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We hosted a webinar given by Brusk Korkmaz (CEO and Founder) and Paul Wheatcroft (CFO) of Hercules Site Services on 8th February 2024. Management discussed recent Full Year numbers which included record results and the importance of its newly opened Construction Academy.
The team provided a financial overview, discussed the company's growth strategy, and commented on current trading. Management also answered an extensive range of questions submitted by viewers.
The full video is available to watch below, divided into chapters for ease of viewing:
0:00:03 Introduction from Brusk Korkmaz
0:02:45 Highlights of 2023 & revenue growth
0:08:17 Group Financial Overview (including Labour Supply and Construction Services)
0:24:55 Post Period End
0:31:58 Current Trading and Industry Outlook
0:34:03 Growth Strategy
0:36:37 Questions & Answers
Link to full video: https://www.equitydevelopment.co.uk/research/investor-presentation-with-qa-february-2024
It looks a decent company as long as they can find more work, get other projects outside of HS2
Gearing rate of 75% is still high though and I dont like the fact they raised capital either
I have been following this company, all debt is asset backed for the suction excavators and one of Hercules' divisions is the fastest growing Suction Excavator company, that's why the investment was made. They started seeing some returns on these investments so looking good for last years accounts and their forecast for the next years.
The debt and lease liabilites are scary if there is a massive downturn, £21 million in total, if companies dont pay on time, it could be a disaster.
This company is going places for certain, just listen to the value of those infrastructure projects, HERC will almost certainly benefit in a very significant way.
The market is yet to catch on as the company remains below radar, the dividend yield is circa 7% and very secure.
No wonder brokers have target prices in excess of 50p.
New report available here: https://www.equitydevelopment.co.uk/research/hercules-construction-academy-launch
Hercules officially launched its Construction Academy on 31st January at an event attended by c.150 industry partners, education professionals, local politicians and Hercules employees. This is the culmination of an ambitious plan to address the significant skills shortage in the construction industry and support major infrastructure projects across the Midlands. The Academy aims to train up to 400 entrants in its first year, making a valuable contribution to local skills and career prospects and underpinning Hercules’ own growth ambitions.
In our view, Hercules’ share price performance does not reflect recent strong progress. Our Fair Value / share estimate is 55p, representing an FY25 EV/EBITDA rating of c.11.5x.
Hercules Site Services (AIM:HERC) is a leading supplier of labour to the UK’s construction industry.
On Thursday 8th February, Brusk Korkmaz (CEO and Founder) along with Paul Wheatcroft (CFO) will present the Company, its recent Full Year results and prospects, along with explaining the importance of its newly opened Construction Academy.
The webinar will start at 10.45am, is open to all existing and potential shareholders, and registration is free. Questions can be submitted during the presentation and, if possible, will be addressed by the management at the end of it.
Link to register: https://www.equitydevelopment.co.uk/news-and-events/herc-investor-presentation-8february2024
Hercules has reported strong full year results, with profits well ahead of our expectations. Against a supportive backdrop for infrastructure investment, we believe momentum is building and a positive outlook statement anticipates another year of growth in FY24. We reflect this in our revenue forecasts, whilst noting that an increasing interest charge will reduce profits in the short term.
All three divisions contributed to the strong growth in FY23, but Labour Supply remains, by some distance, the largest element of the Group. This division accounted for 75% of Group revenue and 65% of gross profit whilst also delivering the strongest revenue growth in FY23 (+92%). This was driven in particular by additional demand under the Balfour Vinci JV contract on HS2 (London to Birmingham), which still has several years to run.
The outlook statement strikes a positive tone, highlighting new revenue streams which should make a positive impact in FY24. Further organic progress therefore looks well underpinned and November’s Future Build acquisition (Hercules’ first deal) adds another leg to the growth story.
Hercules trades on a FY25 P/E rating of c.16x and a dividend yield of 7% with scope for good earnings growth over the medium term. Our new Fair Value / share estimate is 55p (from 60p), representing a FY25 EV/EBITDA rating of 11.5x
Link to report: https://www.equitydevelopment.co.uk/research/full-year-results-well-ahead-of-expectations
Surely this will start to move up soon it’s had good news after good news what’s people’s thoughts
Is this share ever going to move up been stuck in this rut for months now
Hercules' deal for Future Build Recruitment is both highly complementary and earnings enhancing.
Equity Development see HERC as materially undervalued and keep a 60p/share Fair Value, as you can hear/read in the new note out today. Free access here:
https://www.equitydevelopment.co.uk/research/building-for-the-future
Don’t get why this is not higher if the results are good with a good outlook. Something is keeping the price down but l don’t know what
A positive year-end update from Hercules confirms a strong conclusion to FY23, ahead of expectations. It has been another year of excellent organic revenue growth (+60% at Group level), with progress in all three divisions. This continues an impressive track record (average revenue growth over past three years >50%) and Hercules enters FY24 with momentum.
