|Good to see a clear breakout|
|There was a mention of a special dividend back in FY 2016 RNS
"The Group's business model supports strong cash generation, as has been demonstrated by the rebuilding of a good net funds position over the past three years. This cash generation will support future investment in the growth and expansion of the business, whilst maintaining a strong return on capital discipline, along with the progression of the core dividend. It may also support supplementary dividends without diminishing the good net funds position which is being built up, a position which we plan to maintain to help manage the financial risks inherent in a contracting business."
This was what tipped me into buying in at that point|
Strong revenue growth in H2, margins also improve
Severfield’s UK order book began to pick up at the beginning of 2016 (from c £185m in November 2015 to £315m a year later) and this has progressively fed into its FY17 trading performance. H117 revenue was comparable y-o-y, but a marked EBIT margin improvement was the standout feature of results for the first half. We had factored in a good sales uptick in H2 and it appears that the run rate has exceeded our expectations with y-o-y progress approaching 20%. Importantly, this has not come at the expense of margin, which looks to be at or around 8% in H2 (and 7.5% for the year, +180bp). Additionally, good cash collection and receipt of advance payments give our new estimated year-end cash position of c £30m (vs c £19m at the end of FY16). Taken together, this provides persuasive evidence that the enhanced commercial procedures across project lifecycles introduced a few years ago have been rigorously applied. Elsewhere, the Indian JV trading performance has been stable, as has the local order book (at £40m).
Estimates raised for FY17 and FY18
We have raised our FY17 and FY18 PBT estimates by c 9% and c 5% respectively with increased revenue and margin expectations in both years. FY17 UK revenue throughput – especially on larger projects – has brought the year-end order book back down to £267m; we would like to see how the pipeline converts to new work over the next quarter before taking a stronger view on FY18 prospects. Also, at this stage, we have left our dividend expectations unchanged; firming earnings estimates and good cash performance could support an enhanced payout in due course. Lastly, Alan Dunsmore (group FD for seven years) will assume the duties of Severfield’s CEO during his period of temporary absence through illness and John Dodds (chairman since 2011) will act as executive chairman on an interim basis.
Valuation: Driving outperformance
Severfield’s share price has now outperformed the FTSE All-Share Index over 12 months, 2017 to date and one-month periods. We believe the company is still on track to double FY16 PBT by FY20 (implicitly, PBT c £26m) and the closing year P/E of 14.4x and EV/EBITDA of 8.2x compress meaningfully on this basis.|
|I recall talk about a possible special dividend being considered, can't recall though whether Lawson mentioned it in an interview or reading it in an article.
Or at my age imagining it!|
|New highs now.
N+1 Singer have left their 98p price target and forecasts unchanged at present, but expect them to rise as follows - note also the expected £30m cash pile:
"Impact on earnings & valuation
We expect to increase our revenue forecast for FY16 to just over £265m vs. our previous estimate of £260m, with an operating margin of 7.5% vs. our previous estimate of 7.0%. We expect this to drive a c.9% upgrade to our FY16 PBT forecast to around £19.5m vs. £17.9m previously. We expect net cash to rise to c.£30m in FY16 from £27.3m."|
|It's spotting them BEFORE they get tipped, that's the key thing.|
|Ha ha tell me about t Greenroom. I was trying to get clever and buy at the beginning of the spike and sell at the top. If I'd done it manually rather than trusting the lazy muppets at HL I'd have managed it as well... They spiked my existing Bacanora holding at New Years and I really should have sold the spike there too. Problem is I keep telling myslef I'm a long-term investor and thinking that makes me responsible, when the exact opposite is true... So I should have sold at 9am this morning and taken the (smaller) loss I suppose.
And, oh yeah, I'm stuck slightly in the red in INSE too, though I bought on Shares' recommendation rather than Midas's.
I must be the worst investor on ADVFN. Sell the tips and the news! Everyone else will!|
|SFR's UK order book was indeed £270m on 1.6.16 but had grown to £315m 1.11.16, and now £267m, still very healthy of course.
Whilst a little disappointed in this 'bare bones' update still confident SFR will provide good capital growth over the next few years. So will continue to add.|
|Hopefully you'll be in profit soon. I often find it best to let things cool down if you're following Midas. For some reason Midas tips spike a price 10-20% but they often sell back down again. INSE was another recent example, they have some good picks but chasing the price on the first day after the tip often leads to over paying IMO.|
|Greenroom me too. I bought in ON the Daily Mail tip so I'm in the red! NEVER EVER EVER put in an autobuy with Hargreaves Lansdowne, expensive rookie error! Still sat on a spike in the red. But with this stock I think patience will be rewarded. Maybe DM will revisit it and we get to sell out again...|
|I'm surprised by the underwelming response the to the 'ahead' news, maybe CEO sick leave is bearing on the price. Having sold out a short while ago on the Midas tip I'm glad there has been a bit of weakness as it's given me chance to get back in around the level I sold at.|
|Highest for the last SIX years|
Thank you for your updated post.
