Renew Share Discussion Threads

[harrogate] 07/12/2022 15:56

Graham. Thanks for pointing that out. I had missed it when I found the slides. I agree and I always look at company websites and also these days the LinkedIn page is where the most up todate general info is. I still think it is poor that no opportunities for a decent question and answer session have been provided. I am sure the institutions they met on the roadshow had lots of opportunities for such.

[grahamburn] 07/12/2022 14:29

There is a 30 minute presentation by the CEO and CFO on their website, so not sure why other posters are not seeking it out. Not much new in it over and above what was in the statement - and no Q & A's - but still useful to hear their tone and see how the present themselves and the company.

OK it wasn't flagged up in the statement but IMO investors should regularly look at a company's website (just to keep up with its activities etc).

[harrogate] 07/12/2022 13:10

Not by all companies though and many decent non promotional managements find time a couple of times a year to do presentations and take questions from PIs through things like IMC. It is not hard at all and not to do so, having done it last year seems perverse to me.

[wfcreserves] 07/12/2022 11:46

Unfortunately the small shareholder is treated like an inconvenience in this day and age. Even those with more shares in the company than the directors.

[harrogate] 07/12/2022 07:36

I see the results slide pack is on the website. It is extremely disappointing that they did not do a presentation to investors this year. They did one last year and this is a backward step in terms of communication with investors from a Company who are already among the least communicative. Poor form really in this day and age when everyone cried out for more involvement from shareholders

[wad collector] 05/12/2022 22:36

IC article on last weeks results means they have upgraded from HOLD in May (711P) to BUY at 666p, thinks they have negotiated the employees pay rises well.

[rivaldo] 05/12/2022 14:01

Numis say Buy with a 900p target. They forecast 60.3p EPS this year, with an 18p dividend.

They also see a £27.6m cash pile (pre-IFRS16) at the end of this year.

Extracts:

"Strong FY22 results and acquisition of Enisca

Renew's FY22 results were ahead of expectation even after a positive pre-close update, and in our view reflect a business and management team that is continuing to deliver even in a toughening macro backdrop.Today's bolt-on acquisition of Enisca further enhances the Group's capabilities in Water, and serves to offer another demonstration of Renew's value-compounding business model. With the shares trading on c.11x FY23E PE and c.8x EV/EBITA, we remain positive."

"Forecasts: Reflecting the stronger than expected FY22 performance and the Enisca acquisition, we increase our FY23E EBITA forecast by 8% to £62.0m, and our FY23E EPS forecast by 9% to 60.3p. We upgrade FY24E EBITA and EPS by 6%. We forecast an FY22-25E EBITA CAGR of c.4%, noting the Group's strong track record of positive earnings momentum both organically and from M&A and a FY16-22 EBITA CAGR of 18%.

•Valuation: The shares trade on a FY23E PE of c.11x and EqFCF yield of c.7%. Given the Group's track record of compounding organic growth and accretive M&A, its strong balance sheet, and high ROIC, we believe the shares merit a premium rating relative to sector peers."

[rivaldo] 01/12/2022 08:22

Good to see 700p being paid now.

There's an excellent new interview here with the CEO which lays out the huge opportunities for RNWH in rail electrification and EV infrastructure:

Https://www.yorkshirepost.co.uk/business/leeds-engineering-giant-renew-sees-major-opportunities-in-net-zero-projects-as-it-aims-to-be-major-player-in-ps25bn-rail-electrification-3937353

"Leeds engineering giant Renew sees major opportunities in Net Zero projects as it aims to be 'major player' in £25bn rail electrification

Leeds-based engineering services giant sees “enormous” opportunities in major infrastructure projects designed to help the UK achieve net zero in the coming decades, the group’s CEO has said.

Paul Scott told The Yorkshire Post that the company, which focuses on routine maintenance, repair and renewal of critical UK infrastructure, is in the process of positioning itself to be prepared for important future projects.

The company’s results, published this week, highlighted that plans to electrify the nation’s rail network have seen the group’s three rail brands form “a collaborative and unique position for Overhead Line Electrification delivery, another key strategic pillar for the group”.

Mr Scott said: “The vast majority of work we do in rail is directly contracted via Network Rail. But we have a plan in our strategic priorities to broaden our customer base.

"In the case of Transpennine and Midland Main Line upgrades, our route to market is working for consortia rather than working for Network Rail directly.

"Our ambition is to be an Overhead Line Electrification player in the future. We bought Rail Electrification Limited [a leading overhead line electrification business] so we got the badge to be an electrification expert specialist.

"They are working closely with our two rail brands offering a service we believe is going to be compelling. There are 15,000 single track kilometres to be electrified beyond these two programmes to aid to decarbonisation agenda and clean up the network and we will be a major player in that programme. This is just a start of a journey.”

