Nexus Infrastructure Share Discussion Threads

[pr100] 18/5/2023 08:01

Today's interims are good. Tamdown have demonstrated that they can improve margins, make a profit and pay dividends even during a period of considerable challenge and uncertainty - and it is comforting that they have £16m cash and no debt.

They do need to work on their comms/IR but in other respects the management team seems to be doing a great job.

Will this RNS flush out some buyers? They have flown under the radar for too long.

[pr100] 12/5/2023 14:37

Optimism in the sector, from Barclays Broker Tips today:

"Analysts at Berenberg turned more positive on UK homebuilders, not least because the worst-case scenarios for house price deflation had been averted.

They also noted the relative improvement over recent months in sales rates, which supported pricing, even as modest build cost deflation was set to occur in 2024.

In particular, they upgraded their recommendations for shares of Crest Nicholson and Redrow, because their asset-backed valuations screened best within the group.

Affordability had also improved, estimating that mortgage payments had fallen to approximately 40% of a typical new homebuyers' earnings.

A "material" fall over time in average land prices was also anticipated, as were new government support measures for the new-build housing market before the end of the year.

The analysts marked up their target price for shares of Crest Nicholson from 220.0p to 310.0p and for Redrow from 466.0p to 643.0p."

[pr100] 26/4/2023 08:01

Upcoming HY results looking good and £16m in the satchel. The market will be looking for the key outlook statement and the sector seems to be holding up pretty well:
https://www.ons.gov.uk/businessindustryandtrade/constructionindustry/bulletins/constructionoutputingreatbritain/february2023

[pr100] 25/3/2023 09:58

Always tread carefully but don't lose sight of Tamdown's performance. Their order book going into the new year was up 12% at £95.5m and we were told three months ago that "Tamdown [is]continuing to see positive demand for services despite macroeconomic headwinds building and new build housing market softness". Tamdown's margins were significantly higher last year at 10% (and will reportedly continue to increase) while gross profit at £9.9m was 65% up on the prior year.

Their business looks to me to be in excellent shape. But house builders are their customers so they obviously can't continue to shine if the sector suffers long term from reduced demand/inflation. Nor will the share price be immune to macro issues in the banking sector, Ukraine, epidemics, etc.

But whatever the ups and downs of the sector, I like Tamdown's balance sheet and believe that it currently offers an unprecedented level of protection to investors so I won't be selling while that remains the case. I also think that upcoming legislation will give the sector the much-needed clarity and confidence it has lacked for a number of years.

[eezymunny] 24/3/2023 14:47

From CRST AGM "Since the start of the year, we have seen subcontractors starting to anticipate a lower level of build activity which is now being reflected in a greater competitive intensity for work and pricing".

Going to be tough for Tamdown and their ilk for a while methinks...

[pr100] 23/3/2023 12:12

I was wrong. The bid whizzed through 163p as though it had completely forgotten that shareholders had just sold millions of shares back to the company at 163p a pop. Not all of us did of course.

[pr100] 23/3/2023 09:34

So even with the extra shares in issue (now 9m), the Tamdown share price is already a lot higher than the Group share price was a month or so ago. I guess it's possible that the divested assets were holding the share price back even though they appeared to promise much going forward. It's a conundrum. And it might be a tad embarrassing if the Tamdown share price breaks through the 163p bid price so I guess it may hang around a while before breaking through. Today's share price is still lower than just the cash assumed to be in the bank but I guess they'll issue a trading update at the end of this March to clarify the picture and the outlook.

[pr100] 22/3/2023 15:15

EezyMunny, perhaps you should check again for the references I have made to risk. There are risks with all stocks; and housebuilding obviously isn't immune.

[p1nkfish] 22/3/2023 14:45

Certainly risk. GLA.

[eezymunny] 22/3/2023 14:41

Indeed pr100

We really only differ, it seems, in our ability to see potential problems in the road ahead ;)

I guess you haven´t looked at FCRM, NMD and a host of similar outfits...you certainly don´t seem to willing to suggest any significant risk here...

[pr100] 22/3/2023 14:36

Don't let's split hairs. The Tender Offer was a mechanism for returning the proceeds of the asset sale to shareholders. Tamdown's starting point was to keep £10m in their satchel (subsequently increased to £12m) and return the rest. In fact, Tamdown ended up getting a further £2.4m as some shareholders didn't take up their full entitlement. Had there been no asset sale, life would have carried on with the divested assets needing further capital investment which the Group felt it shouldn't provide…and the share price would presumably still be in the 120p doldrums.

