The latest Investing Matters Podcast episode featuring Jeremy Skillington, CEO of Poolbeg Pharma has just been released. Listen here.
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Another new long-term framework win in water and wastewater announced yesterday:
Https://jbconstruction.co.uk/news-blog/enisca-browne-framework-award
"Enisca Browne Framework Award
May 19, 2022
Enisca Browne is pleased to announce the award of the Northumbrian Water Low Complexity MEICA Works framework agreement. The framework covers water and wastewater asset improvements across the Northumbrian Water and Essex & Suffolk Water regions and runs until 2026 with an option to extend for a further 4 years.
This follows the further award of the Water Treatment Construction and Engineering (ESW) Framework Agreement earlier this year."
With 26.2p EPS in H1, plus
- the usual H2 seasonality
- an entire H2 unaffected by the pandemic
- the large water, rail and road infrastructure frameworks now kicking in
there's a very good chance imo that broker forecasts will be beaten.
Shore Capital say Buy, noting:
"Renew has consistently had a very high level of visibility with c.70% of current year forecast sales 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."
"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".
Numis have retained their 900p target price - and have now upgraded to Buy (from Add).
They note that their unchanged forecasts are conservative, given that the H1 actuals therefore imply a forecast 4% decline in EBITA in H2! In addition, last year's numbers split 47%/53% H1/H2, so the seasonality further indicates that the year's outturn should be pretty strong against forecasts.
Numis summarise:
"Renew's 1H22 results were in line with our expectations, and reflected a period of consistent delivery against a backdrop of mounting supply chain and inflationary concerns. With H2 having started well and in line with management expectations, we leave our forecasts unchanged. We believe that the Group's direct delivery model, its position on long-term frameworks, and its exposure to UK infrastructure opex spend, are all factors that should help to business remain resilient in a more uncertain environment. We retain our 900p PT and upgrade to BUY from ADD."
"Valuation: The shares have sold off along with the wider market since December's Prelims, and now trade on a FY23E PE of c.12x and EqFCF yield of c.7%. We do not think these multiples reflect the Group's track record of performance, strong balance sheet, or favourable end market exposure, hence our upgrade to BUY"
Excellent H1 results.
Given the H1 performance RNWH look likely to beat forecasts of 53p-55p EPS this year imo.
The order books are rising, margins are increasing, RNWH are almost into a net cash position again, the risk-averse should love the pension scheme buy-in, and the divi is up 17%.
Above all, the outlook is extremely confident. There are growth prospects in so many areas - water, rail, ESG/green, nuclear, EVs, 5G/telecoms - and all largely underpinned by long-term frameworks with little discretionary spending.
Tuesday 17 May Renew Holdings PLC Half Year Results
RNWH's VHE are one of the companies newly selected for a £1.1bn demolition and land preparation 4 year framework:
Https://www.constructionenquirer.com/2022/05/10/winners-revealed-for-1-1bn-demolition-framework/
More coverage on VHE's web site:
Https://www.vhe.co.uk/news/vhe-success-on-the-pagabo-demolition-and-land-preparation-framework-10-05-2022
"VHE success on the Pagabo Demolition and Land Preparation Framework
VHE Construction plc are please to announce that we have secured a place on the Pagabo Demolition and Land Preparation Works Framework for the next 4 years.
We are on all of the Land Preparation Lots from the Midlands up to and including Scotland and are looking forward to engaging with the frameworks ecosystem and the opportunities that it will bring."
Bed and ISA of a few shares completed at basically neutral cost after today's 20p+ drop! Still a few more to go but now the latest batch are in their final destination these shares can remain there forever!
RNWH's Clarke EV are partnering with Volvo to install electric charging infrastructure across 27 of its dealerships around the UK.....
Https://theenergyst.com/volvo-trucks-to-install-ev-charging-infrastructure/
Extracts:
"Clarke EV is fitting 180 Swarco charge points, including a mix of AC charging posts and DC charging stations, at the manufacturer’s Volvo Truck and Bus Centre North & Scotland and Volvo Truck and Bus Centre South & East dealer locations.
