||ORD EUR 0.32
||EPS - Basic
||Market Cap (m)
|Construction & Materials
CRH Share Discussion Threads
Showing 326 to 350 of 350 messages
|2016 – The Great Irish Share Valuation Project (Part II):
Company: CRH (CRH:ID)
Last TGISVP Post: Here
Market Cap: EUR 22,579 M
Price: EUR 27.40
When Albert Manifold kicked off as CEO, it certainly looked like he was planning to right-size a rather stretched balance sheet (I even wondered whether he’d launch a rights issue). But it’s always hugely tempting for a new CEO (esp. the CEO of an Irish corporate icon like CRH), to make his mark as an empire-builder, so that resolve didn’t last long… Despite announcing a €1.5-2.0 billion multi-year disposal programme in late-2014, 2015 proved to be the year for mega-acquisitions – totaling almost €8 billion, primarily the Lafarge-Holcim & C.R. Laurence Co acquisitions. [OK, Manifold did a placing in the end, but only to fund about 25% of the LH deal].
While underlying organic growth’s now progressing at a very healthy clip (primarily driven by renewed US momentum), we haven’t reached a point where it’s easy to determine an appropriate P/E multiple – therefore, we’ll use a similar approach to my previous write-up. Noting CRH’s two big acquisitions closed in H2-2015, first we need to calculate a post-acquisition revenue run-rate: LH revenue’s €5.1 billion & the deal closed end-July, so that’s a €3.0 billion revenue bump for FY-2016. And CRL revenue’s $570 million & it closed end-Aug – an additional $380 million revenue bump.
CRH’s FY-2015 EBIT margin was 5.6%, which compares to a peak 9.9% margin (back in 2007) – so relying on the company’s actual Op FCF margin (of 8.3%) seems appropriate here for valuation purposes & deserves a 0.75 P/S multiple. [Which seems fair for the incremental acquisition revenue also – LH & CRL earn much higher EBITDA margins than CRH, but since CRH’s Op FCF margin’s about 50% higher than its EBIT margin, it seems unwise to specifically adjust margin higher for these acquisitions]. And looking at average FY-2015 debt levels vs. year-end debt of €9.2 billion vs. underlying net interest costs, I estimate FY-2016 net interest cost will be around €366 million (vs. a prior €295 million), which is just over 16% of Op FCF – so a debt adjustment no longer seems necessary, bearing in mind CRH also has €2.5 billion cash on hand (also provides cover for a €0.6 billion pension deficit). [OK, props to Manifold…he217;s bloody well cashing his way out of a stretched balance sheet!]:
(EUR 23.6 B Rev + 3.0 B LH + $0.4 B CRL / 1.1115 EUR/USD) * 0.75 P/S / 824 M Shares = EUR 24.53
CRH looks marginally over-valued at this point. But noting the underlying momentum of its US business, and likely cost savings to come from its two major acquisitions, we should hopefully see it grow into its current market cap over the next year. But investors should also be mindful of potential integration and/or (renewed) economic risks here, which could prove challenging for a company that’s relatively leveraged at this point.
Price Target: EUR 24.53
For related links/graphs/files, and more TGISVP analyses/price targets: Google the Wexboy investment blog.|
|Very quiet over here.
18.00 seem to be a very strong support,a very strong rebound today, I hope now rise between 10-20%
|Good move today, the only way is up|
|Can't believe they sold UK clay products like Ibstock in UK. A fine company that I know well personally. It will go from strength to strength. I appreciate it is only a small fish in a large ocean to them however of which currently does not have the RONA of its other companies.|
|this is a massive acquisition.|
|CRH #CRH will spend €6.5bn on assets from Holcim and Lafarge.
As mentioned on today's ADVFN podcast> http://bit.ly/ADVFN0120|
|CRH is featured in today's ADVFN podcast
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Ted Baker #TED
Standard Chartered #STAN
Spirent Communications #SPT
Howden Joinery #HWDN
Marks and Spencer #MKS
Talk Talk #TALK
British Land #BLND
Dunelm Group #DNLM
SQS Software #SQS
Foxtons Group #FOXT
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|Good entry point?|
Prior Post(s): 2012 & 2013
Price: EUR 20.98
2013 wasn't a great year for CRH the new CEO, Albert Manifold, has inherited an uphill task (& a stretched balance sheet) from veteran Myles Lee. Total revenue fell marginally again, weak trading in Europe was the culprit, but it's notable CRH's (2012) US momentum has mostly dissipated (with revenue up just 2%). Europe had a more pronounced (negative) impact on profitability, with CRH's underlying operating profit margin falling to just 4.0%. [This performance also prompted a 2013 portfolio review, resulting in a EUR 0.6 billion write-down & a plan to divest 45 (primarily European) business units]. Fortunately, this kind of stagnation often benefits the cash flow statement something we can reasonably expect again in 2014 for 2013, this resulted in a 5.6% operating free cash flow (Op FCF) margin.
