Many thanks edmonda. 13% LFL sales growth means VP must be winning market share hand over fist. Any ideas why?
Combination of specialist plant hire (vs commodity), good management, regional focus, B2B (ie not B2C), large projects (Hinkley point), rivals (eg SDY, A-Plant & HSS) focusing on self-help (as opposed to organic growth), etc? |
another good set of interims from @Vpplc : revs +42%, PBT £25.9m +22%, EPS 52.3p +18%, interim div 8.2% +21%. Chairman looking forward 'with every confidence.'
Updated ED research note and retained fair value now out, freely available here: |
Good results so continue to hold as long as the chart is ok. |
 Equity Development's research note on VP by analyst Paul Hill
Read the full note here ...
House prices are almost as British as fish & chips. Hardly surprising really, given in total residential property is worth a staggering £7.1 trillion (source: Savills), or >4x GDP. So what’s the latest word on the street? Well despite being buffeted in Q1’18 by the country’s other favourite topic, the weather – the recent outlook from the nation’s housebuilders appears to be positive. The UK construction industry rebounded 2.9% in May, led by ‘new build homes’ which were up 8.4% on LFL terms.
Going forward, we expect activity levels to remain supportive - albeit slightly less so in central London, which has greater BREXIT exposure and much higher property values. This positive outlook underpins our forecasts for specialist plant hire group Vp, who released an upbeat trading statement this morning ahead of its AGM.
Here, the company has enjoyed an encouraging 1st four months, with its core UK infrastructure, housebuilding & construction markets demonstrating solid demand. The integration of Brandon Hire is also progressing to plan.
Elsewhere, there has been a “modest recovery” in the overseas oil & gas business (Airpac Bukom) reflecting improved crude prices, allied to good trading at the AsiaPac test & measurement operation.
Consequently, we make no change to our numbers, but nudge up the valuation to £11.00/share from £10.70 - based on a 12x EV/EBIT multiple, which is consistent with sector EV/EBITDA averages of 6.4x. |
Equity Development's research note on VP by analyst Paul Hill
Read the full note here ...
House prices are almost as British as fish & chips. Hardly surprising really, given in total residential property is worth a staggering £7.1 trillion (source: Savills), or >4x GDP. So what’s the latest word on the street? Well despite being buffeted in Q1’18 by the country’s other favourite topic, the weather – the recent outlook from the nation’s housebuilders appears to be positive. The UK construction industry rebounded 2.9% in May, led by ‘new build homes’ which were up 8.4% on LFL terms.
Going forward, we expect activity levels to remain supportive - albeit slightly less so in central London, which has greater BREXIT exposure and much higher property values. This positive outlook underpins our forecasts for specialist plant hire group Vp, who released an upbeat trading statement this morning ahead of its AGM.
Here, the company has enjoyed an encouraging 1st four months, with its core UK infrastructure, housebuilding & construction markets demonstrating solid demand. The integration of Brandon Hire is also progressing to plan.
Elsewhere, there has been a “modest recovery” in the overseas oil & gas business (Airpac Bukom) reflecting improved crude prices, allied to good trading at the AsiaPac test & measurement operation.
Consequently, we make no change to our numbers, but nudge up the valuation to £11.00/share from £10.70 - based on a 12x EV/EBIT multiple, which is consistent with sector EV/EBITDA averages of 6.4x. |
another strong set of FY results: adj PBT £40.6m + 16%, EPS 81.8p +18%, div 26p +18%; plus a 'positive start' to new year.
Full updated ED research note now out from Paul Hill, freely available at
All investors should make their own decisions, Mr Highlands, but this analyst's opinions on Vp in the last 4 years haven't been too far wrong |
Lots of buys after 3.30pm today, leaky leaky pre results ?? |
Here you go Highlands - worth a read from Paul Scott on the value (especially post Mifid II) of paid-for-research
hxxps://www.stockopedia.com/content/problems-caused-by-mifid-ii-297523/ |
Unusual jump in share price given it's in an establishing downward trend. Any reason ? |
Edmondo, that is a non-independent analyst report usually commissioned by tge company itself! Read the section right at the end! |
Solid update (again) released today ahead of results 5th June.
Co says 'good progress over winter period' and FY results to end March seen to be 'in-line'.
New ED research note (unchanged forecasts and undervalued view of shares) freely available here: |
Very solid update (again) released today ahead of results 5th June.
Co says 'good progress over winter period' and FY results to end March seen to be 'in-line'.
New ED research note (unchanged forecasts and undervalued view of shares) freely available here: |
The history of the share price and its consistent returns in terms of capital growth (well over 220% in the past 6 years) and a reasonable income would, with all due respect, seem to contradict your thesis.
Add to that a very considerable beneficial shareholdings of the Founder/Chairman (50% plus), and IMO his interests are very closely aligned to other shareholders.
Finally, kingston68, you seem to have a unhealthy fixation with this share (and the company's supposed financial engineering) which is decidedly suspect. In any event, your prolific posting is clearly not having much of an effect on the other participants on this board (ie you seem to be ignored). Perhaps you should apply your energies elsewhere, as it would seem unlikely that you have any interest in investing in "such as suspect company".
