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Moving up nicely too:
Https://investing.thisismoney.co.uk/broker-views/
Bought 400 shares today. Liked the fundamentals of the company. A strong balance sheet.
Very positive interview with the CEO - essentially the small parts of the business which weren't fully operational will be back in "weeks". Interesting to see that RNWH were involved in setting up the 5G network at the new Nightingale hospital in London:
Https://www.yorkshirepost.co.uk/business/renew-proves-resilient-during-virus-outbreak-2858131
And nice analyst commentary from Numis:
Https://citywire.co.uk/funds-insider/news/the-expert-view-topps-tiles-renew-and-mcbride/a1358721?ref=citywire-money-latest-news-list#i=3
"Numis upgrades ‘impressive’ Renew
Numis has upgraded engineering services company Renew (RNWH) which has proved defensive during the Covid-19 crisis and is at the forefront of an expected pick-up in infrastructure spending.
Analyst Howard Seymour upgraded his recommendation from ‘add’ to ‘buy’ with a target price of 590p on the shares, which surged 11.5% to 466p yesterday.
‘It is very impressive that over the lockdown crisis to date, some 80% of Renew’s works have continued and only 13% of staff furloughed,’ he said.
Seymour said it was just as impressive that he was reinstating estimates so early. ‘Our assumption of c.15% disruptive impact on earnings in our view is prudent, but it is likely to be a major operational outperformer versus peers,’ he said.
‘Results to date and outlook in this crisis demonstrate the attributes of the Renew business model at an unprecedented time that provide both defensive qualities but also place the company at the forefront of expected acceleration of infrastructure spend.’"
The IC says Buy today:
“Renew’s preferred non-discretionary infrastructure markets are underpinned by long-term regulated budgets. This should prove defensive in the face of a wider construction slowdown. With further work likely to arise from the government’s promised £640bn infrastructure revolution, the outlook beyond this crisis remains promising. Buy“
Another key paragraph from the IC article:
"its focus on essential infrastructure maintenance activities means 80 per cent of its work has continued. Rail, highways, water and telecommunications have all been designated as ‘critical’ sectors. That is good news considering more than 90 per cent of sales and adjusted operating profit are derived from engineering services."
Numis upgrade to Buy (from Add) with a 590p target.
Shore Capital reiterate their Buy and 570p target.
Peel Hunt also reiterate their Buy and 575p target.
Enough said :o))
The H1 results look good to me - and most importantly, the outlook is rosy, with 80% of activities having continued as normal and the remaining 20% now coming back on stream.
20.1p EPS in H1 to 31/3 is up a very creditable (given the lockdown) 5% from last year, net debt is down - despite the Carnell acquisition - and Engineering order books are up a whopping 11% following "record trading" in the half year.
Prospects in Rail, Infrastructure, Nuclear, Environmental all look terrific given the huge budgets and spending increases allocated to them over the coming long-term spending programmes.
The Chairman's outlook commentary says it all:
" Our strong trading performance and cash generation in the first half of the year, is reflective of the reliable long-term nature of the UK infrastructure markets in which we operate, a strategy reinforced in the Government's latest Budget when they committed to investing GBP640bn in infrastructure over the next 5 years."
https://uk.advfn.com/stock-market/london/renew-RNWH/share-news/Renew-Holdings-PLC-Half-year-Report/82485858
Good to see £2 billion of extra spending announced by the Government "allocated to fund infrastructure projects", largely transport-related judging by the reports.
And more directly relating to RNWH, it seems that Network Rail have been taking advantage of the quiet on the railways to accelerate their spending programmes on rail infrastructure, which should benefit RNWH's outlook for this year:
Https://www.itv.com/news/2020-05-14/grant-shapps-leads-the-government-s-daily-coronavirus-press-conference/
"He said agencies had been "getting busy" by making use of quiet roads and railways during lockdown to make huge improvements to the national infrastructure.
