Renew Share Discussion Threads

[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:



"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:



"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."

[wfcreserves] 15/11/2022 11:49

From the trading update 3rd October:

"As a result, the Board expects the Group to report results for the year marginally ahead of market consensus1. The Company's balance sheet continues to be strong with net cash, at 30 September 2022, anticipated to be ahead of market consensus1 due to lower capital expenditure and pension costs combined with higher operating profit in the period.

1 Company derived consensus adjusted operating profit is £54.0m and pre-IFRS 16 net cash of £8.9m."

I would guess FWIW that with rising inflation for the forseeable future the general market will be looking at future expectations rather than the historic accounts (already factored into the SP?) with a relatively low dividend yield? Although the fact that they can beat market expectations is to be commended.

[rivaldo] 10/11/2022 07:09

For the record, the prelims for the "ahead of market consensus" results will be on November 29th:

[rivaldo] 07/11/2022 09:37

This news is rather encouraging from Walter Lilly and hasn't been posted before (apologies, you'll have to click the link as the page doesn't allow copying and pasting).

Given the £600m investment planned by DEFRA over the next four years, perhaps a decent slice of this helps explain why RNWH are holding Walter Lilly rather than disposing:

[wad collector] 06/11/2022 14:18

Article in IC wondering if the planned infrastructure spending will happen and concludes that current share price is fair value. FWIW.

[rivaldo] 04/11/2022 15:09

Lewis Civil Engineering have been appointed to deliver a £1.4m flood alleviation scheme in Wales starting in early 2023:

[wad collector] 01/11/2022 15:18

Added at 603 to my already overweight collection here; one that I don't lose sleep over.

[harrogate] 31/10/2022 13:30

I would think they would but there are a few delays around due to auditor resource issues. I would think they do a roadshow after all results to see IIs.

[wfcreserves] 31/10/2022 11:39

It was only for a couple of days and was stated to be relating to pandemic issues. Presumably they would be able to plan for those better now?

Have they done a "roadshow" in the past? Perhaps they need extra timne to organise it?

[harrogate] 31/10/2022 10:25

They had to delay for a few days last year due to audit resource or something. I am sure that is the reason

[wad collector] 31/10/2022 10:20

That seems a rather optimistic interpretation!

[wfcreserves] 24/10/2022 12:58

The website shows that a Preliminary results roadshow is planned for December 2022 but seems to be coy as to the actual date the results will be released. Perhaps a deal in the offing?

[thecroots] 20/10/2022 11:18

Seems too cheap

[thecroots] 20/10/2022 11:17

Been a while since ive been i this so just bought 15k shares. Clearly not printed yet.