The work is expected to be completed by June 2022."
“Initially, the focus is on ensuring our courtesy car fleet is 100% electric by June 2022; but the next stage will be looking at electrifying our van fleet too.”
In addition, Numis have a 900p target now and conclude as follows:
"RENEW (ADD 900p). Trading update.
First half trading was in line with management’s expectations and the Board remains confident in prospects for the full year. The order book has remained in line with the AGM position (up 10% YoY to £742m), underpinned by long-term framework positions. The business continues to successfully navigate industry-wide material shortages and inflationary challenge effectively, without material impact on trading. Net debt and cash generation are also in line with expectations, and we forecast pre-IFRS 16 net cash of c.£8m at Sep-22E.
We believe the shares have unjustly underperformed, down 18% over the past 3 months, and this update reaffirms the attractive defensive attributes of the business. The shares trade on a FY22E EV/EBIT of 9.9x and a P/E of 12.6x."
Shore Capital have a 930p valuation per their post-AGM research update, so lots of upside.
And "scope for upgrades" too
Extracts:
"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 forecasts 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."
"We maintain our BUY recommendation and 930p DCF-based fair value (36% upside). The shares have fallen 18% YTD after a very strong two-year run, presenting an attractive entry point. As of yesterday's closing price, the shares trade on 12.5x our FY22F EPS forecast and 8.4x on an EV/EBITDA basis."
The AGM trading statement is encouraging and solid as ever, being in line with expectations and showing good cash generation.
With 54p-55p EPS expected to 30th September this year RNWH's defensive qualities, balance sheet strength (another acquisition soon perhaps?) combined with high growth potential in a number of sectors should hopefully see a return to 800p+ soon:
Https://uk.advfn.com/stock-market/london/renew-RNWH/share-news/Renew-Holdings-PLC-H1-Trading-Update/87724128
Thanks Rich! It's a very bad time of year to be releasing any sort of updates! I'll feel better once the entire holding is inside ISAs but that might take a while and I would prefer to do it in small-ish lumps to avoid being caught out...
GS
Just checked again - its the INTERIM results which are due this Friday.
Rich
According to Investors Chronicle on line diary - RNWH trade update is expected this Friday.
Thanks Rivaldo et al,
I recall in previous years noticing with annoyance the results being in or around end of tax year time! I think previously I just left the bed/ISA routine for a quieter time of year away from results. The only reason I am thinking differently is to avail myself of CGT allowance that (hopefully) will be used by something else next year! Anyway, thanks for the effort to reply everyone but I also checked out the Renew Investor's Financial Calendar page and it says interim results will be "May 2022", so that might give me a window if things line up between now and 5th April! I hate doing this bit!
Guitarsolo
Looks like the new Sizewell C nuclear power plant will now go ahead with government support etc:
Https://www.thisismoney.co.uk/money/markets/article-10657317/Government-set-20-stake-new-nuclear-power-plant-Sizewell.html
This is good news for RNWH given Seymour Civil's existing large presence at Sizewell B (and Sellafield etc)
Good news for RNWH's Clarke EV subsidiary with heavily increased funding for EV charging points just announced:
Https://www.investorschronicle.co.uk/news/2022/03/25/today-s-markets-stocks-steady-government-looks-to-charge-up-ev-infrastructure/
"Government, BP, throwing cash at EV charging anxiety
The Department for Transport has announced plans to support a tenfold increase in the number of electric vehicle charging points across the UK as the focus shifts from consumer anxiety over the range of battery-powered cars to the practicalities of keeping them charged.
A new Electric Vehicle Infrastructure Strategy will provide a £450mn Local Electric Vehicle Infrastructure fund to provide EV hubs and other on-street charging. When added to the £950mn Rapid Charging Fund announced in September last year and other commitments, the department said it was providing £1.6bn to help build a network of 300,000 charging points around the UK by 2030. This equates to almost five times the number of existing fuel pumps.
