Combatting Covid has been a double-edged sword. One moment enduring worldwide lock-downs, the next suffering from the sharpest supply-chain shock since WW2, thanks to synchronised global growth, unprecedented fiscal/monetary stimulus and pent-up demand. The UK’s construction industry is no different, with the latest PMIs (see below) flagging widespread material, labour & transport shortages, on top of surging cost inflation. Not ideal if you’re a site manager trying to complete a building projec
Companies: Vp plc
A positive update from Vp this morning confirms the Group is trading well, reiterating full year expectations. In the core markets of infrastructure, housebuilding and construction, the predominant picture is one of supportive demand. The key metric is that Group revenues are running at 96% of pre-pandemic levels, indicating further recovery potential over the balance of the current year and beyond. Interim results will be reported on Tuesday 30th November.
Vp’s AGM update this morning confirms encouraging recent activity levels across the Group’s core markets, underpinning full year expectations. As we have written previously, we see scope for outperformance over the forecast period in the event of a continuing recovery in demand. In our view, Vp remains the stand out opportunity in its sector in terms of earnings recovery and re-rating potential.
Vp’s FY21 results confirm a sustained recovery over recent months and a strong April/ May performance. This gives the Board increasing confidence in the outlook for the current year, supported by medium term demand drivers across key end markets, particularly infrastructure. We upgrade our forecasts again (PBT +10%/+8% for FY22/FY23) and continue to see scope for outperformance. Vp’s focus on Digital and ESG innovation provides further evidence of the Group’s quality and long term focus. In our
Today’s upbeat FY21 prelims from equipment rental specialist Vp provided further evidence of its industry leading status, especially in terms of earning quality, ROCE and cashflow. Posting a better than expected adjusted PBT (pre IFRS16) & diluted EPS of £23.3m & 45.9p on sales of £308m, alongside providing a “positive” outlook. Indeed in our opinion, the group’s through-cycle durability justifies a sector premium, thanks to its consistent returns, adoption of all-things digital and exposure to
Vp’s trading update confirms an in line conclusion to FY21 and highlights a further improvement in demand at the start of the new financial year. Revenues have recently returned to 95% of pre-COVID levels, comfortably ahead of the 89% we had factored in for FY22. Adjusting for the current run rate prompts a 12% upgrade to current year EPS forecasts. We see continued scope for outperformance against prudently positioned forecasts and believe the discount to peers fails to reflect Vp’s recovery po
Last year’s -9.8% UK GDP print was the worst since 1921. However it had little in common with normal recessions. Instead due to 6 months of lockdowns, pent-up demand is today ‘off the charts’. So far DIY, RMI and home offices have benefited. Although, ‘we’ve seen nothing yet’ - with catchup work on delayed projects set to further boost construction. Moreover the government is committed to job creation by pumping £10bns into residential property & infrastructure (eg fibre-to-the-home, HS2, offsho
Vp is a high quality business with an impressive track record of revenue growth (11% CAGR from 2001 to 2019) and industry leading returns (15% ROCE target regularly achieved). In this detailed note, we examine the drivers of Vp’s consistently strong performance, which we expect to underpin a full recovery from COVID and sustained growth over the medium term. We see scope for outperformance against prudently positioned forecasts and note that a marked discount to peers fails to reflect the Group’
The CMA has announced the findings from its review into historic behaviour within the UK groundworks industry. This review included part of Vp’s excavation support systems business (Groundforce Shorco). The CMA’s provisional findings were announced in April 2019. The CMA has imposed a fine of £11.2m on Vp. This is lower than the £15.4m provision Vp has already recognised as management’s prudent estimate of a potential fine. Vp has released an RNS indicating that it fundamentally disagrees with t
'The darkest hour is often just before the dawn'. Like many investors during the pandemic, I was guilty of being too pessimistic. However once Gilead had announced the efficacy of its Remdesivir drug on 29th April (1st medical breakthrough), the clouds began to part. Since then many others have also ‘climbed the wall of worry’, culminating with the recent terrific vaccine news. In fact on Friday, Goldman Sachs upped their UK GDP estimates to 7.0% for next year (vs 6.1% B4) & 6.2% in 2022. 1.9% h
Vp’s interims confirm a resilient performance set against the challenges of COVID-19 over the summer. Activity levels are gradually recovering towards pre-COVID levels and recent cash generation has been excellent. A 22p special dividend has been announced in lieu of last year’s final, further confirmation that the recovery has taken hold. We reintroduce forecasts within this note, prudently assuming only a continuation of current run rates over the coming months. Even on this conservative basis
Vp’s H1 trading update confirms a further improvement in activity levels with Group revenue now running at c.85% of pre-COVID levels (from c.80% at the time of July’s AGM). Markets are generally stable with the prospect of further improvement as infrastructure programmes gain momentum. Cash generation has again been excellent (£41m reduction in net debt post year end) and costs are being managed carefully in light of the reduced levels of demand. We plan to reintroduce forecasts as H2 visibility
Recessions and even pandemics come & go. However what doesn’t change is that quality firms ‘rarely let a crisis go to waste’. Instead they use it as a catalyst to streamline operations, improve services and cut their cloth accordingly. Not only building in downside resilience, but also winning market share as smaller rivals struggle, alongside creating favourable operating leverage when the better times ultimately return. We think plant hire specialist Vp falls into this camp. Today saying that
