Renew Share Discussion Threads

[davebowler] 03/2/2020 09:29

Shares mag:Anyone who regularly experiences the joys of public transport in the UK will know the country is in desperate need of infrastructure investment. Recognised as a priority by the Government, this is one area of public spending seemingly set to get a boost, not a cut, in the upcoming Budget.That spells good news potentially for both long-suffering passengers and the likes of Renew (RNWH:AIM), an engineer providing infrastructure maintenance work.What separates Renew from most other engineering firms is that it specialises in non-discretionary maintenance and renewal projects, i.e. work that's essential, not optional.Its clients – which include Network Rail, the Nuclear Decommissioning Authority and big utilities – must spend money on infrastructure to comply with laws and regulations.While this provides a positive backdrop for Renew, it still needs to win this work in the first place as providing infrastructure services is still a competitive market.Fortunately the firm seems to have done a good job of securing work as its latest full year results show 11% growth in revenue 2015 2016 2017 2018 2019250350450550RENEW HOLDINGSto £600.6m, adjusted operating profit up 23% to £38.3m and reported pre-tax profit almost doubling to £27m. There was also a 15% rise in its final dividend to 11.15p per share.The nature of jobs Renew carries out – in rail, water, telecoms and nuclear decommissioning – involves stringent safety checks in heavily regulated markets.Subcontracting work is highly common in the construction industry due to the scale of the jobs firms take on but Renew targets lots of lower scale work, so it uses its own staff for its jobs and doesn't have to outsource, leading to better margins than its peers.Its share price has been on a roll recently, soaring 25% to the current 510p level since its full year results in November, perhaps showing the market better understands the company's risk profile.But the company is still good value, trading on 12.2 times forecast earnings for the current financial year, placing it bang in the middle of its sector when it comes to expectations.It's worth highlighting companies in Renew's industry are cyclical, and while it's proving itself better than peers when delivering on contracts and pricing them correctly, failure in this regard is still an ever-present risk.The company also took on debt significantly in 2018 having bought rival businesses as it looked to expand. But net debt of £10.2m as at 30 September 2019 compared to £21.4m the previous year shows that Renew places a good focus on keeping its balance sheet in check.

[rivaldo] 31/1/2020 07:27

HS2 is now looking like it will definitely go ahead.

RNWH were previously named as one of Numis' top three beneficiaries of HS2:



"AIM-listed Renew Holdings "offers the greatest exposure to rail opex" in the analysts 'universe' of stocks."

And RNWH themselves say on their web site about the opportunities in Rail:

"Investment in Control Period 6 ("CP6")3 £48bn

CP6 is expected to see a 25% increase in spend on operations, maintenance, support and renewals.
Opportunities will arise from the integration of HS2 with the existing rail infrastructure.
Long-term investment is required to deliver renewal and maintenance services on London Underground and Train Operating Company assets."

[sharw] 30/1/2020 13:32

Yes - ex 7.67p

[harrogate] 30/1/2020 12:59

Isn't it ex div today as well ?

[rivaldo] 30/1/2020 12:51

There's not many "punters" here :o))

Placings to institutions are a fact of life if you want to complete an acquisition quickly and easily. Rights issues etc take months to complete - and cost a lot more.

The share price is essentially unchanged now, and it should begin to rise imho as forecasts are raised to account for the new acquisition.

[wfcreserves] 30/1/2020 12:33

@ rivaldo

Might soothe some of the non selected punters who have bought @5.25 and above not knowing there was another placing in store @£4.75?

[rivaldo] 30/1/2020 11:17

Looking at today's press it seems Shore Capital have again reiterated the 570p target.

So I assume they'll either update/upgrade after further consideration of the deal, or will keep that target until further news flow.

[wfcreserves] 30/1/2020 09:28

@ rivaldo

As you reported yesterday before the deal was announced. Did they know about the deal or are they due for another update?

[rivaldo] 30/1/2020 09:20

Thanks re the Numis upgrade bsdjj.

And Shore Capital have raised their target price to 570p (from 470p) too.

[wfcreserves] 30/1/2020 09:06

Lucky they disclosed a day after the AGM. Avoids questions being raised about the privileged few existing shareholders entitled to take part in the placing. Again.

[bsdjj] 30/1/2020 08:14

Numis (house broker) upgrades PT to 590p from 500p.