IMV that is undoubtedly a sound response, so will not be responding to any of your posts in the future. |
You may call me biased, but I am simply speaking the truth. Many people don't understand accounts and those investors rely on what they read in the company's reports. Quite understandably, the directors would like to emphasise the good points and hide the bad points. Some companies pay a dividend even when they have a large pension deficit, for example, to appease investors. This is a political game.
I have analysed the accounts of VP and its main trading subsidiaries. The trading subsidiaries did not perform as well as the way they have been glossed over because the parent company cross charges tiny amount of directors' remuneration to those subsidiaries even though they spent a lot of time on them. Similarly, those subsidiaries receive large interest-free loan from the parent company. Whilst the Group results would be the same, the reporting on individual subsidiaries has been distorted, ie their results have been flattered.
VP continues to chase growth by acquisition. This is a piece of financial engineering to increase earnings per share using cheap debts. This strategy works well whilst the going is good but is not sustainable in the long term because things go in cycle. How is the Group going to service the debt mountain in an economic downturn? VP is not and will not be the last company adopting this type of acquisition strategy until they fall on the own sword some years down the line. |
Well, you're certainly doing your best to constantly suggest that the price is too high! |
There is so little trading in VP's shares that it is difficult to say whether the share price is "genuine", for example, someone bought 30 shares at 880. Why would a small investor buy only 30 shares at a cost of £264 (plus broker's commission). It does not really make sense that this kind of small buying and selling continue, so far VP is concerned.
Market makers, or indeed, anyone for that matter can manipulate the share price by buying or selling tiny amount. I would say this is a false market. |
I fear for the worst to come for VP plc as ambition stretches the Group too far with lots of intangibles and bank borrowings weakening the Group’s balance sheet.
The truth is that a good company should be able to grow organically and if by acquisition, should use its own cash resources rather than by borrowings.
It is a bridge too far in the economic cycle, which I think the board of VP has misjudged. |
The CMA will report its findings in March. No one knows what the findings will be, however, it is understood that VP is not allowed to integrate Brandon Hire in the meantime. This is not going to help VP's business plan. |
There was a typo in my previous post in that the current amount of borrowing is in the region of £200 million (not £120 million as I erroneously stated).
When you dissect the individual accounts of VP's subsidiaries you will find a lot of financial massaging. Whilst the overall group results would be the same the Holding Company charges no interest to the operating subsidiaries and cross charges a tiny amount of directors' remuneration to them. This means that VP can boast about the great performance of those operations whereas in reality their trading results have been flattered.
A company expanding rapidly via acquisition and financed by debt will make you wary.
I have seen it all before. There were great companies with good reputation and a cash mountain have been destroyed by poor acquisitions built on debt. Those good companies were completely destroyed in only a short few years. |
The current balance sheet of VP Plc after its acquisition of Brandon Group would have £91 million of intangible assets. This is because Brandon Group had a net asset of only £7.5 million (actually it had a negative balance sheet of £1.9 million if we stripped out its own intangibles of £9.4 million), and the purchase price paid for Brandon was £41.6 million in cash[goodwill = £41.6 minus £7.5 million = £34.1 million). Funnily enough, the seller did not take shares in VP.
On the other hand its borrowing has increased to at least £120 million, as the acquisition has been funded entirely by borrowing and VP has also assumed the existing £27 debt of Brandon.
Intangible assets are worthless in practice. These are goodwill on acquisition (to balance the books in accounting terms), unlike IP which has a value.
The balance sheet is now very stretched. The idea of the acquisition was to buy market share and enhanced earnings (replacing Brandon's expensive debts with cheaper borrowings).
This strategy will come back to haunt the existing and future management when the demand for its services drops. It will be a downward spiral chasing business at all costs and at lower margin. VP is becoming a mini version of Carillion. Ego and ambition get the better of the present board of directors. |
I doubt it, to be honest.
It looks a good acquisition, made at a good time in the economic cycle with the opportunity of refinancing a load of debt into a longer, cheaper, affordable structure.
And this share is so thinly traded that it barely moves at all.
A long-term hold. |
The share chart does not look good. It is likely that it will drop to 800p as a first stop. If it does not hold there it will drop to 700p. |
The CMA is inviting interested parties to send in their views about VP's acquisition of Brandon Hire. In the event that the CMA asks VP to divest some of the Brandon Hire's branches its acquisition plan will falter, and the economy of scale that it envisaged will not be achieved to the full.
However, in the event that the CMA waves through the deal VP will be left with an expensive acquisition financed by debt. Brandon Hire made so little pretax profit because of its debt mountain paying a lot of interest. It is wrong for people to be fixated about EBIDTA.
Industry sources have revealed that Brandon Hire has adopted aggressive pricing to win over customers. It has probably adopted a Carillion style of chasing turnover at the expense of margins.
The VP board of directors will regret this deal when they look back in a few years time. |
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