Renew Share Discussion Threads

[rivaldo] 28/5/2019 09:39

Cheers penpont, reads very well. RNWH are still only just above a current year P/E of 10, which considering its long-term security and recent successes in winning large framework agreements is simply too low.

[wad collector] 24/5/2019 09:51

Thanks for that. IC have tipped them many times over the years ; through ups and downs :-)
This is now my biggest holding , but as my 2 previous largest were Carillion and Interserve, don't listen to me!

[penpont] 24/5/2019 09:05

IC in full:

By Tom Dines

Renew Holdings (RNWH) has made a strong start to FY2019, clocking up a record performance in the six months to March. This is partly due to the benefit of last year’s acquisition of QTS, but new framework agreements secured in energy and infrastructure have improved prospects for the engineering support services group.

It acquired rail contractor QTS last May in a bid to strengthen its rail infrastructure business ahead of a planned 25 per cent increase to spending on operations, maintenance, support and renewals in the current regulatory ‘control period’. The deal certainly appears to have been a wise move. Renew reported a 110 basis point increase in the adjusted operating margin, while adjusted EPS rose 15 per cent. Statutory profits benefitted from an exceptionally weak comparator after the group took a loss on the disposal of gas pipe business Forefront in February last year. Still, on an adjusted basis profits rose 39 per cent.

Much of the non-discretionary work that Renew targets is won through framework agreements, and it succeeded in joining a wide range of such agreements in the period. It won places on, among others, a decommissioning services framework for the Dounreay nuclear reactor, the Environment Agency’s flood and coastal risk management programme for the South-East, and its first framework related to 5G cellular technology. It’s order book now sits at £580m, from £558m in September.

Broker Numis is forecasting EPS of 39.9p for the Sept. 2019 year-end, up from 35.6p in FY2018.

IC View
Shares in Renew have struggled since we tipped them back in September, but with this update, things look to be on the up. The price-to-earnings ratio is still shy of the group’s five-year historical average, which we think fails to acknowledge its success in winning frameworks and positioning for the upcoming spending increases in water and rail. Buy.

Last IC view: Buy, 365p, 27 Nov 2018

[rivaldo] 24/5/2019 06:47

Cheers, hopefully that will draw in some more interest.

Given the low P/E of only around 10.5, plus the potential and visibility over the next 5 years for rail and water - and there's the huge renovation of Westminster and Richmond House to come in at some stage - RNWH is surely due a decent move up now.

[pugugly] 23/5/2019 23:00

Rivalddo - Basically just a tip update - Repeat a BUY recommendation at price now of 422 (up 8% from their original tip) and quoting numis forecast eps of 39.9 for 2019 -

[rivaldo] 23/5/2019 22:52

Tipped as a Buy in the IC tonight - anyone got access?

[harrogate] 22/5/2019 07:07

Hi Rivaldo. Thanks for posting that. Yes very bullish and much emphasis on acquisition. Would think they would want debt down a bit first. Forecast to be £10m at September 19. They really seem to have put some things in place in last 12 months for the next 5 years and while we do need to get EPS above the current broker 42p for 2020 to really get moving it could be that they can do that and we will get an upgrade. Thanks again

[hsduk101] 21/5/2019 23:30

This looks positive. What's the level 2 looking on this?

[rivaldo] 21/5/2019 23:18

Very bullish interview with the CEO:



"Renew celebrates record half year

Engineering services group Renew Holdings has reported record half year trading following the £80m acquisition of leading Scottish railway contractor QTS last May.

The Leeds-based firm said its order book rose 4 per cent to £580m and is underpinned by a solid foundation of long-term frameworks, including significant new awards during the first half of the year.

Renew's chief executive Paul Scott said: "QTS has bedded down really well. We're absolutely delighted. It's not only made a strong contribution, the way it has engaged and embraced becoming part of the group has been excellent.

"Post-acquisition, it has overcome a number of hurdles involving reviewing its framework so not only has it contributed well, the foundation it has built for future visibility is equally strong.

"That's a testament to the way we acquire businesses. We don't break their brand strength and identity. We don't change. We actually help businesses thrive under our ownership."

Mr Scott said Renew is looking to make further acquisitions.

"We have this fine tuned acquisition search criteria. Whatever we look at has to be accretive and it has to be operating in regulated markets in UK infrastructure and have an established brand identity and customer value," he said.

"Equally we have an ambition to organically grow the group. We have a track record of doing that. We're delighted to deliver 8 per cent organic growth in the period. It's a double stranded approach to our growth strategy."

Mr Scott said that rail activity is driving growth in its core engineering services division.

"From December through to the end of March, we had a really strong run of activity," he said.

"Nationally we were really strong in our maintenance and renewal activity.

"We're on every route in every region. LNE has probably been the busiest route and region for us. It's about bridges, culverts and embankments. It's about embankment stabilisation. The rail network has a major programme of activity around its embankments. The last thing you want is the embankment interfering with your train operating programme."

Mr Scott said Renew is not Brexit immune, but the group has many protective measures in place to counteract any Brexit damage.

"The fact we're working on non-discretionary programmes means we haven't seen a falling off in the amount of work available to us," he said.

"We are simply doing things that are essential to maintaining networks, whether it's in water, the environment, the rail network or energy.

"It's just not an option for our customers to stop spending money because of the political circumstances."

He said Renew has 3,700 staff, but less than a 100 are non-UK nationals.

"We have a very, very small compliment of European nationals and rest of the world nationals. It's less than a 100 people. We have a number of defensive measures against the Brexit issues playing out around us."

Looking forward, the group said it expects full year results to be in line with expectations.

"We've had a really strong start to the year," said Mr Scott.

"The operating performance has been strong. It's about the strong foundations. Our order book is underpinned by a number of frameworks which has strengthened in the period in all of our three sectors."

Engineering services revenue rose 25 per cent to £282m in the six months to March 31 and the division's adjusted operating profit increased by 48 per cent to £19m.

Renew increased its interim dividend by 15 per cent, reflecting confidence in future growth."

[rivaldo] 21/5/2019 11:52

Numis reiterate their Buy and 500p target:

[wad collector] 21/5/2019 11:29

So where now do we think? 460+ ?

The 19p EPS for 6 months makes the (even enlarged) 3.83p dividend rather well covered. Once more this seems a time to hold RNWH .

[rivaldo] 21/5/2019 07:28

Looks very positive on every level on first reading.

Good increase in H1 EPS to 19.2p EPS, giving the possibility of an earnings beat for the year with a slight increase in H2.

A 15% increase in the divi, and a decent debt reduction.

All divisions now seem to be thriving. In particular, the short and long-term outlooks re rail, water, power, 4G and 5G, works at Westminster etc all seem to be coming together extremely nicely.

And the Engineering order book is up very nicely to £531m.

There's also another mention of "selective, earnings enhancing acquisitions".

Very encouraging - time for a re-rating.

[harrogate] 21/5/2019 07:18

Initial look is positive on interims. In line and confident for year and outlook seems decent with growth opportunities. 15% increase in dividend a plus. Will it be enough to get the share price out of this range. Might need a broker upgrade for 2020 that suggests EPS closer to 45p than current numbers. Happy holder as I have been for many years.

[wad collector] 17/5/2019 17:28

Looking on the positive side , it is closing at a 1 yr high ; I do like to see a share price rise just before results...

[harrogate] 15/5/2019 09:42

Excitement building for renew results- 3 shares traded !

[igoe104] 15/5/2019 07:52

Just a reminder, Interim Result are out next Tuesday.

[rivaldo] 09/5/2019 15:09

Good news for Walter Lilly - as well as being appointed to build the £55m London headquarters job mentioned in post 8816, they've been appointed as one of eight suppliers on potentially multiple contracts on a new £218m framework:

target='window'>http://bidstats.uk/tenders/2019/W17/701497354



"London universities name firms on £218m framework
23 April 2019

Procurement was led by the London School of Hygiene and Tropical Medicine

A group of London universities have named the eight contractors appointed to their £218m construction framework.

The London School of Hygiene and Tropical Medicine led procurement, with Birkbeck, University of London, Royal Veterinary College and Soas also set to hand out work through the framework."

[rivaldo] 25/4/2019 08:46

New contract win for VHE too:



"VHE awarded Wheatley Hall Road POS works

23 April 2019

VHE have been awarded the reclamation contract for the public open space area on the Wheatley Hall Road development site in Doncaster. The works, on behalf of client Harworth Group, will complete and complement an area on the site currently being developed by a house builder.

The works include site clearance and earthworks turnover to remove surface structures, foundations, asbestos and delineation of the available materials to enable best reuse to suit the site criteria. The hard materials recovered from the reclamation of the area will be crushed to provide a client stockpile of 6F2 for later reuse.

etc"

[rivaldo] 24/4/2019 14:36

Very good news - Shepley should win a decent portion of the £400m given their excellent record in decommissioning elsewhere.

[igoe104] 24/4/2019 14:03

Very nice framework to be involved with....

£400m decommissioning contract winners for Scotland nuclear site revealed
Infrastructure Intelligence
The joint venture, includes professional services firm WYG plc, Shepley Engineers Ltd., REACT Engineering, and James Fisher Nuclear Lt

[rivaldo] 23/4/2019 07:29

Good to see RNWH's Seymour subsidiary winning a contract for a modular housing development - something which I'm sure will be used more and more:



Extract:

"Seymour Civil Engineering is contracted by leading regeneration specialist, ENGIE who is delivering the project on behalf of Group, to look after the roads, sewers and foundations at the site.

The Hartlepool-based civil engineering firm has been laying the foundations at the site and is also responsible for the internal and external drainage, services and hard landscaping.

Thomas Brown, Seymour Civil Engineering Site Manager, said: “This is the first time we have worked in this way – and it is so interesting to watch the process. The main difference is the way we lay the foundations.

“With traditional construction, perimeter walls and load-bearing walls need deep foundations – and therefore deep excavation – to support the load of the structure.

“However, the modular homes require shallow excavation with concrete and blockwork plinths as the weight of the property is spread across the site.”

Due to the current housing shortage, the UK needs to build between 240,000 and 300,000 new homes annually. The industry is currently building around 190,000 houses per year due to the cost of building homes and declining number of skilled workers.

Thomas added: “The time taken to erect a modular house is a fraction of the time it takes to construct a traditional build.

“Myself and the team have found this project fascinating and amazing to watch the homes as they are erected and complete in such a small space of time.

“We’re all very proud to be part of this fantastic project.”

He added: “I’m 100% certain that this is the future of housebuilding in this country.”

etc"

[wad collector] 18/4/2019 13:55

New six month high today. The sun is shining. Bank Holiday tomorrow.

Looking at last report I couldn't see any Crossrail involvement ; only other Network Rail contracts. So today's further delays not a concern.

[rivaldo] 17/4/2019 13:38

Excellent news Jeff H, thanks for that. Considering the Building division's total revenue last year was £74m that is indeed a very decent slice of work through to 2021.

[harrogate] 16/4/2019 14:27

Thanks. That is a decent chunk of the next couple of years construction volume secured as it is clear that the new team are less keen on that side and are very selective on work

[jeff h] 16/4/2019 13:30

The specialist building arm of the Renew Group, Walter Lilly has secured a pre-construction services agreement for a £55m headquarters project for the London Institute of Medical Sciences.