[jampot7us] 30/1/2020 07:57

Tipped in todays shares mag...

[harrogate] 30/1/2020 07:40

Looks a good fit at a decent price. Disappointing again that no open offer for us but at least it is at a reasonable discount and not too large a placing. Should make life interesting

[rivaldo] 30/1/2020 07:39

I did say yesterday "it's about time for another earnings-enhancing acquisition" :o))

Et voila....



Carnell fits perfectly into the RNWH model, with "long term framework contracts and high barriers to entry" providing good visibility going forward as "focused on direct delivery, non-discretionary renewals and maintenance" - in a new sector for the company.

The 475p placing price is a tad disappointing, but this looks highly earnings-enhancing, with £5m EBITDA expected for a £38m consideration and a possible return to £6.2m EBITDA from 2018.

Particularly as:

"Looking ahead towards Road Investment Strategy 2 (("RIS2"), which runs from 2020 to 2025), in the 2019 Autumn Budget, the Government announced the National Roads Fund would be GBP25.3 billion, a 66% increase from RIS1, with an increased focus on renewals and maintenance which the boards of Carnell and the Company believe will therefore offer a major opportunity for Carnell. It is also widely expected that the forthcoming budget by the Government will have a focus on infrastructure investment which will likely benefit services providers such as Carnell."

[bsdjj] 29/1/2020 21:25

sorry Rivaldo see you picked this up first thing. Worth repeating though...

[bsdjj] 29/1/2020 21:23

Thats quite a decent jump in the order book. £651m at end year compared to £581m at 30th Sept. 2019. Bodes well for the future....

[rivaldo] 29/1/2020 10:02

Shore Capital say Buy today with a 570p target.

Peel Hunt also say Buy, with a 575p target.

Liberum have also updated, but as I noted previously their "research" is so laughably misjudged imho that it's not worth repeating.

We should hopefully see good progress here towards 570p or so, especially with such secure forward order books, attractive fundamentals and increasingly strong prospects across the divisions.

And it's about time for another earnings-enhancing acquisition given the tiny net debt and the gap since the last one.

[harrogate] 29/1/2020 07:33

Steady as she goes as usual here. Reassuring but at some point with rail CP6 up 25%, lots of new framework wins and order books up 12% this has to feed through into more than a 2020 increase in EPS of < 5% or we are missing something.

[rivaldo] 29/1/2020 07:10

Once again today's trading statement is very encouraging.

Not only is current trading nicely in line, but the order book at 31st December was £651m, up from £581m at 30th September. That's a 12% increase in just 3 months....which has to bode well going forward:

[wad collector] 28/1/2020 12:44

When you look at all those magnificent viaducts ,especially when you stand under them, it is awesome that the Victorians constructed them without modern equipment. Don't suppose that HS2 bridges will last a century and a half. I see that one has concrete without steel reinforcement.

[rivaldo] 28/1/2020 12:40

Nice eight month remediation contract awarded to VHE:



"VHE awarded Homes England Former Electrolux Site, Merrington Lane Infrastructure Works

27 January 2020

VHE have commenced work on the regeneration of the former Electrolux Site, Spennymoor site near Durham for Homes England.

The works include site remediation and preparation of development platforms, highways re-construction, diversion and provision of site utilities and associated infrastructure.

Infrastructure works are being undertaken by sister company Seymour Civil Engineering and are integrated into the VHE regeneration package. These include the construction of a new spine road, SW and FW drainage for the proposed spine road, 278 works at an access junction, culvert diversion and combined sewer diversion.

The VHE North East team commenced works on site January 2020 with the project programmed to take 33 weeks to complete."

[wad collector] 14/1/2020 10:20

The NED posts have always seemed a bit of a dubious business model to me. Call me old fashioned but I would rather have a director focused on one company rather than a selection of directors with fingers in other pies. It may be good for networking and spying on other sectors but it can lead to conflicts of interest and lack of commitment.

Looking at the share price dip , this looks like a buying opportunity , but I remind myself that I have far too many of these and many burned fingers.

[harrogate] 14/1/2020 08:07

Hopefully we needed an additional NED ( we have a few ) and this is not some sort of diversity tick box exercise

[rivaldo] 14/1/2020 07:38

Looks like a quality and high-profile NED appointment today: