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The questions are piling up for our managemetn team aren't they!
Speedy Hire will provide non-operated plant hire to Amey's operations on a range of sector contracts including rail, highways and public estates, a significant proportion of which consists of innovative eco-products, including H-Power Generators from Speedy Hydrogen Solutions and battery storage units from Green Power Hire.
Speedy Hire got the Amey contract, up to £25m pa for them so similar level to HSS.
https://www.lse.co.uk/rns/SDY/contract-win-uiqtig3kndaij50.html
3 trades adding up to 1,500,000 shares unknown!!
Amey appears to be a private company now not a PLC ?
Amey was acquired by UK private equity outfits One Equity Partners and Buckthorn Partners on 30th December 2022 from Ferrovial of Spain in a transaction valued at £400m.
Big fall yesterday after RNS HSS Hire Group To Lose Amey Plc Contract
Today's news matches what my broker shows this must be the one analyst .
Deutsche Bank cuts HSS Hire price target to 13 (18) pence - 'buy'
I’m not aware of any hire companies providing details on exposure to customers,either in % or £ terms, as it’s gives competitors targets to go after
So in 2015, before the Amey contract, EBITA was only £20.3 m and the share price was £1+.
This company has failed multiple times on various stock exchanges
They would be if offered enough!
Wont happen unless the two biggest shareholders are in agreements. Check the share register
Absolutely right. Add to that the Board needs to be asking the following questions:
1. Why were s/holders unaware of the size of Amey's existing contract and the fact that it has been a cornerstone of the firm's revenue for years?
2. Why was this not even hinted at with the results?
3. What does this mean for revenues and margins going forward. Bear in mind they sold off a big chunk of revenues with the Abird sale
4. Why wa sthRNS tilted contract update when there had been no previous RNs about this pending renegotiation
2.
I work for a company who spends externally £22m pa on plant equipment. HSS didn't even provide a rate card in the end for our evaluation so were removed. On there qualitative answers, they indicated that there top 5 customers make up 18% of there turnover, with Amey being over half of this, so after Amey the "hook" customers drop off a fair bit. Speedy and Sunbelt were by far the cheapest provider on most items on our tender, so wouldn't surprise me that Amey went with them.
Will have been another major player cutting the rates to death. Either Sunbelt or Speedy is my best guess
So who got the contract? Was it Ashtead?
Threeputt..a good point.
Management need to explain why such a contact was lost...
Was it to renegotiate at a lower cost?
Delivery of hire a problem?
Breakdown of hired plant??
The list of ideas why could go on.
Gla
To be fair they have spent last 3 years refocusing the business around digitalisation & reducing fixed costs by moving branches into merchants which seems to be working well… but this is a big set back for the reputation of the management team. And it isn’t helpful that the CFO announced he’s leaving.
Also to add, why wouldn't you just start a hire company as it's easy.. I can answer that from experience, you need an awful lot of money to invest in equipment,transport, facilities & staff... other than that it's easy!
All very good points Dartron, HSS operate differently from Speedy,Travis and Brandons (who incidently are atrocious to deal with by the way!...HSS have a system with alloted timed deliveries, they are trying to push more online and rely on the non account type customer where they can charge a premium on the hire rate.
Speedy are heavily contract based (like the one HSS have just lost) i think the statement was something like 80% 0f turnover for the top 20% of your clients... from memory... look how that worked out!!
the rest, well answer the phone and emails and just deliver the kit.. travis are the ones to watch as the hire turnover is increasing YOY.
Boels on the other hand have a uk presence albeit small, but read the statement from the owner on the link.
https://www.constructionbriefing.com/news/boels-makes-norwegian-acquisition/8028569.article
Well I wouldn't buy it if they were losing major customers, would you ?
Safestyle was a prime takeover target IMO. They owned a factory and a head office outright. They had a good operation but just ran out of cash as sales contracted sharply. They did get taken over in the end, but it was via an administration. jackhammers, from the stocks you post on, you are clearly a bottom fisher. Sometimes, stocks are low for a reason. HSS has no moat, no barrier to entry. Why shouldn't this company that you reference just invest the cash in starting their own hire company? What do they need HSS for? Why not go and buy Speedy? or Brandon tool hire? There are several small independent / family firms round my way who hire out all sorts of plant and tools, it is the type of business almost anybody can start. I still think the sector is saturated, last time I had a builder here, they hired from Travis Perkins, who delivered and collected. Prior to that I had a builder who hired plant from Jewson. More competitors to add to the list. HSS need to come out and explain to shareholders how they are going to differentiate themselves from all these others, and why they should be backed by shareholders (or indeed a acquirer). I would assume that that operational efficiencies of materials supply from somewhere like Travis, would increase margins on tool hire as opposed to a one trick pony like HSS. Perhaps it makes sense for a builders merchant like Lords to consider acquiring this, but again why not just start your own. Can anybody offer some points to why HSS is unique, or stands above its competitors?
Prime target for a takeover... A large european hirer stated that they wanted to double turnover every 5 years, this will be mainly through aquistion...last major purchases were Riwal (access hirers) and Cramo.
You have the reduction percentages round the wrong way. It is 7% of Group revenue and 10% of Group Adjusted EBITA.
I said before, it is the lack of strategy that concerns me. Is this going to be another company run in to the ground as the bod leave just at the last minute. At least the contract runs until early December, so should help contribute to most of FY24. I have not sold today, though I may exit if we get a slight uptick. Clearly this is not a bullish stock.
To see 8p again
CEO and management have a lot of explaining to do! Even the headline is bloody misleading - Co tract Update…as if s/holders had been informed about this before. Really really poor. Shareholders likely to be unimpressed with the poor news management - shareholders here surprises and this is that!
So they’ve sold the ABird and Apex hire businesses and lost the revenues from these business whilst reducing gearing. I wonder whether these were related to Amey’s decision…
Revs of £349m means a £35m hit ; 7pc off EBITA £24m means a £1.7m hit…
I agree. Given the size of this contract, why was this never covered in previous updates. Among the plethora of stats in the annual report, shareholders have never been informed upfront about contractual risks like this! Very poor from the management team - and the CFO is leaving