Hercules expects both its revenue and adjusted EBITDA for FY23 to be ahead of market expectations. Revenue is expected to be > £80m, representing an upgrade of at least 8% to previous expectations. We assume a similar uplift to our EBITDA forecast of +8% to £3.7m.
The overall performance has again been driven by the core Labour Supply business, which benefited from the ramp-up of the multi-year HS2 Phase 1 contract (London to Birmingham). In Civils, the Group is benefiting from increasing investment in the water sector, as illustrated by the £3.1m of contract awards announced on 20th September. Meanwhile, the Suction Excavator business continues to see solid utilisation rates, having expanded by 14 vehicles over the period to create one of the largest fleets in the country.
To us, the Group’s strong growth trajectory and forecast free cash flow (double digit FCF yield) suggest significant value in the shares. Our Fair Value per share of 60p represents a 7.5% FCY yield on prudently positioned FY25 forecasts.
https://www.equitydevelopment.co.uk/research/positive-year-end-update-ahead-of-expectations
Is this ever going to move it’s been stagnant for months now
New business wins for both Labour Supply and Civils Projects divisions are encouraging
Equity Development see growth supported by the outlook for infrastructure spend, undersupply of skilled labour, and organic investment: 60p/share is their fair value.
Read new note here, free access:
https://www.equitydevelopment.co.uk/research/recent-newsflow-points-to-strength-in-diversity
Hercules Site Services (AIM:HERC), a leading supplier of labour to the UK’s construction industry, hosted an online presentation for investors.
Brusk Korkmaz (CEO & Founder) and Paul Wheatcroft (CFO) ran investors through the company and its principal business areas, highlights of their strong H1 period including an 85% YoY turnover increase, and key tenets of the growth strategy. The team also answered a wide range of questions from viewers.
The full video has been divided into chapters as below:
0:00:03 Introduction & Business Overview
00:03:16 History of Growth
00:05:41 H1 2023 Highlights
00:08:25 Group Statement
00:11:11 Labour Supply
00:14:28 Suction Excavators
00:17:11 Civil Projects
00:18:46 Financials (Balance Sheet & Cash Flow)
00:21:08 UK Infrastructure investment
00:23:38 Growth Strategy
00:26:22 Investment Case
0:27:53 Questions & Answers
Link to full video: https://www.equitydevelopment.co.uk/research/hercules-site-services-investor-presentation-with-qa-july-2023
Hercules Site Services (AIM:HERC) is a leading supplier of labour to the UK’s construction industry.
Brusk Korkmaz, CEO and Founder, along with Paul Wheatcroft, CFO, will present the Company and its ambitions to investors on Tuesday 18th July.
The webinar will start at 11.00am, is open to all existing and potential shareholders, and registration is free. Questions can be submitted during the presentation and, if possible, will be addressed by the management at the end of it.
You can register to attend at the link: https://www.equitydevelopment.co.uk/news-and-events/hercules-investor-presentation-18july2023
Link to full note here: https://www.equitydevelopment.co.uk/research/driving-growth-through-innovation
Hercules Site Services is an innovative, entrepreneurial and high-growth business with a focus on the UK Infrastructure market. Its shares were listed on the AIM in February 2022.
The core business is labour supply, where Hercules has built a reputation as a trusted partner to an impressive blue-chip client list. Hercules has also expanded its offering in recent years into complementary construction services, namely civil projects and specialist equipment hire.
Growth to date has been highly impressive (three-year revenue CAGR 50%) and demand is underpinned by a favourable outlook for infrastructure spending, a structural undersupply of skilled labour and recent organic investment in technology and fleet expansion.
Infrastructure investment has been a key driver of the recovery of the construction industry post Covid and the medium-term outlook is well underpinned by major projects, not least HS2 with Phase One (London to Birmingham) approaching peak activity over the next 3 to 5 years.
We believe that our full year earnings forecasts are conservative and see Fair Value at 60p per share.
If you missed the Hercules Site Services investor webinar this week you can read a write up of the event here.
https://youtu.be/fSep_4WnLVc
Surely this has got to move soon been stuck in a rut for what seems like ages
Webinar today at 12pm. #HERC - Meet CEO Brusk Korkmaz and CRO Paul Wheatcroft who will provide an introduction to Hercules Site Services plc and update on performance following the publication of the HY results which were released yesterday. Register
https://us02web.zoom.us/webinar/register/7016824108414/WN_zUrJq9V-SZSpP8b-DR9iDQ
Investor webinar on 6 June at 12pm. Brusk Korkmaz, CEO and Paul Wheatcroft, CFO will provide an introduction to Hercules Site Services plc and update on performance following the publication of the HY results which will be released in June
Register
https://us02web.zoom.us/webinar/register/7016824108414/WN_zUrJq9V-SZSpP8b-DR9iDQ