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

14 Sep 18

LIBERUM: Kier Group* - Why we think the bears are wrong

Kier is one of the most shorted stocks in the UK (10%). Are the bears onto something, like Carillion, or are they setting themselves up for a short squeeze, like Ocado? Given the amount of gratuitous mud that has been hurled at Kier recently, it is inevitable that some of it sticks.

Companies: Kier Group

03 Sep 18

The Monthly September 2018

September’s Hardman Monthly features an article from guest contributor, Tim Ward. Tim is the Chief Executive of the Quoted Companies Alliance (QCA), an organisation that champions the interests of small to mid-size quoted companies.

Companies: OPM AVO AGY APH ARBB AVCT BNO CMH DNL EVG GDR INL KOOV MCL MUR NSF OXB PHP RE/ REDX SCLP SCE SIXH TRX TON VAL W7L

18 Jul 18

Quarterly Research Outlook

In Q2, UK equities regained some of their poise after the draw down in Q1, although uncertainty around Brexit continued to grab the headlines. On the back of this, investor concern about the UK economy has been understandable in recent months given a number of negative data points. However, we see reasons for optimism for UK Plc with wage growth supporting an improving outlook for the consumer and business investment holding up. That said, continuing UK political disruption clearly remains a risk going forward.

Companies: AMER EMR HMI JOG PDG ABBY AMS AVON BLVN PIER CGS CALL CSRT TIDE DTG DEMG ELM EMR FPM FPO GTLY GENL GOR GEEC HDY HMI HAYD HEAD HILS HTG HUR IBPO IOG INDI JHD JOG LAM MACF MKLW NAH OXIG PCA PKG CAKE PDG RBW REDD RSW RNO RKH ROR SUS SCPA SHG SIV TRAK TRI VTC ZTF

29 Jun 18

Explicit growth aspirations

Variable underlying markets did not prevent Norcros from delivering both organic and acquired progress in FY18. Moreover, a new target of almost doubling revenue by 2023 has been set with ROCE sustained above 15%+. Share price movements suggest that the market is starting to give credit for management’s achievements. Performance will be measured against the strategic plan and we believe that a further re-rating is likely.

Companies: Norcros

18 Sep 18

Sector leading growth; outperformance in cash

Maiden FY results report strong growth, delivering volumes of 770 (2017: 620) and adj. PBT growth of 46% to £9.8m (2017: £6.7m), 2% ahead of our forecast. Both divisions had a solid performance, with gross profit increasing by 17% in Private and 89% in Affordable. The Group significantly outperformed on cash generation, with net debt of £15.3m at the period end (N+1SE: £28.4m, 2017: £33.2m). In addition to strong trading, cash outflows were lower due to fewer land purchases and a focus on securing land under contract (vs. outright purchase). We reduce net debt forecasts accordingly. The outlook for the Group remains positive and we believe Springfield is well placed to outperform the peer group over the medium term. We retain our revenue and profit forecasts and believe recent share price weakness is a buying opportunity.

Companies: Springfield Properties

27 Jun 17

Machinations

We recently hosted our annual Industrial Technology dinner with 14 companies, many of which are active in the materials science arena; having focused previously on composite materials in the aerospace sector, in this edition of Machinations we focus on graphene, with its unique and potentially game-changing qualities and potential applications. Investments in this area remain fairly early stage, but could potentially reap huge rewards. Graphene is well represented in the UK small-cap market by several players.

Companies: SIXH DSCV AXS AMPH ALU AEP AVG CAPD CAR FENR FLO GINV GHH HDD HAYT IOF MPE RE/ RED RNO RBN SOM SCE TRI VANL ZAM TRT

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

29 Jun 18

The Monthly

We have analysed every IPO on the London Stock Exchange (LSE) between January 2015 and February 2018. Our analysis proves that, as expected, liquidity does dry up after float. The scale varies between markets and sectors.

Companies: OPM AGY ARBB AVCT BNO CMH COS DNL EVG GTLY GDR INL KOOV MCL MUR NSF OXB PHP RE/ REDX SCLP SIXH TRX TON VAL W7L

30 Jul 18

Stronger foundations?

Forterra’s guidance in its HY results today that FY 2018 results would be “in line” contrasts with this morning’s unscheduled trading update from larger rival Ibstock, warning on 2018 profits, due to production difficulties, needing more spending. We believe that Forterra, the UK’s number two, is reaping the benefits of several plant upgrades since the IPO and more aggressive rationalisation during the last downturn. We have kept our PBT, EPS and DPS estimates unchanged.

