Renew Share Discussion Threads

[rivaldo] 16/5/2023 07:27

Excellent H1 results today, as we've come to expect.

PBT is up 21% on revenue up 14%, and RNWH are nicely on track to meet forecasts of around 60p EPS to 30th September.

Plus there's now a fast-rising £17m cash pile, with the dividend up 6% suggesting an annual 18p dividend.

All divisions are doing well - including the Specialist Building division where the order book is up by two-thirds.

The overall order book is up a whopping 15% since the year end to £890m, which bodes well.

And there's mention of further acquisitions. I note there were £554k of aborted acquisition costs so RNWH are evidently being careful about their next moves. And EPS though up by 5% was held back by an increased tax charge.

These very encouraging results (and the optimistic narrative) should continue to support broker price targets from Numis etc of 900p or thereabouts.

[wfcreserves] 15/5/2023 15:08

The share price is all over the place on small volumes.

[rivaldo] 10/5/2023 22:27

Looking good into next Tuesday's interims - a nice £296,800 buy at 742p today was noticeable.

[rivaldo] 03/5/2023 09:44

AmcoGiffen have highlighted the completion of the first programme of works for Network Rail in Scotland - plenty of work ahead as this is "an eight-year programme of rail electrification involving 81 miles of twin-track electrification and gauge clearance work to help provide significant carbon reduction for Scotland":



And J Browne have reported on a six week emergency water mains replacement contract in London (given the picture in the feature I wouldn't have liked to live there during the works! But evidently a pretty major scheme):

[wad collector] 02/5/2023 13:13

Breaking out...finally

[davebowler] 28/4/2023 15:56

Unicorn's view-
We met with the management of Renew Holdings during this quarter, who reiterated the strength of the company’s low-risk business model, its exposure to long-term structural growth drivers and the resilience of its end markets. The management of the firm remained positive regarding their current and future performance, and their ability to successfully navigate the challenging market environment. The company also released a trading update shortly after the quarter-end, reporting encouraging activity levels, a healthy order book, and positive cash generation.

[mattboxy] 28/4/2023 11:45

Nice rise yesterday. Is it the end of the overhang?

[rivaldo] 19/4/2023 11:00

A nice £3.5m bonus mostly benefiting this H2 from this Scottish rail weather resilience works programme being carried out by QTS:

[cwa1] 19/4/2023 09:11

There's also transactional(buying and selling) costs to consider. Plus the spread. And the possibility the price could move against you...

[wad collector] 19/4/2023 08:50

One aspect of the non-ISA protected holdings is that , with the reduction in Dividend Tax allowance from 5th April (£2000 down to £1000), there becomes a possible strategy of selling cum-dividend then buying back XD to avoid the divi. The reduction in the CGT allowance limits this if you pick up capital gains in the meantime.
Now that RNWH is lower yielding it is less important, and irrelevant if safely in an ISA.
There continues to be mumblings about putting a limit to the ISA total holdings, but hard to imagine even Labour would make it retrospective.

[igoe104] 18/4/2023 16:23

Good to see Amco-giffen picking up work in the channel Islands..

[igoe104] 13/4/2023 19:17

Mark Bentley talking positively about his besr ever investments RNWH.( Which is at the beginning of the podcast)

[rivaldo] 13/4/2023 15:36

A Labour government would likely also increase spending by a large amount on infrastructure etc and penalise companies (water, energy etc) which don't keep to their spending commitments, which would also be very good news for RNWH.

[wfcreserves] 13/4/2023 14:26

I would believe that all bets are off regarding future tax rates and exemptions should Labour form the next Government.

[rivaldo] 13/4/2023 12:08

It's worth noting that RNWH have outperformed forecasts by some margin. For example, for the last year to 30/9/22 RNWH achieved 59.3p EPS, compared to the forecast 45.4p EPS per a broker note back in Dec'20 and then 52.3p EPS forecast in a Nov'21 note.

The current broker forecasts appear conservative to me too, particularly as more acquisitions are likely, but also because trading appears strong. I expect upgrades once again.

There was further support for this from VP.'s trading statement today. They stated that their UK division "has seen the benefit of a stronger civil engineering (i.e highways) and infrastructure (i.e water, rail & energy) market". All of which are key sector for RNWH.

