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Airport framework win for Amco-Giffen:
hTTps://www.google.com/url?rct=j&sa=t&url=https://www.newcivilengineer.com/latest/amcogiffen-eurovia-and-kier-among-winners-on-manchester-airport-group-700m-civils-framework-17-02-2022/&ct=ga&cd=CAEYACoTNDY2NzU1NzkwNDQyNTA3NTUxMDIcZGM1MjUwNzIzZjE3NTA4Mjpjby51azplbjpHQg&usg=AFQjCNH7nMr9ZYSwBJIAuMMcS6haW3kuHw
More framework involvement for Amco-Giffen:
hTTps://www.google.com/url?rct=j&sa=t&url=https://www.highwaysmagazine.co.uk/Salford-names-winners-on-40m-framework/9546&ct=ga&cd=CAEYACoUMTUyMDU2NDYyNTc5NDk3ODg4NDAyHDMyZTgwOGU1ZDBmNTIzZjQ6Y28udWs6ZW46R0I&usg=AFQjCNFbyQQNlAdXrADXPyamvFFgDyDNsA
Amey quit its 25-year maintenance and management contract with Birmingham Highways Ltd (BHL) on 31st March 2020.
RNWH's Carnell subsidiary are one of the parties interested in this rather sizeable £2.7 billion contract which is now being tendered:
Https://www.theconstructionindex.co.uk/news/view/balfour-and-kier-show-interest-in-27bn-birmingham-highways-contract
Thanks for the info and updates, Rivaldo.
The new issue of SCSW was out this weekend, so it should be OK to reproduce the rather positive coverage of RNWH from the last issue:
"Renew
820p Epic code: RNWH
(Sharewatch) Renew's FY21 results demonstrate the benefit of current and prior year M&A. Revenues increased by 28% from £620m to £791m, helped by a full year’s contribution from Carnell and the in-year acquisitions of J Browne and REL. Pretax profit was up 31% to £50.8m and eps were up 23% to 50.1p. Net debt was £13.3m despite £33m spent on the acquisitions.
Within Engineering Services, which accounts for over 95% of the group’s adjusted operating profit, sales were up 22% to £706.7m with operating profit up 26% to £51.5m, resulting in an operating margin of 7.3% (2020: 7.1%) and the divisional order book has increased from £665m (March) to £679m.
The Rail and Highways divisions were the swing factor behind the 12% organic growth. Renew holds over 50 CP6 maintenance and renewals frameworks across Rail and this segment is >50% of the group whilst the £38m Carnell deal now takes it into the buoyant Highways segment. Although these are mostly about maintenance rather than capex, a helpful tailwind is the government’s National Infrastructure Strategy, which has committed over £24bn investment between 2020-21 and 2024-25 in strategic roads and a £96bn investment in rail infrastructure, which is the biggest in history. Other smaller segments aren’t doing too badly; notably, nuclear works have recovered at Sellafield since early May whilst Water had been weak due to the transition to AMP7 but has been ramping up in H2.
First written about at 79p in January 2007 (and more recently at 430p in Sep ‘20), the shares are now a 10-bagger. Peel Hunt forecasts eps of 53.2p for the current year to end September but if last year’s momentum is anything to go by, these will be well beaten."
Further details on Shore Capital's latest Buy note, with a 930p fair value:
"Renew^ (RNWH, Buy at 709p)
AGM statement Q1 trading in line; attractive entry point
Summary
This morning, the engineering services group, supporting UK infrastructure, announced, ahead of its AGM, that Q1 22F trading, net debt and cash generation were in line with the Board's expectations. The Group order book at 31 December 2021 was £742m (31 December 2020: £677m; 30 September: £749m) and the Engineering Services order book was £687m (31 December 2020: £583m; 30 September: £679m).
Forecasts
We expect to leave our forecasts unchanged but see scope for upgrades. Renew has consistently had a very high level of visibility with c70% of current year forecast sales usually in the order book.
This has helped the group meet or beat consensus profit forecasts in every year since the group came into its current form in 2006.
Valuation and recommendation
We believe Renew represents a good opportunity for investors seeking to benefit from the UK Government's commitment to invest £640bn in infrastructure from 2020 until 2025. Given the nature of the group's variable, cost-plus contracts, we believe Renew is very well placed to pass on inflationary pressures to customers. We also believe it is protected against economic downturns given that its revenue is driven by the public sector.
We continue to believe Renew has a lower risk profile than the market perceives, possibly due to associations with peers servicing much larger fixed contracts. Renew's ability to control costs and resilience during the pandemic has been much greater than the majority of Industrials and worthy of an even greater re-rating, in our view. It is highly unlikely, in our view, that operations will be significantly impacted by restrictions related to the Omicron variant.
We maintain our BUY recommendation and 930p DCF-based fair value (31% upside). We see significant scope for this to be upgraded. As of yesterday's closing price, the shares trade on 13x our FY22F EPS forecast and 9x on an EV/EBITDA basis. We believe the current share price represents an attractive entry point for Renew. BUY"
Amazing performance here after going ex divi yesterday.