For valuation purposes, I'll still assume we'll see an eventual convergence towards CRH's long-term margins of almost 10% so let's utilize an average 7.8% margin here. However, it's worth highlighting fresh anxieties over Chinese/emerging market growth mean the timing of this convergence has become that much more uncertain... On the other hand, CRH is still the Irish blue chip for domestic & international investors (well, even though it's not very Irish...) so I'll continue to assign a 0.7 P/S multiple.
But leverage remains a big problem EUR 255 million of net interest expense is a whopping 35% of adjusted operating profit. But let's be generous here & focus on CRH's Op FCF of just over EUR 1.0 B instead...unfortunately, net interest's still over 25% of this figure. I calculate total debt (of 5.5 B) would need to be reduced by about 39%, to limit net interest to 15% of Op FCF therefore, we'll include a 2.1 B (negative) debt adjustment in our valuation, plus a 336 M adjustment for the net pension deficit. However, cash has now accumulated to a rather ridiculous 2.5 B I suspect management will opt for ample liquidity, but it seems reasonable to assume 50% of this cash will be used to offset debt balances/maturities. Put all this together & we have:
(EUR 18.0 B Revenue * 0.7 P/S + 2.5 B Cash * 50% 2.1 B Debt Adjustment 0.3 B Net Pension Deficit) / 735 M Shares = EUR 15.53
CRH remains pretty over-valued. I suspect there's a potential takeover premium embedded in the price considering the Holcim-Lafarge merger news, we may be on the verge of a new wave of consolidation. If that's the case, CRH is a mere morsel shareholders often seem to presume it's a global player, but in reality it barely cracks the top 40 largest cement companies. Meanwhile, shareholders probably face another tough year...and it might prove tempting for the new CEO to indulge in another kitchen-sink job this year, or to even consider a rights issue.
Price Target: EUR 15.53
|Construction and materials
Housebuilders have had a good run during the earlier stages of the cycle and now it is the turn of the companies that make and distribute materials for the wider construction sector, building not just houses but commercial property and infrastructure projects.
CRH is a major producer of cement, concrete products and asphalt, and operates in 36 countries. Stephen Williams, of Brewin Dolphin the stockbroker, says the company is in a strong position. It cut costs during the downturn and is in the process of disposing of a raft of businesses that do not meet its targets on financial returns.
Wolseley is the world's largest distributor of plumbing supplies and building materials. After nearly going bust when the housing market collapsed in 2008, the company has been able to stage a strong recovery, and Mr Williams says: "A combination of a recovery in some of its markets, such as infrastructure, and its new improved business models offer the prospect of above-average growth in earnings."
|Yes you could.|
|Could you really get a better LONG TERM uptrend? Pretty cool eh.|
|Well worth putting this on the hot watch list. Should see further upside within the uptrend channel. Wait for positive confirmation in the market before entering.|
|agreed,great hold,great trade|
|Just look at that graph. Great FTSE 100 company|
|JP Morgan have just increased their holding from 3% to 5.81%.CRH is a class company|
|800,000 late trade (from 15.05 hrs) reported. Look at the graph from 15.00 hrs onwards,|
|Irish Sunday Independent 30th June 2013 report takeover rumours for CRH.|
|hi volume today|
|I notice LBO you have'nt published any of your poisonous
snippets from todays media reports about the Competition
Commission's investigation into price fixing in the uk
cement business....does'nt mention CRH tho'
|2013 The Great Irish Share Valuation Project (Part XI)
I take a look at CRH, plus a batch of other Irish stocks:
|Tricky to call right now. I rode the 1090 to 1290 spike long at end of august/early sept and am now looking to re-enter at 1090. I thought we'd see it today with a general market pull-back on the back of an unimpressive IMS, but not to be. Missed an opportunity last week when it hit 1094 which would have yielded a good 100 points. So will keep my powder dry until we hit 1090 again and then I'll be in long. Am a bit worried this time that it may go as low as 1000 but can't see it lower than that. Nice share to bet on!|
|To many negatives in the IMS....falling revenues in the Americas joining the known falling revenues in Europe....I am in SHORT at 1130p. All my own views of course. DYOR.|
|Looking like a good recovery play|