[eezymunny] 22/3/2023 14:16

Errr they didn´t get the cash from the tender offer. What utter bunkum.

[pr100] 22/3/2023 14:07

Tamdown needed to pay off the net £5m approx due to the divested group companies; and they needed to replace the £5m AIB facility so that's £10m of exceptional cash need forced on them by the restructuring. Infinitely preferable imho that they got the cash via the Tender Offer versus the other options.

[eezymunny] 22/3/2023 13:20

The 12m is an increase from the existing working capital, which was c. 14m end Sep 22 (see Tamdown at Companies House). So they´ll have c. 30m working capital for c. 2m profit?

Not a great business IMO but there´s perhaps decent upside if this sucking up of cash is temporary and nothing nasty comes out of the woodwork.

Cash is king. Beware companies that are swallowing cash...

[pr100] 22/3/2023 12:59

If I were to build a house and sell it, I would need a hefty money satchel to get the job done. All builders need bridging loans on big contracts, especially with the cost of materials and labour rising. So a fighting fund of £12m doesn't seem untoward for a £95m order book. As and when they set up a new bank facility - presumably soon – there's also every chance that excess cash will be returned to shareholders. Tamdown's last announced net cash position of around £5m was fine when they had access to the bank facility and intracompany loans. Unsurprisingly, they need more now that they are on their own. Mr Market seems to be rating NEXS a buy as we speak.

[eezymunny] 22/3/2023 12:45

Nothing sinister? Just the need to hold back 10, then 12 million. As I said, it´s the sort of business that can run into big problems with no warning (to investors). I´ve no idea if that will happen here, but a company that makes c. 2m pbt but needs 12m extra working capital like this, is not one I want to hold. There´s a bull case and a bear case!

Just look at recent events at FCRM if you want to see what can happen.

[pr100] 22/3/2023 09:56

They did explain why they needed to boost their cash. Costs are rising and their bank overdraft facility ended when the company was restructured. Nothing sinister albeit rising costs are a concern for everyone, everywhere. Meanwhile, they have reduced overheads, cherry-picked contracts and done all the prudent things shareholders would expect. If the recent bank sector jitters are over, Nexus look good to go imho. Of course, we are also waiting on the new Levelling Up Bill and the new NPPF, either of which could have a big impact on the housebuilding sector. So, of course there are risks but this seems to have a fat safety cushion built in at the current share price

[eezymunny] 22/3/2023 09:00

It´s a very strong buy if it makes profits etc. A couple of contracts going wrong, running into inflation problems etc, and it´s wiped out pretty quickly. I think you have to ask yourself why they kept so much cash back (12m, no?).

Hope all goes well for those left in, but not for me.

[pr100] 22/3/2023 08:48

So the new Nexus has approx 9m shares in issue and approx £18m net cash with no debt and a solid order book in a murky market. Any suitor who wanted to buy the company would have to bid way above the current cash-only value per share of 200p and yet the share price opens at the predicted sub-160p price. Strong buy imho.

[eezymunny] 22/3/2023 08:39

A complete nonsense of a tender IMO. Didn´t even entice everyone to tender their basic allocation. Cost me a few quid, this one, but I can´t regret a sensible idea ruined by a daft tender. Remaining company may be very cheap here, but who want to hold a company like that (low margin, high value contracts)? So very many companies like that have been awful - Fulcrum, North Midland, Costain, Carillion etc etc

[p1nkfish] 21/3/2023 09:55

Finally decided to tender mine, all of them. GLA, dyor etc.

[boadicea] 21/3/2023 09:12

Tender offer results tomorrow.
If tenders haven't been met in full, i.e. including excesses, then I would expect a flurry of small scrag end sales to follow.

[boadicea] 14/3/2023 14:04

HL customers have until noon on Thursday to log their tender decision.
The sagging share price seems a bit strange at this stage but it may be that small holders don't want to be left with the nuisance of an even smaller rump holding.

[pr100] 14/3/2023 11:29

You're leaving it late to get the guaranteed sale and while I agree that it looks a sound proposition logically, I wouldn't be surprised to see the new share price open at well below its cash value. And why isn't the current share price rising under the weight of the arbitrage buys?

[boadicea] 14/3/2023 11:09

There seems to be an arbitrage situation here - or at least a bargain entry.
I can currently buy shares -say 600 @158.5 for £951 and guranteed sell 500 @163p for £815. That leaves me 100 shares for £136 or 136p each less expenses only for one purchase.
It seems unlikely to me that after the tender the shares would be worth less than that although in today's market anything is possible!