With regard to the order book figures, the order book @ 1/6/16 270 m.
Highest for the last years.|
|From "Construction Enquirer"
Ian Lawson, chief executive of steelwork contractor Severfield, has temporarily stepped down due to ill health. John Dodds, non-executive chairman, will now act as executive chairman on an interim basis and will work with finance chief Alan Dunsmore, who has agreed to assume the role of chief executive for the time being.
Dodds said: “I will work closely with Alan and the wider team during this time and in the meanwhile, on behalf of the board and everyone at Severfield, I would like to wish Ian a full and speedy recovery.”
In a second half trading statement this morning, Severfield said its performance for the year ending 31 March 2017 would be ahead of expectations.
It added that the UK order book remained solid at £267m and the pipeline of potential projects remained steady although, as previously highlighted, the mix of commercial projects would return to normal levels over the coming months.
“Both order book and pipeline performance remain consistent with our objective of doubling profits by 2020,” said Severfield.|
|28 March 2017
("the Company" or "the Group")
Severfield plc, the market leading structural steel group, today announces an update on trading for the financial year ending 31 March 2017.
Trading during the second half of the financial year has been strong, with the Group's performance for the year ending 31 March 2017 now expected to be ahead of expectations. Cashflow performance in the second half has been similarly strong with net funds at the year end also expected to be ahead of expectations.
Performance on our UK contracts continues to reflect our ongoing operational improvement programme which is delivering benefit to our clients and to our own financial performance. The UK order book remains solid at £267m and the pipeline of potential projects remains steady although, as previously highlighted, we expect the mix of commercial projects to be at more normal levels over the coming months. Both order book and pipeline performance remain consistent with our objective of doubling profits by 2020.
JSW Severfield Structures Ltd (India)
Operational performance remains solid and the long term debt repayment programme continues on track. The order book is stable at £40m, despite excluding a commercial project in Kerala, originally awarded in December 2016, which was recently cancelled following a change in prime contractor.
With a good order book, continued strong operational performance and our ability to work across a wide range of sectors, including infrastructure, the UK business is well-placed to deliver further growth towards our objective of doubling profits by 2020. The Indian business continues to perform in a stable manner with the economic backdrop continuing to show signs of improvement following the government's demonetisation programme.
Full Year Results
Severfield will announce its financial results for the year ending 31 March 2017 on 14 June 2017.|
|Excellent - trading ahead of expectations, once again. Good to see India continuing to slowly progress too.
The outlook is extremely bullish.
I notice that the UK order book, whilst well ahead of this time last year, is well down on the £315m in the interims. Is there a seasonality which means we can expect the order book to rise into the summer/autumn?
Hope the CEO recovers soon too - sounds like a temporary leave rather than anything permanent.
Runthejoules, just click on the link in the thread header post for the RNS.|
|Big jump. Think it will stay like this?|
|80p will break today with consummate ease|
|SFR have a capital markets day iirc on the 30th of March so canned/deferred the trading update to coincide|
|But the results will be for year ending 31st March. Full announcements come in June, do they not??|
|I think it's end of year results.....|
|Do we know that the company will issue an update this week, or is it that we hope they will?|
|Hopeful Holder. VAN ELLE is a completely different business to SFR. Anyone with a little piling know how can set up a piling business. All manpower / plant are easy to hire in and with low overheads have a cost differentiation. Whereas SFR, is a leader in size by quite a fair way, high barriers to entry even on this scale and customers need SFR for the big steelwork projects.
I'm not ramping here. This stock could go either way next week, but I suspect in an upwards direction.|
|Topped up this week in readiness for forthcoming trading update, this coming Thursday hopefully.
From the interims last November,
With the strongest order book for over six years and steady pipeline, the outlook is very good. Revenue growth coupled with the continuing operational improvements provide confidence in the Group's ability to deliver profit growth in the current year comfortably ahead of expectations.
The Indian joint venture continues to perform steadily and improving market sentiment coupled with some reduction in debt within the business provides more confidence that the business can deliver a break-even result in the current year and move into profit thereafter.|