Shore Capital remain very keen after yesterday's update:
Https://www.morningstar.com/news/dow-jones/202201263747/ftse-gains-renew-holdings-could-capitalize-on-gbp640-billion-infrastructure-spend
"Renew Holdings Could Capitalize on GBP640 Bln UK Infrastructure Spend
Renew Holdings is a good opportunity for investors looking to benefit from the U.K. government's commitment to invest GBP640 billion in infrastructure, Shore Capital says. What's more, the U.K. engineering-services company's variable cost-plus contracts leave it well positioned to pass inflationary pressures on to customers and its public-sector-driven revenue protects it from economic downturns, Shore adds. "We continue to believe Renew has a lower risk profile than the market perceives, possibly due to associations with peers servicing much larger fixed contracts," the U.K. investment group says. Shore Capital has a buy rating on the stock. Shares trade up 3.8% at 736 pence."
As always today's AGM update is short, and is relatively sweet. Q1 trading and cash generation is nicely in line, the overall order book is steady at similar levels to the year end record highs, and the higher margin engineering order book has continued to increase.
Not long either until the H1 update on 1/4.
Yes, volumes have been decreasing since the current retrace began so sellers conviction looks to be waining. Happy to hold and see how this plays out, 825p my initial target. As someone mentioned on here recently, it’s much appreciated how you find the contract wins etc for RHNW and post here, thank you.
Agreed, the volumes were small yesterday ,and the MMs are simply taking advantage of forced/panic sellers with exaggeratedly low prices. I suspect there may be a sharp bounce back upwards.
Remember only last month RNWH said:
"Current Trading & Outlook
· Positive trading momentum carried into new financial year
· Strong forward order book underpins confidence in achieving further progress in 2022
· Confident in our future prospects and well positioned to capitalise on our strengths to target new opportunities in attractive markets"
Buy order filled at 715p, quite surprising as company looks in great shape. I know it’s wider market sentiment today but anyway, guess I’m back in. Target prices people are expecting?
Thanks Rivaldo for this, and other, news about contract wins! It is much appreciated even if I don't say it every time.
I don't know where you find this stuff but thanks for sharing.
Everything looks pretty rosy for RNWH.
Guitarsolo
Good news for RNWH's VHE - they've just won places on all 3 lots of a sizeable new framework for site remediation works by the Your Housing Group:
Https://www.vhe.co.uk/news/yhg-framework-success-13-01-2022
"YHG Framework Success
VHE are absolutely delighted to announce that we have secured a place on all three lots of the Your Housing Group Framework Agreement for Site Remediation Works. The framework is in place to ensure that YHG sites are in a condition fit to begin development for residential properties."
The work is detailed here - not sure if they replicate each other or not, so the total could be £20m or up to £30m for the total framework:
Https://bidstats.uk/tenders/2022/W02/766640478
Https://bidstats.uk/tenders/2022/W02/766640532
for RNWH's Shepley Engineers:
https://cumbriacrack.com/2022/01/14/west-cumbrian-firms-win-7-million-nuclear-contract/
"Joint venture success for Shepley and React
14/01/2022
Two Cumbrian businesses are celebrating success on a new £7 million waste management framework after forming a joint venture.
Nuclear Waste Solutions – formed by React Engineering and Shepley Engineers Ltd – has won a place on the four-year framework with the Low Level Waste Repository Ltd (LLWR) to provide Expert Support and Alternative Treatment (ESAT) Framework.
LLWR is leading the implementation of the UK strategy for the management of solid low level radioactive waste from the nuclear industry.
Nuclear Waste Solutions will provide LLWR and waste generators throughout the UK, to undertake a full range of projects from small scale consultancy or specialist technical support tasks, through to multi-million pound, full-lifecycle waste management projects involving engineering design and installation activities as well as support to on-site operations.
React and Shepley have a long history and track record of working closely together to successfully deliver lifecycle waste management solutions across the NDA estate.
Since 2006, both organisations have played a key role in the ongoing success of Cumbria Nuclear Solutions Limited (CNSL) at Sellafield and have collaborated successfully on a range of other projects and ventures across the NDA estate.
etc"
£2m of contract wins already this month for Seymour Civil from two local councils:
Https://bidstats.uk/tenders/2022/W02/766640242
Https://bidstats.uk/tenders/2022/W01/766247026
Also this month, VHE have won a share of a £20m framework contract by Your Housing Group:
Https://bidstats.uk/tenders/2022/W02/766640478
And of a £10m framework from the same group:
Https://bidstats.uk/tenders/2022/W02/766640532
Another contract win, this for Seymour Civil as part of a £1.6m Townscape scheme in Seaham, Durham:
Https://www.sunderlandecho.com/business/scheme-to-enhance-access-in-seaham-to-begin-in-new-year-3510706
Happy New Year to all - it's been an excellent 2021 here and prospects for 2022 look extremely rosy too.
News this week on the refurb of the Palace of Westminster, which could now cost £14 billion - of course RNWH are already hugely involved at this location . And in addition RNWH's Seymour Civil in particular should also be benefiting from the annual costs of maintenance and other projects rising fast:
Https://www.thetimes.co.uk/article/westminster-repairs-could-last-20-years-and-cost-14bn-r35pm50h5
Extracts:
"Westminster repairs could last 20 years and cost £14bn
MPs and peers will have to move out of the Palace of Westminster for up to 20 years under a restoration plan that could take the cost of repairs to £14 billion, three times the original estimate.
