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All sounds promising for us.
And 43.82 today. Not bad when the rest of the sector got a bit of a hammering.
Cladding crisis could cost more than £50bn, contractor says
NEWS
20.04.21
11:15 AMBY DOMINIC BRADY
Remediation costs for cladding issues in the UK could top £50bn, 10 times the amount made available by the government, a specialist contractor has estimated.
Colmore Tang Construction, a Midlands-based cladding specialist, said that based on the cost of 20 recent remediation projects it has led on, the true cost of the cladding crisis is likely to be £50bn.
That equates to one third of the annual output of the whole construction industry.
So far the government has made £5bn available to fund cladding remediation works, while the Housing, Communities and Local Government Select Committee has said costs could be closer to £15bn.
Both estimates are eclipsed by the analysis from Colmore Tang, which suggested that costing methodology from professionals submitting bids to the £1bn Building Safety Fund often did not accurately reflect the full scope of works.
Based on the firm’s pricing, the cost of remediation for the estimated 5,000 buildings taller than 18m requiring an External Wall System (EWS) certificate could reach £25bn if all required cladding removal and replacement.
A further 35,000 blocks between 11m and 18m could amount to costs of £70bn, taking combined costs to £95bn.
But Colmore Tang said it has taken an “optimistic view”, leaving the total at £50bn.
I link the comments, albeit loosely, in my last post to the part of the Sig trading update saying, "Providing there is no material disruption to either our business or end markets as a result of the pandemic, the Board expects the near term benefits of the actions taken in 2020 to deliver organic revenue growth in 2021, including market share gain."
Inference from the Builders Merchants Federation seem to be that no such "material disruption"is evident, and if merchants and customers coped with the pandemic last year, there is no apparent reason why they will not do so this year.
I know it is old news for Sig, but it is nevertheless the last published builders merchant report.
https://www.buildersmerchantsjournal.net/builders-merchants-sales-continue-rising-to-end-of-2020/
"2021 now provides a realistic hope of a return to normality and an expected economic upswing.”
"....the adaptability to enforced changes demonstrated by merchants and their trade customers over the past 12 months gives me a cautious degree of optimism for the coming year.”
A heading for flavour from Building magazine
Fire the starting pistol – there’s an amazing year ahead
By Jack Pringle24 February 2021
Jack Pringle 2020
There is plenty of money, projects in the pipeline and people are gagging to get back up to speed. The end of an appalling 12 months is in sight, says Jack Pringle
Are you ready for lift off? We’re coming out of winter, the vaccination programme is storming ahead, schools are about to go back and people are gagging to get going again.
Companies cannot sit on their hands forever, so managers are either about to give stalled projects the go-ahead or are commissioning new ones for the restart. A straw poll of offices shows that architects are getting busy again.
In the last twelve months there was more buying than selling by SIG insiders. They paid about UK£0.29 on average. These transactions show that insiders have confidence to invest their own money in the stock, albeit at slightly below the recent price.
https://rcimag.co.uk/people/sigs-new-divisional-sales-director-is-a-cause-for-celebration
And maybe a read across?
"Nevertheless, group sales were up 20%, year-on-year, in the first six weeks of this year."
Sorry. This is the first bit.
https://www.irishexaminer.com/business/companies/arid-40230224.html
Just an update for those interested - nothing to do with Sig. Lion Trust unimpressed.
https://www.irishexaminer.com/business/companies/arid-40212557.html
As a generality, this is how Sig saw things on 24th. September.
The implementation of the strategy is now underway. In the UK and Germany, where the Group's operational and financial performance has seen greater deterioration, the new strategy is initially focusing on repairing the operational foundations of these businesses so as to provide the appropriate platform from which market share can be recaptured and profitable growth restored. In France, Benelux, Poland and Ireland, where the Group's operational and financial performance has been more stable, the new strategy is empowering the Group's operating companies to move onto a growth footing."
And 11th. January saw progress against the strategy. https://www.lse.co.uk/rns/SHI/full-year-trading-update-jx3545tukauwagx.html?
Unusually, a bit on Poland construction - having a bad winter, but
"After removing the impact of seasonal factors, construction and assembly output continued to grow. In January, it rose by 1.7% MoM after a 1.9% MoM increase in December. This is a bright spot in the negative year-on-year picture."
https://think.ing.com/snaps/poland-extended-lockdown-impacts-activity-in-january/
As said, that scheme has it's problems. It is open to govt. to do something about it ( budget?)
https://www.theconstructionindex.co.uk/news/view/statistics-lay-bare-green-home-grant-failure
In passing, a view on Kingspan.( up today, but the name may be somewhat tarnished, regardless of inquiry outcome )
https://www.proactiveinvestors.co.uk/companies/news/941700/kingspan-upgraded-to-neutral-by-ubs-as-grenfell-inquiry-concerns-to-have-limited-financial-impact-941700.html
In passing. Couple of odds.