Companies: Forterra

01 Aug 18

The Monthly

Hardman & Co’s analysts have direct experience of uncovering accounting frauds. In this article, Steve Clapham outlines why we might see a surge in them over the next few years. He is engaged by institutions to teach their fund managers and analysts how to identify risks brought about by such frauds. Hardman & Co is pleased to offer this service to private investors.

Companies: OPM AVO AGY APH ARBB AVCT BUR CMH CLIG COS DNL EVG GDR INL KOOV MCL MUR NSF OXB PHP RE/ REDX SCLP SCE SIXH TRX TON VAL W7L

12 Sep 18

Interim results in line but operating environment remains difficult

Group like for like revenue was marginally ahead yoy at £142.4m, with notable growth seen in the extrusion, mouldings and distribution businesses, but declined on an absolute basis from £149.9m, due to the loss of the two largest customers in FY17. Group adj. operating profit was £7.1m (HY17: £11.1m) as margins were impacted by increasing cost input pressures. We marginally increase revenue estimates but leave FY18 profit forecasts unchanged on the back of today’s statement and acknowledge, as management has previously stated, profitability will be H2 weighted (ZC FY18 revenue and adj operating profit forecast of £285.2m and £19.6m respectively). The industry has experienced a difficult period with weak consumer demand and widely reported cost input inflation. This has been exacerbated for Epwin due to the customer issues experienced last year. The reiteration of FY18 guidance in today’s results should be viewed positively against this backdrop. Our expectation is that FY18/19 should prove the trough in profitability for the Group. On current year forecasts Epwin trades on 7.2x earnings and an EV/EBITDA of 4.7x, yielding 7.0% with net debt to EBITDA of less than one times.

Companies: Epwin Group

20 Sep 18

LIBERUM: Kier* - 16% upgrade to FY 2020

FY in line with 9% FD EPS growth, helped by McNicholas, and no exceptionals. Average net debt of £375m in line with expectations and the pension is now in surplus.

Companies: Kier Group

18 Feb 16

Positive underlying trading; legacy contracts prompt downgrades

North Midland’s trading update is mixed. The company details unexpected losses of £3.1m relating to the resolution and conclusion of a number of legacy contracts. However, stronger than expected underlying trading has offset some of the impact of these losses. The company now expects to achieve reported PBT of c.£0.6m for the year to 31st December 2015 vs. our forecast of £2.0m. North Midland has been dogged by a number of legacy contracts, but after today’s statement, only one problematic contract remains. This de-risks the business and should allow the management team to focus its efforts on further improving the Group’s underlying trading performance.

Companies: North Midland Construction

15 Sep 15

Headlining the UK roads show

Kier’s final results on 17 September, the first since the Mouchel acquisition completed in June, are likely to paint a confident outlook, including in roads, where the enlarged group has an expanded presence and the government has been stepping up investment. Our new estimates, reflecting the acquisition and rights issue, imply compound earnings growth of 13% over the next three years. Our new price target of 1,763p represents 17% potential upside and we restate our Buy recommendation.

Companies: Kier Group

27 Oct 17

Machinations

Highlights this quarter: Economics: Generally, the data points to modest growth continuing, with a more positive trend in PMI surveys suggesting decent m manufacturing momentum over the next six months. Currency weakness continues to be a double-edged sword for U K manufacturers, with exporters gaining competitiveness while input prices have risen. There has recently been a divergence of sterling’s performance against the euro and the USD. Those in commodity or competitive product areas may well have seen margin erosion, while many in intermediary goods have already passed on price increases to their customers. With low unemployment, the prospect of tighter labour markets post-Brexit and public sector pay caps starting to come off also signals the potential for some labour inflation, long absent from the UK industrial scene. Topic of the quarter: We believe that powerful macro and sectoral pressures will drive further significant changes to the manufacturing supply chain over the next few years. We investigate some of these pressures, with the move to outsource suppliers to low- cost centres, like China, now seeing a slight reverse flow with some restoring to shorten complex and often inflexible supply chains. We see systems technology facilitating greater supply-chain control and efficiency. Brexit will present challenges to the UK supply chain with price and time to market barriers likely to rise, presenting challenges to the UK’s highly integrated and time-sensitive supply chain. Slick distribution infrastructure and greater information sharing with suppliers are likely to prove winning strategies in optimising logistics and gaining stock efficiencies. Sector valuation: The industrials sector has continued to exhibit strength, with small-cap industrials outperforming by 2 % on last year and larger cap industrials by 17%. Currency and improving economic data have been a positive for the sector. While some other sectors have seen a pick-up in profit warnings over recent months, industrial technology companies have announced generally positive or in-line trading updates that have helped to drive the small-cap Industrials to an EV EBITDA of 8.4x and a P/E of 16.7x with the traditional small-cap discount narrowing.