[harrogate] 13/4/2023 10:30

I am surprised at the fall back from the mid 700ps. But the current broker notes show a business where EPS in 2025 is no higher than 2022. This is driven in part by the large increase in CT but still no growth over the next 3 years. In this context I think the miserly increase in the dividend has played a part as we are neither a growth stock nor an income stock. I believe that they will upgrade this year as the broker note shows almost no organic growth at all yet we are told that our framework contracts all have protection on inflation. So that is a mismatch and at least one broker has stated they believe we will come in a high single digit percentage above their estimate. If that comes true we will move up. But what we really need is a decent earnings enhancing deal to drive EPS growth - without that not sure we can justify a significantly higher rating but a deal that shows us back to growth can get us that rerating on that higher EPS. But we need to do it.
I also think something hanging over RNWH and all solid AIM companies is the regular narrative that the IHT exemption for AIM shares will be removed. A future Labour government will be looking at this for sure. If that was to happen there would be a few funds who hold RNWH whose reason to exist would be gone.
Having said all that I am a holder here since 2006 and am sticking with them since I think they will do that deal and will beat in FY23

[wfcreserves] 13/4/2023 10:18

As you say pretty decent "at these levels".

[rivaldo] 13/4/2023 10:04

I'm a huge ISA investor wfc! And much of my RNWH holding is safely tucked away in ISAs as I consider there'll be further large capital gains to protect from here.

Plus the divi yield is a pretty decent 2.7% tax free in ISAs at these levels (inflation will drop like a stone soon).

Hopefully we'll see a rise in the share price in the run up to the results on 16th May.

I note from the latest major shareholder list that Octopus Investments now own 15.59m shares, or 19.77% of RNWH - this is nicely up from the 14.97m shares in their last holdings RNS (back in Nov'21!).

[wfcreserves] 12/4/2023 22:23

@rivaldo
Yes the placing rewarded the placees who if I recall were a few selected institutions and directors. Shareholders who bought prior to the deal paid a higher price than they needed to. Luckily for those who held the deal worked well and the share price didn’t take too long to recover.

I agree that the interims should be good but the market knows that too and the share price is struggling to get back above £7. I still believe that the dividend yield is holding the share price back in a time of inflation and money being tight.

From a previous post I guess that you are not an ISA investor? But not everyone will want to sell their shares to crystallise a gain taxed as a capital gain and ISA investors have no need to worry about tax differentials.

[rivaldo] 12/4/2023 15:19

Good to see the bounce today. Quite right too :o))

The last three acquisitions have all been purely from internal cash. The Carnell acquisition was back in Jan '20 and the placing was only for around 40% of the purchase price despite it being a large acquisition. Further, the placing was at 475p, so RNWH have rewarded the placees nicely since then. I really don't think this is a factor.

I'm looking forward to the interims in a month's time which we know will be good and will have a confident outlook.

[wfcreserves] 06/4/2023 12:10

Perhaps potential investors are waiting to see if the next acquisition will be out of the cash pile or whether another unexpected placing is required?

[lammylover] 05/4/2023 15:57

RNWH share price being deliberately held below 700p to shake out loose shares. Up at 5% earlier, before ATs really kicked in, to drive price down yet again..

I'm expecting 700p to be breached soon..

[igoe104] 05/4/2023 11:25

Just added aload, didn't really want to be adding whilst on my hols, (in Barbados)but was to tempted..🧐

[rivaldo] 05/4/2023 09:02

It's fallen from recent highs, but as harrogate says, RNWH has been a stable sleep-easy investment over the last couple of years whilst the rest of the market has lurched from one thing to another.

It'll only take a small uptick in investor sentiment, or an institutional buyer, to re-rate the share price to nearer those 900p-950p targets. Perhaps the upcoming interims will start the process.

Shore Capital have a 950p price target, but they also see scope for upgrades from their current 59.3p EPS and £32.9m cash pile forecasts:

"We believe EPS could be ahead of our current number and consensus by a high single-digit percentage"

More extracts:

"Renew^ (RNWH, Buy at 676p)

Order book indicates risk to the upside"

"Forecasts

We maintain our revenue forecast of £870m for FY23F (2.5% growth). We noted following the AGM update on 1 February 2023 that this appeared to be increasingly conservative following 16% order book growth in Q1 to £861m. We continue to believe this given that the order book is set to be reported c.12% ahead of 31 March 2022. We anticipate that the adjusted operating margin will remain at the elevated level of c.6.9% with very low downside risk, given the cost-plus nature of the group’s contracts. Given the increased tax rate, we currently forecast minimal growth in adjusted EPS, but see scope for revenue upgrades.

We believe EPS could be ahead of our current number and consensus by a high single-digit percentage. 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."

"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. We maintain our BUY recommendation and 950p DCF-based fair value (40% upside). As of yesterday's closing price, the shares trade on 11x our conservative FY23F EPS forecast and 7x on an EV/EBITDA basis. We consider this valuation to be anomalously cheap, given the company’s consistent c.30% ROIC, 18% adjusted EPS CAGR since 2011 and current net cash position."

[harrogate] 04/4/2023 19:57

It is hard to argue that it has been a good 18 months for the share price but it has outperformed AIM for sure They always do their numbers so we know the least they will do this year. Given the nature of the business and its spread it is very safe. But we need a deal which they have firepower for and preferably a beat which I am pretty sure will come this year. Without those hard to see the reasons for a rerating