The results also described the Government’s commitment to ban the sale of non-electric new cars by 2030 as “another exciting growth opportunity” for the group. They highlighted a £950m Rapid Charging Fund that has been agreed to support the rollout of at least 6,000 high powered charge points across England’s motorways and major A-roads by 2035, as well a further £500m of funding granted to support local authorities to find innovative ways to increase local charge point coverage.

Mr Scott said an increase in private sector interest in electrifying their vehicle fleets was another promising sign. The firm’s projects during the last year have included the delivery of Volvo bus and truck electrical infrastructure and charging projects UK wide, providing EV infrastructure for Amazon distribution facilities, the Post Office and the installation of EV and network upgrades in nine mainline Network Rail stations.

"We have made an investment in EV capability. We brought some people in and have made a significant investment that hasn’t made us a great deal of return so far but it would be wrong of a company like Renew and its subsidiaries who are so deeply embedded in UK infrastructure to ignore this opportunity.

"Actually getting the power out of the network into the EV network requires what are called Independent Connection Provisions and we have those qualifications.

"The tone of our results report on EV is a lot more positive than it has been in the past. Two things have happened – firstly, there is the Rapid Charging Fund which people are leaning on now. But more importantly we’ve seen people with big fleets greening their fleet. They are coming to market and say please help us develop our programme.”

He said the road and rail schemes both have considerable potential for the group.

"Rail electrification of that 50,000 km is going to cost £25bn to build and they have said they are going to do it by 2040. It is a complicated animal to deliver so it is not necessarily something that is going to transform the group tomorrow but the scale of these opportunities is enormous.

"The scale of the EV infrastructure plan is enormous. We are not baking it into our near-term numbers but we are getting in position.

"It bodes extremely well for the next 20 years of this group for sure.”

[rivaldo] 30/11/2022 08:49

Nice review on Investors' Champion, highlighting the "impressive 29% return on equity" and "glorious" cash flows!

Https://www.investorschampion.com/channel/blog/testing-the-stress-levels

"Renew – excellence, as always

Renew (AIM: RNWH), the leading Engineering Services Group supporting the maintenance and renewal of critical UK infrastructure, announced excellent full year results and news of an acquisition.

Renew's activities are focused into two business streams: Engineering Services, which accounts for over 95 per cent of the Group's adjusted operating profit, focuses on the key markets of Rail, Infrastructure, Energy (including Nuclear) and Environmental which are largely governed by regulation and benefit from non-discretionary spend with long-term visibility of committed funding.

Specialist Building focuses on the High Quality Residential, Landmark and Science markets in London and the Home Counties.

For the year ending 30 September 2022 revenue rose 7.3% to a record £849m while operating profit was up 21.7% to £50.0m.

Network Rail is a significant strategic customer for the Group and during the period Renew became the third largest provider of engineering services to Network Rail nationally.

It entered the Highways market via its acquisition of Carnell in January 2020. The UK Government has committed to an unprecedented level of spending on England's strategic road network as part of its second Road Investment Strategy ("RIS2").

The order book of £775m offers decent visibility.

Post tax profit of £40m for the year represents an impressive 29% return on equity. Renew generates attractive returns from a balance sheet of negative tangible assets. That could be worrying for some, but it certainly hasn’t disappointed over the years and unlike Victoria covered above, free cash flow was a glorious £54m with Renew closing the year with net cash of £20m.

Renew also announced the acquisition of Enisca Group for £15.6m. Enisca is an engineering business operating in the water and environmental sector with headquarters in Cookstown, Northern Ireland."

[rivaldo] 29/11/2022 13:48

The IC moves RNWH up to a Buy:

Https://www.investorschronicle.co.uk/news/2022/11/29/renew-maintains-track-record/

"Renew maintains track record
Earnings beat analysts' expectations
November 29, 2022

The chief executive of Renew Holdings (RNWH), Paul Scott, wasn’t surprised that chancellor Jeremy Hunt reaffirmed the government’s commitment to its £600bn infrastructure spending plans during the recent Autumn Statement, although he was somewhat relieved.

“There were a number of references throughout the statement that gave us some comfort that commitment will prevail,” he said.

Like others in the contracting market, Renew’s share price had taken a knock following September’s disastrous 'mini' Budget. Although it is less exposed to big capital spending programmes than its peers, there could have been knock-on effects if other commitments – such as electrifying certain rail lines – had been shelved. As it is, there seems little for investors to worry about.

Full-year earnings came in 9 per cent higher than consensus estimates, margins improved despite cost pressures and cash generation was strong – it finished the year with net cash (excluding leases) of £20.2mn, from debt of £13.7mn a year earlier.