He said during lockdown 419 Network Rail projects were completed over Easter and 1,000 upgrades during the May bank holiday."
This is a big and high profile contract - and good to see the work starting immediately:
Https://netimesmagazine.co.uk/news/work-underway-to-transform-the-former-ssi-steelworks-site/
"Work underway to transform the former SSI steelworks site
May 6, 2020 @ 12:37 by Richard Dawson
Following the successful outcome of the compulsory purchase inquiry into the purchase of land on the former SSI steelworks, a contractor has now been appointed to begin major redevelopment work on the site.
Hartlepool-based Seymour Civil Engineering has this week started site clearance and preparation work on land known as the Grangetown Prairie, as part of a multi-million pound contract with the South Tees Development Corporation (STDC).
The 124-acre site will be one of the first areas to be redeveloped as part of the STDC’s masterplan, which hopes to deliver 20,000 new jobs and more than £1 billion per year into the UK economy over the next 25 years.
The work has begun just days after the compulsory purchasing ruling, which granted the STDC powers to purchase the former Redcar steelworks, following a three-year legal battle.
The positive outcome means the 4500-acre site can be redeveloped and provide good-quality jobs to people in Teesside, Darlington and Hartlepool."“That’s why I am pleased that, less than a week on from the judgement, we are moving forward and getting spades in the ground.”
Councillor Mary Lanigan, leader of Redcar & Cleveland Borough Council, added: “Starting the redevelopment work of the former SSI site is a huge step forward and one which brings the prospect of high-quality jobs for many thousands of people across the region.
“The site has the potential to bring prosperity and a better quality of life for so many of our residents and seeing the development of large-scale, cutting-edge manufacturing on the site would be a fitting use for a borough which made the steel that built structures which transformed places around the world.”
Peel Hunt retain their Buy and 575p target today
Https://investing.thisismoney.co.uk/broker-views/
RNWH have just been tipped as a Buy in Forbes magazine:
Https://www.forbes.com/sites/roystonwild/2020/04/28/2-top-stocks-i-think-you-should-buy-in-may/#30cac6e87119
"Renew Holdings
Renew Holdings is another UK share that looks cheap according to current growth forecasts. It trades on a forward price-to-earnings (P/E) ratio for the current financial year ending September 2020. It’s a reading that fails to recognise its exceptional defensive qualities, however, a particularly-appealing quality in these uncertain times.
This other AIM business hasn’t been totally immune to the Covid-19 crisis. However, its role as a supplier of essential engineering services for critical UK infrastructure means that its outlook in the short-term and beyond remains robust. In its main Rail and Highways divisions it remains mostly operational, whilst its Water and Telecommunications operations also remain up and running due to these sectors’ designations as critical areas.
Renew Holdings is a share that’s poised to gain from huge spending on domestic infrastructure in the next decade, too. City analysts are expecting earnings here to dip 1% in fiscal 2020, though the outlook for the medium term onwards is much brighter. I’d buy it today, in fact, on the likelihood of a robust trading update on Tuesday, May 19 which could help its share price extend recent gains."
Buying coming in at above 445p now.
When we get out of this economic and health nightmare one of the things thing that will drag the economy back from the abyss will be gov. infrastructure spending.
Here's an article written when rnwh was 510p - now 404p
https://www.sharesmagazine.co.uk/article/buy-this-stock-to-profit-from-the-uk-infrastructure-boom#.Xpg7Ii8KBoh.twitter
HS2 construction has got the green light to begin despite lockdown measures:
Https://www.bbc.co.uk/news/business-52293055
Analysis from Shore Capital this morning:
Https://citywire.co.uk/funds-insider/news/the-expert-view-auto-trader-chemring-and-renew/a1342698?ref=citywire-money-latest-news-list#i=4
"Engineering services provider Renew (RNWH) is delivering activities critical to the Covid-19 response and Shore Capital says the fall in the shares presents a good opportunity to ‘buy’ the stock.
