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

23 Oct 18

Quarterly Research Outlook

The June IPO of Knights Group Holdings, a Top-100 regional law firm, marked the fifth entrant to the burgeoning UK-listed legal sector. Following recent expansion of our coverage across all five listed legal firms, complemented by coverage of three broader support services peers with exposure to the sector, we revisit and build upon our views on this rapidly evolving sector.

Companies: ARS GTLY GENL KEYS KGH MNO RBGP TWD 7DIG ABBY AMS AMER ANX ARS ATYM AVON BLVN PIER CGS CAML CALL CSRT TIDE DTG DEMG ELM EMR FPM FPO FST GTLY GENL GRI GEEC HDY HMI HAYD HEAD HILS HTG HUR IBPO IOG INDI JHD JOG KEYS KGH LAM MACF MNO MKLW NAH OXIG PCA PKG CAKE PDG RBW RMM REDD RSW RNO RKH RBGP ROR SUS SCPA SHG SOLG TWD TRAK TRI VNET VTC ZTF

06 Nov 18

THE MONTHLY November 2018

In addition to Hardman’s monthly analysis of client stocks, the thorny issue of market disruption – a popular theme currently - is also addressed. In a wide-ranging article, Hardman’s utilities analyst, Nigel Hawkins, assesses the impact that market disruption has already made. In some sectors, notably telecoms and aviation, market disruption has been apparent for many years, as the rise of Vodafone, Ryanair and easyJet demonstrates. However, in some sectors, such as oil and housebuilding, structural changes have been modest – the dominance of the big players endures. For investors, there is real interest in those sectors where changes are underway. The UK groceries market, which may shortly become a duopoly, is a case in point. And, intriguingly, who knows if there is a company currently languishing in AIM, which will attain a £50bn market valuation within the next decade?

Companies: OPM AVO AGY APH ARBB AVCT DISH BNO BUR CMH CLIG CSH DNL DPP GTLY GDR HAYD KOOV MCL MUR NSF OXB PHP RE/ REDX SCE SIXH TON VAL VTA W7L

18 Oct 18

Norcros - Positive progress in H1

The Norcros H119 pre-close update reiterated management’s expectations for progress in FY19. Trading newsflow was similar to that reported in Q1 – with a good uplift to UK EBIT anticipated for H119 and a growing South African top-line – albeit with an implicitly slightly quieter second quarter. Brand presence, coupled with product and channel diversity, appears to be supporting ongoing progress in variable market conditions. Our estimates are unchanged and H119 results are scheduled for 15 November.

Companies: Norcros

15 Nov 18

My Aim is True

The Platinum-certified album of the same name by Elvis Costello is widely held to be the most impressive debut in popular music history; and it ranks 80 in the greatest records of all time. It was released in 1976, four years after Titon was founded. Both have been constants since then too – as many about them have lost their heads. Titon was listed on the USM in 1988 and the full list of the London Stock Exchange (LSE) in 1992. Now, in 2018, it has come full circle with the decision that its true path is admission to AIM.

Companies: Titon

16 Nov 18

LIBERUM: Kier Group* - Re-assuring AGM statement

AGM statement guides to in line, and we assume c. 70% weighting to H2 as expected. Average net debt to fall £20m in H1 but we increase our over ambitious FY average net debt from £342m to £365m.

Companies: Kier Group

05 Oct 18

UK Housebuilding Sector in 3Q 2018…

“It’s like the cow that every single day during 10 years sees the train crossing in front of it at the same time. And if you ask the cow what time is the train going to come, it’s not going to have the right answer. In football it’s the same”.

Companies: ABBY TEF CSP TW/ BWY PSN RDW BDEV MCS BKG GLE SPR

31 Mar 17

N+1 Singer - T2 Trend spotting - Strategy update

In our second edition of “Trend spotting” we note how in the last three weeks the defensive rotation trend has gathered pace and further evidence has emerged of the “relative fading” in the UK economy. However we now see early signs of the “risk on” trend starting to reassert itself in equity markets and we look at small cap laggards plus European exposure as ways to play this.

Companies: GNS NTG SPH TRI XAR BOY VCT GHH CHH DPH INS HILS RPS LWB EKF UDG SYNT MYSL IMO BCA JUP KMK

23 Oct 17

Value being evidenced

The strong trading seen in H1 has continued into H2 to the extent that management now expects FY 2017E to be materially ahead of expectations. We have upgraded our FY 2017E EPS by 16% and highlight that, assuming no change to the economic backdrop, there remains upside to both FY 2017E and subsequent forecasts. We reiterate our view that our sum-of-the-parts analysis is well evidenced by both company and external transactions, supporting our 398p target price.

Companies: Henry Boot

04 Dec 17

Support Group

Topic of the quarter: It’s alive! Infrastructure and assets in general have traditionally been built to provide a fixed service and are maintained and renovated to a fixed schedule – dead and dumb. Technology will completely change this. Sensors and wireless networks have the potential to allow assets to ‘talk’ to us. These living, smart assets will be able to tell us when they need maintenance, how efficient they are being and provide the data that will directly influence their construction, availability and use. The implications for construction costs through to operating costs and the ability to service changing user needs are very significant. The Support Services, Construction and Technology sectors need to work together to maximise this potential, recognise and harness the power of data, and invest in and embrace change. These are daunting challenges in highly competitive markets where politics play a role, different skill sets (that are currently in short supply) are needed and shareholders are looking over management's shoulders. However, the prize for those companies who get it right is significant, and the risk from not changing much greater. There are positive early signs with Crossrail providing tangible examples of Smart Infrastructure using innovative sensors.