"No matter where you live – be that a city centre or rural village, the north, south, east or west of the country – we’re powering up the switch to electric and ensuring no one gets left behind in the process," transport secretary Grant Shapps said.
Oil giant BP (BP) also committed a further £1bn to develop new charging infrastructure on Friday. It will fund "more high-speed charging in dedicated hubs and on existing fuel and convenience sites" as well as providing more home charging services, BP pulse senior vice president Richard Bartlett said."
More detail here:
Https://www.edie.net/news/13/Electric-Vehicle-Infrastructure-Strategy--UK-Government-to-pledge--1-6bn-for-public-chargers/
Last year's H1 trading update was on 26th March, and 2020's was on 1st April, so that should be any time in the next week or two!
Interim results are due in May... That's all I've been able to find so far!
Morning All,
Does anyone know of any planned annoucements between now and say mid-April? (e.g. results, "we'll give an update by...." type dates)
Thinking of trying to do a bed/ISA on a few shares but always find those few days in between a bit fretful when it's one of my hold forever type shares! I can't do anything about spontaneous RNSs but just trying to avoid any planned updates.
Thanks for any help.
Guitarsolo
While ever the UK government is talking about capital investment, levelling up the regions etc. this company will be a huge beneficiary. It's a great defensive stock in the current climate and should do well even if inflation persists. Thanks for all the updates rivaldo, you're clearly following this one closely and it is a good stream of news you are providing us.
RNWH are now on a current year P/E of only around 12.6, have terrific visibility of revenues and defensive attributes, yet have high growth potential in a variety of sectors and have a secure Balance Sheet with the potential for further earnings-enhancing acquisitions.
Good to see buying at 690p this morning and the bounce continuing.
News that Clarke Telecom are building a "radio base station, featuring a 25-metre lattice tower for nine antennas and six transmission dishes in the 2,760-acre Wykeham Forest, at Hackness, near Scarborough".
Hopefully lots more work to come under the Government-backed scheme outlined in the article:
Https://planetradio.co.uk/greatest-hits/yorkshire-coast/news/mobile-coverage-wykeham-forest-hackness-scarborough/
"The proposal is part of the Government-backed Shared Rural Network scheme in which Three, Telefonica and Vodafone are working to improve mobile coverage for people living, working and travelling in areas where installing mobile infrastructure has not previously been considered commercially viable or too problematic."
Tipped here on Motley Fool by a Buffett follower:
Https://www.fool.co.uk/2022/03/02/how-im-picking-2-cheap-growth-stocks-using-warren-buffetts-method/
"The second business is Renew Holdings, a support services firm specialising in construction and engineering. Its compound annual EPS growth rate over the past five calendar years is 6.3%. While this is not as high as Pan African Resources, it is certainly competitive and consistent. However, the firm posted net debt of £13.7m for the 12 months to 30 September 2021, down from a net cash position of £300,000 in the previous year.
Its forward P/E ratio, of 12.41 at a current price of 680p, is significantly lower than Balfour Beatty‘s. The latter is a competitor and has a forward P/E ratio of 26.07. Renew Holdings recently bought J Browne for £29.5m and this provides greater exposure to the water business. New clients include Thames Water and Southern Water. It appears Renew is putting its earnings to good work.
I’ve always found Warren Buffett’s techniques useful. I will buy both Pan African Resources and Renew Holdings without delay, acquiring two cheap growth stocks in the process."
Absolutely agree Rivaldo - I've been adding on the way down and bought more yesterday at 590p.
This is clearly a UK defensive stock with most work contracted way ahead, plus a moat to entry working on nuclear reactors etc.
Buy and hold for market to recover - hopefully the Ukraine war can be sorted out soon for the suffering people in Ukraine.
Crazy markdowns for a company with perfectly secure revenues and margins and growth prospects we all know about. And no exposure to Russia/Ukraine.
Obviously this is across the entire market, but some drops are more absurd than others.