBA. Due mid May.

Companies: SAR VIS CORA DUKE TERN INSP REDX FAL COIN

14 May 18

Q1 18: outstanding performance with EBIT progressing by 39.4%

The group’s EBITDA increased by 15.3%. The EBITDA margin increased by 2.1pp to 15%, a level never before attained at the consolidated level. All business areas have contributed to this but it was mainly thanks to cement. Net financial expenses were cut by 29.7%, resulting in FCC’s attributable net profit amounting to €50.3m in Q1 18, a substantial increase on the €21.4m reported in Q1 17. Following this earnings release, we may upgrade our recommendation from Sell to Reduce.

Companies: Fomento de Construcciones y Contratas

18 May 18

Termination of coverage

Edison Investment Research is terminating coverage on Epwin Group (EPWN). Please note you should no longer rely on any previous research or estimates for this company. All forecasts should now be considered redundant.

Companies: Epwin Group

07 Dec 17

Capital Network's Ed Stacey on Morgan Sindall Group PLC

17 May 17

finnCap - Henry Boot, The ultimate scarce resource - land

Premium

24 Mar 17

Henry Boot PLC - Annual Results 2016

20 Apr 18

Bitesize briefing – AJ Lucas Group

30 Nov 17

Capital Network's Ed Stacey on Norcros PLC

25 Aug 17

Henry Boot - Interim results

14 Jun 17

Norcros PLC - Executive interview with CEO Nick Kelsall

07 Mar 18

Breedon Group - Full-Year Results 2017 Interview

29 Aug 17

Henry Boot - Analyst interview, WH Ireland

08 Mar 17

Breedon Group Plc - Full year results 2016 interview

20 Dec 12

Analyst Interview - Tyman

23 Mar 18

Henry Boot - Full Year Results 2017

23 Oct 15

Michelmersh Brick Holdings - Trading statement

17 Nov 16

Norcros - Half year results

16 Nov 17

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

Latest Content

Epwin Group

Trading in line with FY18 expectations

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22 May 18
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STCK GETB LSAI POLX MOGP PIL AGM NTOG FBT SLE

Small Cap Breakfast

Block Energy— UK based oil exploration and production company whose main country of operation is the Republic of Georgia. Raising £4m. Mkt cap £9.3m. Due early June. Codemasters Group— video game developer and publisher, specialising in high quality racing games. Offer TBA. Seeking £15m in primary. Due 1 June. Strongbow Exploration (TSX:SBW) intends to dual list on AIM. Holds rights to the South Crofty underground tin mine, a former producing tin mine located in the towns of Pool and Camborne, Cornwall . The project is estimated to require the Company to raise £25 million over the next 18 months to progress to a production decision. Offer TBS. Due June. Maestrano Group, a software company with operations in Australia (main country of operation), the UK, US and the UAE, is looking to join AIM. Offer TBC, expected late May. Yew Grove REIT—newly formed Company will pursue its investment objective by investing in a diversified portfolio of Irish commercial property. Offer TBA. Due Late May Team17 Group -video games label and creative partner for independent developers. 2017 revenues of £29.6m and Adjusted EBITDA of £12.9m. Raising £45.1m primary and £62.5m secondary at 165p. Mkt Cap £216.6m. Expected 23 May 2018

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22 May 18
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Ferrovial

Q1 18: hit by the BHM provision, Ferrovial remains value destroying

With a ROCE expected of below 6.5% against a WACC of 7.6%, Ferrovial is a value-destroying company. With the £-208m provision (€-237m) registered for the Birmingham contract (BHM) in Services, one can understand that risk management isn’t yet at the utmost best level. As a consequence, we will reduce our target price. And this should trigger a change in recommendation from Add to Reduce.

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21 May 18
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Gresham Technologies TClarke

Morning Song

Gresham Technologies (GHT LN) Capital Markets Day highlights the potential of the Clareti platform | T. Clarke (CTO LN) Positive order book momentum provides a share price catalyst

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18 May 18
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Epwin Group

Termination of coverage

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18 May 18
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Acciona

Q1 18: missed estimates but a buying opportunity

Acciona reported net income for the first quarter which missed the lowest estimate of analysts. Despite this, Acciona remains a strong case for investment as it is currently trading sharply below our calculation of intrinsic value.

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17 May 18
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Bouygues

Adverse weather for Colas in Q1

Q1 sales were up by 2% yoy and lfl: a performance slightly worse than the growth (between 2.5% and 4.5%) recorded in the previous quarters but the adverse weather in Europe has had a strong impact, especially at Colas. Note, however, that Bouygues Telecom has continued the good momentum of 2017 with a 6% yoy growth in its revenue. The Q1 EBITDA was down by 24.3% yoy but this is not really significant as the Q1 represents only a little bit more than 5% of the annual EBITDA due to highly seasonal nature of Colas’ business. Note, however, the good performance of Bouygues Telecom whose EBITDA was up by 12% yoy. The start of 2018 was also marked by the announcement or completion of a number of acquisitions at Bouygues Construction, Colas and TF1: - In Canada, on February, Colas completed the acquisition of the Miller McAsphalt group. The provisional purchase price of the shares paid on closing is €585m. - In Switzerland, in March, Bouygues Construction and Colas announced the acquisition of Alpiq Engineering Services, a leading Swiss player in the energy, industrial services and rail infrastructure sectors. It will offer an opportunity to enter new European markets, mostly in Germany and Italy, in complex projects in industry and energy production. The acquisition will take place on the basis of an EV of CHF850m. - TF1 stepped up its digital transformation with the acquisition of the aufeminin group, an international digital player with a brand portfolio and unique female-orientated content, such as aufeminin, Marmiton and MyLittleParis.

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17 May 18
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Eiffage

Q1 18: sales met analysts’ estimate thanks to the international operations

Sales met analysts’ estimate thanks to the international operations. The sales trading update highlights a strong recovery in the Contracting activities, supported by the award of two projects linked to the Grand Paris Express project. The second quarter could prove to be less successful as Easter was in Q1 this year. We expect to keep our current Reduce recommendation.

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16 May 18
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ACS Actividades de Constrccn y Srvcos

Q1 18: excellent performance in fully-consolidated Spain is a positive

Sales in Spain, which are fully consolidated, accounted for 14% of the group’s sales but much more when considering what is fully consolidated. Indeed, in Construction, it is worth noting the recovery of the activity in Spain which experienced an increase of 8.2%. In Industrial services and Services, sales in Spain increased by 19.1% and 5.4% respectively. Following this earnings release, we will rework our model. As of now, we don’t expect a change in recommendation.

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