Renew Share Discussion Threads

[dozey3] 01/2/2018 09:14

OK, is there please an expert on this board who can explain the conflicting views to a mere mortal?

[nurdin] 01/2/2018 07:33

PS was hs been raising the balance sheet issue for as long as I can remember.The share price has grown by several multiples since his first utterance on the subject..nearly made me sell then.Glad I didnt.

[rivaldo] 01/2/2018 07:22

Finncap say Buy with a 586p price target.

They note that "Renew could see some benefit from Carillion's demise with rail maintenance a key target", via (1) increased market share on the national network or (2) with London Underground through the Giffen acquisition. This is all "essential maintenance work".

Funnily enough, Finncap quote "Renew's strong balance sheet" and strong reputation as being attractive to ex-Carillion clients.

They believe there is "significant upside", due to:
- "ROCE significantly ahead of the peer group"
- "strong balance sheet"
- "prospect of reinvesting cash flow into enhancing acquisitions"

I don't think PS understands that RNWH are providing primarily essential, non-discretionary work which is not subject to overruns etc as much as others in its sector.

[sharw] 31/1/2018 22:16

I don't think today's fall has anything to do with Capita which is a sprawling empire running outsourced call centres or collecting your TV licence fee or congestion charge. Nether is RNWH a Carillion doing major projects like HS2. The vast majority of its work is day to day maintenance and renewal (Renew geddit?).

The problem is fears that the comment about "A slower than usual payment profile" would stretch the balance sheet. Paul S put it much better than I could:

"Renew's balance sheet is awful - with negative net tangible assets, and the whole business is financed on advance payments from customers. Therefore I see this as a high risk share, with the potential for big problems at some stage, if any large contracts go wrong. And/or if customer up-front payments dry up. It's not anywhere near as safe as bulls imagine it to be, in my reading of the balance sheet. So considerable caution is needed. It might all turn out to be fine. However, my job is to flag up risks when I see them".

See

[harrogate] 31/1/2018 17:08

Maybe impacted today about the Capita profit warning as well as that is in the support services sector I think

[pugugly] 31/1/2018 16:01

Breakout point last time was in the region of 400p so possibly an area to consider a top-up/repurchase BUT all infrastructure coys reliant on HMG spendiing under the cosh at the moment - All are getting tarred with the same brush so can understand why getting sold down especially re cash flow - Could slow payment be a knock on from their customers being cash short as owed by others?

[wad collector] 31/1/2018 15:46

Bizarre share price weakness. A buying opportunity?

[rivaldo] 31/1/2018 11:46

RNWH still have an almost £4m cash pile, so they're still in a position to make acquisitions. It would be nice to see the Engineering order book growing faster, but the overall order book is stable as from the year end at £511m, which is good to see.

The RNS wording implies that the slower cash flow is only with certain public sector customers, and is simply an unusual one-off for this period.

[harrogate] 31/1/2018 10:31

There is no issue on bad debts but there whole cashflow model is based on very quick payment on jobs - if that has fundamentally changed then for me that is an issue - especially in a business that based on the order book ( even the specialist engineering one ) is not growing.

[sphere25] 31/1/2018 09:46

Buying here.

Massive overreaction. Trading is in line and that's what matters the most. Yes, the payments might be delayed abit, but the market will look past that as there hasn't been a history of significant bad debts.

[harrogate] 31/1/2018 07:56

What about the mention of the slowing payment profile that will leave net cash at Sept 18 the same as last year? That sounds like a negative for cash availability for deals and dividend increase.

Anyone here going to the AGM - I was going to go as usual but now can't - if you are let me know as I have a couple of questions I wouldn't mind being asked.

[zimbtrader] 31/1/2018 07:27

And long term debt cleared in 2 months. Plus no Carillion contageon but omitting to say if they are looking at cherry picking work Carillon has left behind that fits their abilities. A canny acquisition must, surely, be something they will be looking at!

[rivaldo] 31/1/2018 07:18

Good, solid trading update in line with expectations.

Higher margin Engineering Services order books are up even if the overall order book is slightly down. And absolutely NO exposure to Carillion.

I'd expect another acquisition soon since it's been a while since the last one:

[zimbtrader] 28/1/2018 09:32

AGM on Wednesday which should see a trading update being published. This one has been one of my star investments and I like their "steady as she goes" approach to conducting business.

[dozey3] 25/1/2018 16:14

This has been a successful investment for me, buying several tranches at less than 50p about ten years ago, and slicing in the upper 400s a year ago. RNWH as far as I can see has ploughed a shrewd course, and hopefully will benefit eventually from Carrilions demise as customers look for quality and reliability at sensible margins. Recently though the share price has not kept up with the market, perhaps because overseas earners have become fashionable along with leisure and tech. I would like to see a shift upwards in the dividend, the Sharescope market forecasts show a slight increase in cover whereas it should be reduced to circa 2.0 imo. Then Finncap’s ideas would look more reasonable.

[rivaldo] 24/1/2018 12:18

Good to see a £45,000 buy at 453.9p just now. RHWN look on the verge of breaking upwards from this trading range. Hopefully if so it will herald a significant move towards Finncap's 586p target price.

[harrogate] 15/1/2018 13:00

CLLN also are responsible for massive amounts of maintenance and essential works - what I am not 100% clear on is if RNWH deliver any work to CLLN - I can't see that they do

[rivaldo] 15/1/2018 12:50

None AFAIK. Happy to be corrected, but RNWH - as they regularly state - are involved in maintenance and essential works, NOT "discretionary" spending.

This may even concentrate investors' minds as to how RNWH are a growing and stable investment as opposed to the likes of Carillion and its sector comparators.

[harrogate] 15/1/2018 12:49

I don't see any negative issues here as I don't think that we work for them on anything as we work on the frameworks but I am not sure completely. On the upside I can only see from the CLLN website that some work with London Underground might come up

[hardupfedup] 15/1/2018 10:53

any knock on here with clln good/bad -- thoughts

[rivaldo] 09/1/2018 12:33

It's encouraging that the bid price is now up to 440p and the spread is a mere 6p - much improved. Perhaps an indication of background demand/buying.

[wad collector] 09/1/2018 08:45

As you say , the share price has been pretty stable for the last yr, the Omens look good for a rise in 2018. Providing no disasters...

[rivaldo] 04/1/2018 14:06

Happy New Year to everyone here. RNWH are looking quite strong at these levels - hopefully it's time for the next leg upwards.

[robow] 20/12/2017 11:43

Good spot Rivaldo