Rejigging in the wake of Grenfell, but of no particular relevance to Sig.
https://www.theconstructionindex.co.uk/news/view/hse-building-safety-boss-named-new-boss-of-building-safety
For anybody following importation issues, bit of a recent record. ( though out of date now for Sig, gives a comparative view over 13 years ) Will have to see how supplies hold up, but I continue to take a view that builders will continue to stockpile from merchants when they can.
http://www.bdcmagazine.com/2021/02/materials/timber/timber-imports-reached-13-year-monthly-high-in-november-2020/
In the interests of balance it is fair to say accessing work through the scheme has not proved easy, generally I think through difficulty in finding authorised tradespeople.
Small excerpt from article today discussing Govt. Green Homes Grant.
"Data from Rated People has found that the Green Homes Grant is proving popular with homeowners. Demand for wall and loft insulation has more than doubled, soaring by 161 per cent year on year, and projects covered under the scheme as ‘secondary measures’ are also in high demand, with replacing windows and doors up by 13 per cent and installing secondary glazing up 8 per cent."
Government could review immigration rules for construction trades after covid, minister suggests
By Tom Lowe17 February 2021
Move could allow more workers into UK
The government could be open to reviewing immigration policy for construction workers after the covid-19 pandemic, a minister has suggested.
Lords minister Susan Williams said the list of occupations which are allowed easier access into the UK in the government’s post-Brexit immigration system could be reviewed after “assessing how the UK labour market develops post-covid-19”.
Great analysis Prof. The way Stockopedia are presenting SIG is not helping the share price.
Prof. I knew there was a good reason to have you on the team. :-)
And here's a link if what net debt is:
https://www.investopedia.com/terms/n/netdebt.asp#:~:text=Key%20Takeaways-,Net%20debt%20is%20a%20liquidity%20metric%20used%20to%20determine%20how,if%20they%20were%20due%20immediately.&text=Net%20debt%20is%20calculated%20by,term%20and%20long-term%20debt.
All you liabilities in the long and short term minus the cash (including short term assets such as repos etc). The question is: could you pay every liability right now if you wanted to?
Well, SIG nearly can. Their net debt is just 5m. And then they have the long term assets too...
The information offered by Stockopedia below is wrong. In addition the metrics below are shallow (I'll explain later) and, very importantly there's no true insight.
Wrong: For example, the total number of shares in circulation is about 1.18bn, not 618m as mentioned.
Wrong: net debt is not 347m. It's actually only 5m.
Net debt is defined as long term liabilities + short term liabilities - cash and short term assets (which means that long term assets are not measured and SIG has a lot of them as the biggest supplier in UK/Europe).
Also, Shallow information:
The loss in 2019 was indeed 120m BUT if you dig a little deeper you'll see that actually SIG had underlying profits. It was only after the inclusion of accounting tricks such as "impairment" of 80 million that they appeared to be loss making.
However... When SIG revenue starts going ups again (and it will), the impairment will return. So, SIG profits will appear to skyrocket now because 80m will come back.
No insights:
Choosing stocks through Stockopedia metrics is like trying to assess where a car will go Only by looking Backwards. That's a mistake. we should be looking ahead and try to predict things based on emerging info about the future. For example:
Cd&R bought here to fix the company. They Are experts in turnaround cases.
Insulation drives and Green expenditure from governments in the UK and Europe
Francis's plan makes sense to me and seeks to boost margins for SIG
Talented people coming back
Patents for new products
Branches reopening due to demand
Small acquisitions already (and they have loads of money in the bank)
Loads of money in the bank
Tiny net debt
500 branches and the Biggest supplier in insulation in the UK and Europe in times when expenditure in the area will rise.
Quantitative Easing has resulted in property prices appreciation. That means that profits for construction will go up and so new projects by the private sector will mushroom too.
I could write more points here, such as that SiG will easily reduce their refinance costs etc. The main point here is that by looking at the metrics (let alone outdated/shallow) metrics, you can't see where the vehicle is heading too.
Gla
As we are both investors, there appears little point in discussing any negative stance Stocko might publish. I simply intended to register my own views ( not that they matter ) on the 'sucker stock ' label, which I think is outdated.
.
Stockopedia pride themselves on having very up to date data. Everything is updated daily. Their analysis of the categorisation of a share is based on the most current information as they would see it and they adjust their rankings accordingly on a daily basis.
As a new investor a lot of this information doesn’t mean a lot to me at this stage.
The TTM (trailing twelve months aggregated of the most recent financial statements) give the following information.
BALANCE SHEET
Cash etc 197m
Working Capital 221m
Net Fixed Assets 340m
Net Debt 347m
Book Value 237m
Average Shares 614m
Book Value ps 38.6m
That is pre Ifrs 16, which I imagine Stockopedia were intending to deal with?
The trading update update followed that 6 month report, https://www.lse.co.uk/rns/SHI/full-year-trading-update-jx3545tukauwagx.html?