The plan will be announced in the new year amid fears that the 19th-century building is falling down faster than it can be repaired. The last time MPs left was during the Blitz in 1941."
"The cost of managing the deterioration of the building is rising, and recent maintenance and continuing projects cost £127 million in one year alone. Weekly costs more than doubled between 2015 and 2019 to about £2.5 million."
RNS this morning - the next trading statement is coming soon via the AGM on 26th January:
Https://uk.advfn.com/stock-market/london/renew-RNWH/share-news/Renew-Holdings-PLC-Annual-Report-Accounts-and-No/86860248
Good to see the directors encouraging questions via email beforehand to info@renewholdings.com.
Shore Capital say Buy, with a 930p target and "significant scope" for upgrades.
They conclude:
"Forecasts
We expect to leave our forecasts unchanged but see scope for upgrades. Renew has consistently had a very high level of visibility with c70% of current year forecast sales usually in the order book. This has helped the group meet or beat consensus profit forecasts in every year since the group came into its current form in 2006.
Valuation and recommendation
We believe Renew represents a good opportunity for investors seeking to benefit from the UK Government's commitment to invest £640bn in infrstructure from 2020 until 2025. Given the nature of the Group's variable, cost-plus contracts, we believe Renew is very well placed to pass on inflationary pressures to customers. We also believe it is protected against economic downturns given that its revenue is driven by the public sector.
We continue to believe Renew has a much lower risk profile than the market perceives, possibly due to associations with peers servicing much larger fixed contracts. Renew's ability to control costs and resilience during the pandemic has been much greater than the majority of industrials and worthy of an even greater re-rating, in our view. It is highly unlikely, in our view, that operations will be significantly impacted by restrictions related to the Omicron variant.
We maintain our Buy recommendation and 930p DCF-based fair value (16% upside). We see significant scope for this to be upgraded. As of yesterday's closing price, the shares trade on 15x our FY22F EPS forecast and 10.5x on an EV/EBITDA basis."
Cheers ricardofin - a Buy tip in the IC should bring in further interest here. And note that the "increased government spending" also applies to every other area of RNWH's business including water, 5G, nuclear etc, as well as roads and rail.
The company avoids many of the booms and busts that have floored competitors by forgoing the highly competitive (and capital-intensive) new build market, focusing instead on maintenance and renewal work for utilities, rail and highways customers.
Procurement for this sector is generally over 5 to 10 year cycles and about three-quarters of Renew's contracts are carried out through target price arrangements, which have a mechanism allowing for adjustments to cover for exceptional cost inflation. Clients also commission work through operating rather than capital budgets, which leaves the company less exposed to downturns.
As a result, Renew has a history of steady, profitable growth, using the cash it generates to buy businesses along the way. Over the past year, it has strengthened its presence in the water business in the South East through the £29.5m purchase of Browne in March and spent an initial £3m in May (with a further £2.3m dependent on future targets) buying rail electrification specialist REL.
These contributed to a cash outflow of around £23m in the 12 months to September but net debt (excluding leases) of £13.7m at the year-end is well covered by earnings – the company’s operating profit climbed a quarter to £41.1m.
Over the past five years, cash profit has grown by an average of about 15 per cent a year. This predictability has attracted fans among investors and its share price is up 60 per cent since the start of 2021.
Increased government spending on roads and rail mean the outlook for the sector is upbeat, though, and at 15 times’ broker Peel Hunt’s forecast earnings for next year Renew’s shares don’t look too expensive. Buy.
Well Done I say
Absolutely Rivaldo!
A cracking set of results, and largely predicted. The company seems to be right in the sweet spot to benefit from many of the necessary updating/rebuilding of critical infrastructure.
What continually impresses me is that management remain focused on the good margin work and aren't chasing revenue for revenue's sake. They have an excellent track record of bolt-ons and organic growth.
Note to tie in with previous threads; Net debt stands at £13.7m. So after the acquisitions of Browne and REL they are doing exactly what they have done before; pay down the debt rapidly and have a clean balance sheet for more acquisitions. Big thumbs up from me for that one!
Well done RNWH!
Apparently Peel Hunt have now increased their target price to 1000p.
Absolutely outstanding full year results, and importantly an equally confident outlook supported by the rising order books.
The results are even slightly ahead of the latest upgraded forecasts, particularly the dividend, which at 16p - almost doubled from last year - is well ahead of 14.5p expectations.
RNWH state they continue to look at acquisitions in their own and new sectors, so I'd expect them to use their healthy balance sheet to good effect in the near future.
If you look through the various divisions the growth prospects are enormous, and RNWH already have the presence in those areas to take advantage.
Congrats to the management - and the new non-exec director also appointed today sounds just the ticket for bringing in new business and contacts.
Peel Hunt yesterday reiterated their Buy and 900p target price:
Https://investing.thisismoney.co.uk/broker-views/