In the six weeks since Vp’s FY20 results were reported, demand has continued to return with activity now at 80% of prior year levels. Over two thirds of furloughed employees have returned to work and many of the mothballed locations have re-opened. This improving trend is expected to continue and we look forward to reintroducing forecasts as visibility improves over the next few months. Cash generation has been impressive in recent weeks resulting in a £22m reduction in net debt since the year e
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Palace Capital has released a good trading update of for the 6 months to 30 September. The Group has achieved good progress both across the portfolio and in sales achieved at Hudson Quarter. With cash reserves rising, the Group continues to look for value creative opportunities to recycle capital which should realise value for shareholders. Buy
Companies: Palace Capital plc
Non-Standard Finance (‘NSF’), one of the leading providers of unsecured credit to UK adults, published interim results for the half year to 30 June 2021 on 28 September. Overall, these showed a significantly lower loss before tax due to improved operational performance and lower below the line charges. The group also reported that current trading was ahead of plan primarily due to strong collections performance. Discussions with the FCA regarding the redress programme for guarantor loans custome
Companies: Non-Standard Finance Plc
We see the UK Government’s Net Zero Strategy as being overall helpful but not especially definitive. Amongst our coverage group, Drax Group (DRX LN) and Velocys (VLS LN) benefit from the Humberside CCS cluster prioritisation and Velocys from SAF support. The amount of renewables is likely to boost the need for flexibility solutions where Drax, Gore Street (GSF LN) and SIMEC Atlantis (SAE LN) can benefit. Hydrogen companies ITM (ITM LN) and Powerhouse Energy (PHE LN) are likely to find support. T
Companies: ADN DRX GSF ITM NESF PHE SAE SIT STRLNG TLG VLS
NextEnergy Solar Fund’s investment in NextPower III opens up geographic opportunities in Latin America, Asia and other parts of Europe much earlier than could have been delivered by direct project investment. Additionally, the JV announcement with energy storage system (ESS) developer Eelpower is also an attractive way to accelerate portfolio diversity as well as opening up the door to further asset growth. By working with partners experienced in different geographies and the energy storage segm
Companies: Nextenergy Solar Fund
What’s new: Tatton’s interims trading update confirm it has “delivered strong growth in all its key metrics during the period including revenue, profits and assets under management” (AUM). It is “trading in line with expectations”.
Companies: Tatton Asset Management Plc
AuM pushed on in Q2, hitting £10.8bn – including the acquisition of the Verbatim funds (+13% in H1 organic only). Crucially, net inflows have remained strong through the whole of H1 at £109m avg pcm. This flow momentum underpins an encouraging outlook, both near and medium-term. We leave our forecasts unchanged although note risk to the upside heading into H2. We will review our model again at the Interims. Given the pace of growth and scale of opportunity from already established relationships,
The third quarter continued to enjoy record CIB revenues and loan provision recoveries. Consensus expectations have now largely aligned with our projections, thus leaving limited upside potential in our view.
Companies: Barclays PLC
Gore Street’s trading update confirms expectations of a strong trading environment for batteries in both the GB and Irish markets. Driven principally by high gas prices creating electricity market volatility and with tight capacity margins likely to remain, we see the company continuing to generate excess cash returns in this financial year at least.
Companies: Gore Street Energy Storage Fund PLC
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Devolver Digital to join AIM, an award-winning digital video games publisher and developer in the indie games space. Recently awarded indie 'Publisher of the Year 2021' by GamesIndustry.biz. Offer TBA. Due early Nov.
Life Science REIT to join AIM raising up to £100m. This will be the first London listed real estate investment trust (REIT) focused on UK life science properties providing investors with exposure
Companies: SYS1 ARE SO4 SNG TMG TMT OHG IDE KIBO MRL
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Gymshark has started to put together plans for a stock market listing according to City A.M. The company hit a £1bn valuation just over a year ago and boasts customers in more than 130 countries. Gymshark was founded by teenager Ben Francis in 2012 in his parents’ garage with products that appeal to Gen Z consumers. Timing TBA
Rubix Group Holdings, the market leading pan-European distributor of industrial main
Companies: ZOO CUSN ECHO IDEA PURP TEK
Companies: Chrysalis Investments Limited
Today's news & views, plus announcements from BHP, MGGT, RIO, BWY, MONY, BGO, YOU, AVAP, PCA & SOLG.
Companies: AVAP BGO RIO SOLG
Currently, Gore Street Energy Storage Fund (GSF) primarily relies on revenue from frequency response services, including Dynamic Containment (DC), to estimate near-term returns. The dislocation in the UK power market has led to a sharp rise in returns available from energy arbitrage leaving GSF’s assets well placed to benefit from this increased volatility. In September, those of GSF’s GB storage assets that participated in the actively-traded GB power markets generated revenues that were signif
TMT Investments PLC have provided a portfoloio update. We have published research on this which is attached and a snapshot of the research is below.
The venture capital company investing in high-growth technology companies has moved one step closer to its first IPO driven exit. In a portfolio update announced this week TMT noted that its portfolio company Backblaze, Inc. publicly filed with the SEC on 18 October 2021. TMT currently holds a 9.97% interest in Backblaze, Inc. (pre its expected fun
Companies: TMT Investments
Companies: NewRiver REIT plc