Analyst Tom Fraine retained his ‘buy’ recommendation and ‘fair value’ price of 570p on the shares, which fell 2p to 374p yesterday.
The group continues to operate across the majority of its sectors as 80% of its activities are deemed critical to battling Covid-19.
‘Despite the impact of Covid-19 being unclear, we are encouraged to learn that the majority of the group has continued to be operational in its critical sectors and we highlight Renew’s ability to control costs to a much greater extent than many industrials,’ he said.
‘We consider the 34% share price fall since the start of 2020 to be an excellent opportunity for investors seeking to benefit from increased public sector spending in regulated markets.’"
Shore Capital reiterate their Buy and 570p target today.
And Peel Hunt reiterate their Buy and 575p target.
Today's trading update is about as encouraging as one could expect in the current climate:
- 80% of RNWH's activities are deemed critical
- H1 to 31st March is nicely in line with forecasts
- Carnell integration is going well
- the most profitable Engineering Services divisions are those deemed critical
- cash generation is strong and the Balance Sheet sound
- the management team are sound/responsible and have cut their salaries by 20% and implemented cost reductions/deferrals
The share price is down by 30% from prior levels - given that 80% of activities are critical, hopefully the current situation is more than priced in already.
A damning report was issued last week about last summer's dam safety incident at Whaley Bridge. The Times' report here indicates that there's lots of work needed to make the UK's 2,000 dams safe.
A good job then that Seymour Civil have expertise in this area and have already been appointed (last October) by Yorkshire Water to their £290m frameworks for this sector:
Https://www.thetimes.co.uk/article/whaley-bridge-dam-charitys-failures-put-lives-at-risk-0jtc6fk28
"An independent report shows how the Canal & River Trust (CRT) failed to carry out essential maintenance to keep the dam safe for residents of the picturesque Peak District town...
...The incident triggered a meeting of the government’s Cobra committee. A rescue operation was launched by the RAF and emergency services to save the town, which was in danger of being washed away by 300 million gallons of water....
...Government sources are understood to be “highly concerned” about the condition of the other 71 reservoirs across the UK currently maintained by the CRT. One Whitehall source said: “This report shows a worrying lack of urgency for important repairs that were recommended, in some cases for years, by inspection engineers.
“We are taking steps to ensure this is not the case with the other reservoirs maintained by the Canal & River Trust.”
There are about 2,000 dams in England and Wales and 800 in Scotland. They create reservoirs for drinking water, fill local canals, help farms or are used for recreation. Many are above towns and cities.
The report’s author, Professor David Balmforth, warned of a gap between owners of reservoirs being “compliant with the current legislation” and “what is actually safe” for communities living in the shadow of the UK’s dams.
etc"
Good to be back above 400p again. On relatively small volumes too, which suggests there's not much stock around.
Also a new contract win - looks like quite a biggie:
Https://www.vhe.co.uk/blog/2020-03-17-vhe-awarded-homes-england-whitley-pumping-station-well-and-adit-decommissioning-and-reservoir-removal-contract
"VHE awarded Homes England Whitley Pumping Station Well and Adit Decommissioning and Reservoir removal contract
17 March 2020
VHE have been appointed Principal Contractor on the Former Whitley Pumping Station project by Homes England with works commencing on-site March 2020.
Under the contact VHE will open up a well chamber to allow access to the headworks, decommission the borehole and well to the base of the well chamber and undertake a post-construction independent structural condition survey of the Locally Listed Pump House. VHE will backfill adits on site using a surface filling / drilling and grouting method.
The final stage of work includes the removal and backfilling of a covered reservoir. Works include crushing and screening of generated demolition arisings in accordance with the WRAP Quality Protocol, general earthworks and backfilling of reservoir void with recycled aggregate and off-site disposal of materials deemed unsuitable for reuse on site."