It has already put this to use, spending £15.6mn on the purchase of Enisca, a company that provides mechanical, electrical, control, instrumentation and automation services to the water industry. This is a service line Renew doesn’t currently offer and Enisca is already a joint venture with the J Browne water contracting business bought last year.

In May, we moved Renew’s shares to a hold, concerned about the potential impact of higher wages on margins and employee turnover. Although still an issue, it has handled things well – holding two pay reviews a year rather than one, offering discretionary bonuses and weighting increases towards lower-paid workers. These seem to have done the trick.

Renew’s shares also remain reasonably priced at 11 times broker Numis’s forecast earnings of 60p. At that price, they offer good, defensive exposure to what should be a steady, but growing market. Back to buy."

[wfcreserves] 29/11/2022 11:54

Like Harrogate I feel they have been a bit miserly on the dividend. The rate of increase has fallen back year after year.

I'm still miffed that they didn't restate the interim dividend that was cancelled due to Covid worries that didn't affect the profit (another record) materially that year.

They seem to more interested in building up the empire than actually distributing the rewards now which is fine if you are meaning to be a long term holder with not so much interest in the current level of the dividend pay out. Not quite so attractive for those looking to offset current inflation rates?

It would interesting to know the demographic our shareholders.

[harrogate] 29/11/2022 11:33

Over the past five years, we have delivered: -- Adjusted(1) earnings per share growth of 68 per cent; -- an increase in our adjusted(1) operating margin from 6.5 per cent to 6.9 per cent; -- Group organic revenue growth of 1.9 per cent and total revenue growth of 7.3 per cent; and -- five strategic acqu

[harrogate] 29/11/2022 11:30

It is in the RNS

[rimau1] 29/11/2022 11:22

Harrogate, you raise some interesting points to balance the bullishness which is appreciated. The ongoing provisions are annoying but probably not material at a Group level. Where do you find the 5 year organic revenue growth rate figure? I’d be surprised if this is disclosed or even computable 5 years back given the number of acquisitions made.

[rivaldo] 29/11/2022 11:17

Shore Capital's new note implies 65p EPS for their "upgraded FY23F EPS forecast", i.e around 10% growth over the 59.5p EPS to last September.

Given that RNWH have already added around almost £2m operating profit for a full year of the new acquisition, this seems conservative to me.

There are many potentially huge growth drivers which are now coming to fruition in addition to RNWH's secure and continuing defensive operations:

- rail electrification
- 5G implementation
- electric vehicle charging
- AMP7 regulatory spend ramp-up in Water
- Road Investment Strategy
- nuclear decommissioning and decontamination
- MOU in place to support the manufacture of Rolls Royce's Small Modular Reactor
- £5.2billion government spending to improve flood defence infrastructure
- new phase of works at Palace of Westminster

[wfcreserves] 29/11/2022 09:22

According to the website financial calendar there will be a result roadshow in December but they are still being coy on the precise date.

[harrogate] 29/11/2022 08:53

Last year there was a presentation that PIs could watch. Doesn't seem to be one this year which is a shame. Unless I have missed it

[rivaldo] 29/11/2022 08:50

Shore Capital this morning say Buy with a 930p target.

They note that:

"Renew has consistently had a very high level of visibility with c.70% of current year forecast sales usually in the order book. This has helped the group meet or beat consensus profit forecasts in every year since the group came into its current form in 2006."

They conclude:

"Valuation and recommendation

We believe Renew presents an attractive opportunity for investors to benefit from the UK government’s commitment to spend £600bn on infrastructure from 2022 to 2027. Given the nature of Renew’s variable, cost-plus contracts, we believe it is very well placed to pass on inflationary pressures to customers. We also believe it is protected against economic downturns given that its revenue is driven by the public sector.

We continue to believe Renew has a lower risk profile than the market perceives, possibly due to associations with peers servicing much larger fixed contracts. Renew’s ability to control costs and resilience during the pandemic was much greater than the majority of Industrials and worthy of a greater re-rating, in our view.

We maintain our BUY recommendation and 930p DCF-based fair value (40% upside). The shares have fallen 22% YTD after a very strong two-year run, presenting an attractive entry point. As of yesterday's closing price, the shares trade on 10x our upgraded FY23F EPS forecast and 6x on an EV/EBITDA basis."