Companies: FOUR DSCV BOOT CLL CNCT FCRM LOK PPH RNWH STAF UTW WATR VANL WYG

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

04 Jan 18

2017 Reviewed and 2018 Selection

Remarkably, in spite of Interserve (-71%), my 2017 Bulls on average comfortably beat both my Bears and the All-Share. My 2018 segmental Bulls are: Bovis, Breedon and Mears. My 2018 Bears are: Berkeley, SIG and Morgan Sindall.

Companies: BREE BVS MER BKG MGNS SHI

27 Sep 18

Low & Bonar - Tough conditions persisting in H2

While volume growth is being achieved in several divisions, some of the factors that affected H1 trading – most notably higher input costs – have not receded as quickly as anticipated. Underlying operational improvements are happening but have not been enough to offset these pressures to date. We have lowered FY18 earnings expectations sharply – slowing the rate of net debt reduction a little – with a flat DPS profile now.

Companies: Low & Bonar

16 Nov 18

9m18: solid performance in lfl EBITDA, net debt decreased significantly

Acciona used to be a pure construction company more than a decade ago but it now has the profile of a Spanish renewables player in electricity generation from windmills (60% in Spain). Note that the Energy division accounts for 70% of our NAV. Reported EBITDA increased by a mere 1.2% over 9m18 vs a 6.7% increase in H1 18. Following this earnings release, we expect to cut our EBITDA forecast slightly but to keep our Buy recommendation with a lower target price.

Companies: Acciona

21 Nov 18

Tyman - Trading reasonable but share price weak

Tyman’s trading update referenced firmer demand in two important European markets, some short-term input cost drag in North America and two small acquisitions, which enhance the group’s commercial and residential offerings respectively. Our small net EPS reduction for FY18 is followed by slightly larger upgrades in the following two years and, after a weak share price period, leaves Tyman trading on 7.7x P/E and 6.0x EV/EBITDA multiples in FY19 (first full year of acquisition contributions). Separately, Tyman has announced a CEO succession path with Louis Eperjesi to retire in June 2019, to be replaced by Jo Hallas (from Spectris).

Companies: Tyman

15 Nov 18

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

17 May 17

finnCap - Henry Boot, The ultimate scarce resource - land

Premium

24 Aug 18

Henry Boot - Interim Results 2018

17 Nov 16

Norcros - Half year results

25 Aug 17

Henry Boot - Interim results

23 Oct 15

Michelmersh Brick Holdings - Trading statement

07 Mar 18

Breedon Group - Full-Year Results 2017 Interview

20 Dec 12

Analyst Interview - Tyman

08 Mar 17

Breedon Group Plc - Full year results 2016 interview

23 Mar 18

Henry Boot - Full Year Results 2017

07 Dec 17

Capital Network's Ed Stacey on Morgan Sindall Group PLC

20 Apr 18

Bitesize briefing – AJ Lucas Group

16 Nov 17

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

29 Aug 17

Henry Boot - Analyst interview, WH Ireland

05 Sep 18

Breedon Group - Half year results 2018 interview

Latest Content

Tyman

Tyman - Trading reasonable but share price weak

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21 Nov 18
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Kier Group

LIBERUM: Kier Group* - Re-assuring AGM statement

AGM statement guides to in line, and we assume c. 70% weighting to H2 as expected. Average net debt to fall £20m in H1 but we increase our over ambitious FY average net debt from £342m to £365m.

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16 Nov 18
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Acciona

9m18: solid performance in lfl EBITDA, net debt decreased significantly

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16 Nov 18
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Norcros

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

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15 Nov 18

Bouygues

A reassuring Q3 after the profit warning of one month ago

A reassuring Q3 (in particular on the telecom side) after the profit warning of 19 October. If we consider the issues on the two biomass plants as a one-off item, the stock should return to the €35 level. We maintain our Add opinion.

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15 Nov 18
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ACS Actividades de Constrccn y Srvcos

9m 18: solid backlog growth bodes well for FY2019

ACS posted solid figures over 9m18, driven by a strong performance from the construction division. Management expects to reach EBITDA of €2.4bn for FY18 and net profit of over €900m. Following the earnings release, we shall be reworking our model but expect to maintain our buy recommendation.

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15 Nov 18
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Titon

My Aim is True

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15 Nov 18
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Koninklijke Boskalis Westminster

9m 18: Improvement expected in H2 18 compared to H1 18

Concerning guidance, net operating profit in H2 18 is expected to be sharply higher than in H1 18 (€34.5m). However, the net result is not expected to match the level achieved in H2 17 (€75m). Following this earnings release, we expect to lower our EPS, but we will keep our current Buy recommendation unchanged.

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12 Nov 18
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Koninklijke BAM Groep

9m 18: less disclosure than the previous year is a yellow flag

BAM, contrary to 9m 17, did not disclose the breakdown of adjusted results before tax by division. In our opinion, this is a yellow flag. There was a cash outflow on the IJmuiden sea lock of €80m in 9m 18. Constructive discussions are being carried out with the banking syndicate but it is unclear when these will finish. We expect to keep our bottom-line forecast mostly unchanged and we don’t expect a change in recommendation.

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12 Nov 18
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Sacyr

9m18: Sacyr successfully enters the US market

Sacyr has been awarded its first three infrastructure projects in the US, thereby meeting one of the targets of its 2015-20 strategic programme. In our opinion, the absence of a cash flow statement disclosure continues to be a yellow flag. Following this earnings release, we will rework our model. We expect to increase our EBITDA forecast significantly as well as our EBIT one. But we will keep our adjusted net income forecast mostly unchanged. The Buy recommendation will remain unchanged.

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