There's also the small matter of the £27 billion now to be spent on the roads per the recent Budget, which will benefit the new Carnell Group acquisition:
Https://uk.motor1.com/news/403616/government-march-budget-roads-investment/
"Government announces £27bn investment in roads as part of March Budget
The government has confirmed it will invest £27 billion in Britain’s road network over the next five years, including a £2.5 billion fund to fix potholes. The announcement, which came as part of Chancellor Rishi Sunak’s first Budget speech, came alongside a pledge to keep fuel duty at its present rate.
etc"
SP down 22% now recovering.
I couldnt resist buying a few - surely div paying infrastructure cos are a good long term bet?
As well as the huge increase in spending on averting flood risk - very good news for Seymour Civil Engineering - the Chancellor has promised £5 billion for Gigabit capable broadband to be available to all premises across the United Kingdom.
Which should be similarly good news for RNWH's Clarke Telecom:
Https://www.thinkbroadband.com/news/8690-5-billion-for-gigabit-broadband-confirmed-in-budget
Huge flooding expenditure boost now confirmed in the Budget:
"13:25
Flood defences get funding boost
Following widespread recent UK flooding, the chancellor unveils funding to boost flood defences.
"I can announce today that I’m making £120m available immediately to repair defences damaged in the winter floods.
"To support those areas that have been repeatedly flooded, I’m providing £200m of funding directly to local communities to build flood resilience.
"And to protect people and over 300,000 properties, I’m doubling our investment in flood defences over the next six years to £5.2bn."
Terrific news for RNWH - yet another of its core activities is to benefit from increased spending, with flood defence expenditure doubling to £5.2 billion, plus another £120m to spend on repairing the damage after the recent storms:
Https://www.bbc.co.uk/news/uk-51784660
"Floods: Budget will double spending on defences, says Treasury
7 March 2020
Funding for flood defences in England is expected to be doubled to £5.2bn over five years in the forthcoming budget, the Treasury has said.
The money, due to be announced on March 11, will help to build 2,000 new flood and coastal defence schemes and protect 336,000 properties in the country.
Chancellor Rishi Sunak said communities had been "hit hard" in recent floods.
The funding - double the £2.6bn budgeted between 2015 and 2021 - is due to be available from April 2021....
....The chancellor is also due to announced a £120m fund to repair flood defences that were damaged in the recent storms, bringing at least 300 schemes back to full operation, the Treasury said."
Huge markdowns and opportunities all over the market last week. But I fail to see how the virus impacts RNWH in any way, shape or form in a material way given the non-discretionary nature of its services and complete lack of reliance on the global supply chain.
That's the whole point of RNWH's strategy, i.e to eliminate cyclicality or vulnerability. There are profits to take here, and of course in a panic some have done so, but I'm holding mine.
As well as having no exposure to the virus, RNWH will also have had a nice boost just prior to the half year end due to all the storms and rotten weather recently with all the flooding and collateral damage.
For example, here's AMCO beginning work last week on a "major operation" to resolve a huge landslip on a rail line caused by Storm Ciara:
Https://www.cumnockchronicle.com/news/18262879.engineers-working-round-clock-fix-major-east-ayrshire-landslip/
As well as HS2, Boris has announced a series of other transport sector upgrades which will likely benefit RNWH.
Carnell are of course specialists in highways, and also work on cycleways, plus the Beeching upgrades strike me as perfect for RNWH in terms of opening up routes, tunnels etc already in existence:
Https://www.thetimes.co.uk/edition/news/johnson-sidelines-hs2-bosses-over-poor-management-bfz2v9bww
"The prime minister also announced other upgrades outside the capital designed to “level up” Britain. They include £1.5 billion for opening railway lines closed under the Beeching cuts of the 1960s, a £5 billion investment in bus and cycling upgrades and a number of road-building schemes. There will be improvements to the A1 north of Newcastle to the Scottish borders and a series of local upgrades in towns including Hartlepool and Cheadle."