[harrogate] 29/11/2022 08:49

Very solid but I don't see a rerating on these at the moment. Almost beyond belief that we see another £3.3m of provisions against Allenbuild which was sold 8 years ago. Seems never ending and until we know that this is ending I think it weighs on the share price. Also disappointing that the dividend has only increased a little. Organic revenue growth over the last 5 years has averaged only 1.9% which seems strange given the growth in end markets. Still my largest holding but they'll still be buying more on the back of this

[rimau1] 29/11/2022 07:33

Enisca looks a very good strategic fit and a good use of excess cash on our balance sheet, immediately earnings enhancing too. Results look excellent, strong outlook statement and i don’t see any red or amber flags on first glance. One snippet i wasn’t aware of, we have an MOU with Rolls Royce for the mini nuclear reactors manufacturing which is interesting. I also suspect Renew may actually rerate on these results.

[rivaldo] 29/11/2022 07:28

Terrific results - 59.5p EPS is well ahead of Numis' forecasts (56.6p). I'd have thought upgrades would be necessary for this year.

Particularly as there's also news of an "immediately earnings-enhancing" and material acquisition in the water sector for £15.6m cash. With £2.1m operating profit forecast this seems good value in one of RNWH's core sectors. And it's already well known to RNWH, so very little integration risk.

All divisions are trading well and the outlook statement is rosy. The continued Allenbuild provisions are the only relatively small fly in the ointment, but the ongoing business looks in great shape.

Above all, there are many £billions of pledged government and industry spending in all of RNWH's divisions - water, nuclear, rail, telecoms etc etc. And RNWH looks more and more like a major and trusted partner to build out the required infrastructure.

If forecasts this year are for say 65p-70p EPS, then the share price should really be anywhere from 850p-900p at least given the rate of growth and the prospects.

[rivaldo] 28/11/2022 11:59

Results tomorrow. We already know the numbers - ahead of consensus - and outlook will be good.

[rivaldo] 22/11/2022 09:09

Great read-across for RNWH from Severfield's interims this morning as regards the increased budgets for rail electrification, roads, power networks etc:

"As a key component of economic growth, the construction industry will be central to a sustainable economic recovery. New, low carbon infrastructure (including HS2, wind power, new nuclear, rail electrification, energy efficient buildings) will play a leading role in stimulating sustainable growth. The UK government's National Infrastructure Strategy ('NIS') sets out its plans to transform infrastructure to drive economic recovery, levelling up and meeting the UK's net zero emissions target by 2050. The funding of £650 billion for developments in roads, railways, power networks and other UK infrastructure projects, represents an increase of around £100 billion from the previous plan. Included within the NIS are increased budgets for some of the Group's key customers such as Network Rail, including a significant amount of rail electrification work and Highways England, including the second Road Investment Strategy."

[rivaldo] 21/11/2022 07:46

Tipped by Peel Hunt with a 900p target:

Https://citywire.com/funds-insider/news/expert-view-just-eat-burberry-halma-renew-and-ceres/a2402912#i=5

"Peel Hunt: Renew Holdings underappreciated 

Engineering group Renew Holdings (RNWH) is seeing continued momentum but it isn’t appreciated by investors, says Peel Hunt.

Analyst Andrew Nussey retained his ‘buy’ recommendation and target price of 900p on the stock, which added 1% last week to close Friday at 636.5p having fallen 22% this yeare.

He said the October update from the group triggered a 3% full-year 2022 earnings per share upgrade and management ‘continues to enhance earnings quality and quantity’.

‘We anticipate another confident outlook statement given the visibility and growth opportunities,’ said Nussey.

He said the shares trade on 11.5 times forecast earnings for next year 2023 with anticipated cash in 2024 that is equivalent to 11% of its market value.

‘We continue to believe that the organic cash compounding and M&A growth characteristics, supported by a strong management team, are not fully appreciated by investors. The forthcoming results could be an important catalyst,’ he said."

[rivaldo] 18/11/2022 08:58

Amidst all the tax rises/allowance reductions etc yesterday, the few major spending commitments were good news for RNWH.

Jeremy Hunt committed to £600 billion of infrastructure investment over the next five years. For example, RNWH are already involved in HS2, Shepley have highlighted Sizewell C a number of times, Clarke Telecom will welcome the gigabit-broadband roll-out, etc etc:

Https://www.agg-net.com/news/cea-responds-to-chancellor-s-autumn-statement

"We welcome the Government’s decision to proceed with a new nuclear power plant at Sizewell C, which will help to provide reliable low-carbon power."

She continued: ‘Mr Hunt confirmed that as part of the Government’s commitment to growth and infrastructure, it will deliver the core Northern Powerhouse Rail, HS2 to Manchester, East-West rail, the new hospitals’ programme, and gigabit-broadband roll-out. These will be funded with morw than £600 billion of investment in the next five years, which Mr Hunt said: ‘will connect our country and grow our economy’. The CEA welcomes the Chancellor’s continuing commitment to major investment in infrastructure."