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.

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Cenkos: Breedon Group Plc -- In good shape

Breedon is effectively moving to a (temporary) lockdown position on all its sites save Hope cement plant (which will produce to storage) and those in the Republic of Ireland where the principal customer is central and local government and as such will continue to operate until directed otherwise. Crucially, the group is in a strong financial and liquidity position with undrawn facilities of £220m and £60m in cash whilst any unwind of working capital from here is likely to actually generate cash. Moreover, the planned £155m cash outlay on the Cemex assets to be acquired is almost certain to be delayed beyond the coronavirus period due to the associated stalling of the TUPE process and IT migration. This position seen against a cash ‘burn' of probably no more than £15m per month (gross of any government support schemes and noting employee cost is the largest single constituent of fixed overheads) is comfort indeed for shareholders. We are withdrawing our forecasts for 2020 (formerly £200.7m of EBITDA, £113m underlying PBT and 5.6p EPS) and beyond on the simple basis that we cannot predict either the depth or duration of the coronavirus impact. Nonetheless we are happy to retain a Buy on the basis that: (a) there will be no structural damage done to the group's operational, asset or financial base as a result of coronavirus, (b) it should see a rapid scale-up when normality returns and (c) management can be relied on to re-assert relative growth versus its peers which has been a hallmark of Breedon's history to date. For long term investors these are opportune times.

Breedon Group

  • 26 Mar 20
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