Companies: SIXH DSCV AXS AMPH ALU AEP AVG CAPD CAR FENR FLO GINV GHH HDD IOF MPE RE/ RNO RBN SOLI SOM SCE TRI VANL VEL ZAM TRT

24 Aug 18

Henry Boot - Interim Results 2018

17 May 17

finnCap - Henry Boot, The ultimate scarce resource - land

Premium

05 Sep 18

Breedon Group - Half year results 2018 interview

17 Nov 16

Norcros - Half year results

08 Mar 17

Breedon Group Plc - Full year results 2016 interview

20 Dec 12

Analyst Interview - Tyman

29 Aug 17

Henry Boot - Analyst interview, WH Ireland

24 Mar 17

Henry Boot PLC - Annual Results 2016

20 Apr 18

Bitesize briefing – AJ Lucas Group

23 Mar 18

Henry Boot - Full Year Results 2017

07 Dec 17

Capital Network's Ed Stacey on Morgan Sindall Group PLC

30 Nov 17

Capital Network's Ed Stacey on Norcros PLC

13 Jun 18

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

07 Mar 18

Breedon Group - Full-Year Results 2017 Interview

16 Nov 17

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

Latest Content

Kier Group

LIBERUM: Kier* - 16% upgrade to FY 2020

FY in line with 9% FD EPS growth, helped by McNicholas, and no exceptionals. Average net debt of £375m in line with expectations and the pension is now in surplus.

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20 Sep 18
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AMS AUG BHRD FST NTG SPR

Morning Song

Advanced Medical Solutions (AMS LN) OEM woundcare a millstone on Branded surgical division | Augean (AUG LN) Strong H1 profit growth; EPS upgraded by 10% pa | Be Heard (BHRD LN) Focus on execution improving | Frontier Smart Technologies Group (FST LN) Value in both divisions despite tough period | Northgate (NTG LN) In line AGM Statement, with the business on an improving trajectory | Springfield Properties (SPR LN) Sector leading growth; outperformance in cash

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18 Sep 18
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Springfield Properties

Sector leading growth; outperformance in cash

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18 Sep 18
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JDG BILN I3E

Morning Comment

Judges Scientific - Strong H1 outcome; 15% FY upgrades to EPS | Billington Holdings - H1 results – confidence in FY remains | i3 Energy - Joint Venture and Operational Update

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18 Sep 18
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Kier Group

LIBERUM: Kier Group* - Why we think the bears are wrong

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14 Sep 18
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Koninklijke BAM Groep

H1 18: BAM burns €262m, namely 30% of its current market cap

The cash outflow for H1 18 was higher than in H1 17, despite the better results. The cash outflow was €237m, namely 7.3% of revenues and 4.1x PBT, which is far above the normal seasonal pattern. 90% of the result came from the Construction and Property division, which is a risky proposition. Note that the second caisson is actually a bit more complex and, hence, riskier given the size of it, so that another cost overrun looks more likely than not.

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12 Sep 18
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Epwin Group

Interim results in line but operating environment remains difficult

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12 Sep 18
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ALU CYAN K3C STM

Morning Note – 11 September 2018

Alumasc (ALU): Corp Full-year results in line | CyanConnode (CYAN): Corp A record H1 and more expected in H2 | K3 Capital (K3C): Corp Unstoppable market leader proves new model works | STM (STM): Corp Skilled results

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11 Sep 18
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Alumasc Group

Full-year results in line

Full-year results were in line with reduced guidance. The last year has seen significant headwinds, resulting in a lower outturn than originally expected. The recent stronger activity levels in construction provide some encouragement and support underlying profit recovery, with a boost from the inclusion of Wade for a full year. We increase our price target from 145p to 165p, which remains prudently pitched and offers good upside; with an attractive dividend yield 5.9% providing support, it also currently trades at a significant discount to its peers.

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11 Sep 18
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Koninklijke Boskalis Westminster

H1 18: sharp collapse of profitability/significant impairments but better outlook for H2

The net operating results of Boskalis collapsed in H1 18 compared to H1 17. This decline was mainly due to the sharp collapse in the transport activities at the low end of the market/S-curve in particular which are now considerably loss-making. Boskalis has decided to exit this market segment. Due in part to this decision, an extraordinary charge of €397m was recognised in H1 18, consisting mainly of a goodwill impairment and a writing-off vessels at scrap value.

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