Guitarsolo
23 Feb 2018
Dividend future Morning All, Well, RNWH seems to have recovered well from the market wobble and is rightly being treated very differently to the other contract service providers out there (MTO, Interserve etc) in the post-Carillion mess. RNWH has matured significantly over the last 5+ years. It is now a market leader in many specialised areas with strong visibility of its earnings. You don't want to be chopping and changing your engineers on decommissioning your nuclear power station after all!So I wonder whether now (or soon) is the time for the board to also show a more "mature" dividend policy (i.e. move towards a higher payout!). Previously, RNWH has wanted to keep its cash for acquisitions and to keep debt low. We like acquisitions when they are bought for the right price and integrated well. However, the larger (and richer) you become the more difficult it gets. The price goes up and there are often more complexities for integration. Whilst wanting to retain sufficient cash to buy something if the opportunity presents (and always keeping debt in check), perhaps we can have a progressive dividend policy? EPS is forecast to be 34p or so in 2018, FCF over 20p and the dividend last year was 9p. We would expect both EPS and FCF to continue to improve (particularly as the loss making Forefront has been disposed of) - albeit probably more modestly than before. How about an intention to increase the dividend to run the cover on EPS down to x2.5 and on FCF to x1.5? That would mean say a 10% increase for the next 5 years at least whilst leaving cash and earnings to build steadily for acquisitions. Just a thought if the board are reading! Why? Well we all like a dividend I suppose! But on a more serious note, becoming an income stock opens RNWH up to a whole new tranche of investment funds which is good for the share price as well.Guitarsolo - does like a dividend!
gretel
23 Feb 2018
Good news for RNWH I see that Amey have taken up Carillions's Network Rail contracts:[link] worth noting that RNWH's AMCO originally bought their tunnelling division from Amey, and that Amey and AMCO seemingly have a close relationship given their work together on major projects.Hopefully this is good news for RNWH.
smilingmickey1
22 Feb 2018
Re: Also tipped on Motley Fool Hi Gretel,Whilst I fully support your bullish view on Somero I'm afraid I'm not with you with respect to Renew. Numis is Renew's broker so I take their upgrade (as with Somero's) with a pinch of salt.Despite it's low debt, (IHMO) Renew had a weak balance sheet at their year end. Since then a slowdown in payments from Government as noted in the recent trading statement, plus the writedown following disposal of the gas business does not help. SM
gretel
20 Feb 2018
Also tipped on Motley Fool [link] increaseTake Renew Holdings (LSE: RNWH) for example. The AIM-listed engineering services group has not only proven it can turn a healthy profit, but has grown its market capitalisation more than ninefold since September 2005 without recourse to new equity.The Leeds-based group operates a number of autonomous subsidiary businesses which provide essential engineering services to maintain and renew UK infrastructure networks. These independently branded businesses have expert knowledge in their individual markets and directly deliver engineering services aligned to the needs of clients, many of whom are responsible for the long-term maintenance and renewal of national infrastructure networks.Strong resultsIn its last completed financial year, the group delivered another strong set of results reflecting the company’s position as a leading provider of engineering services to many of the UK’s critical infrastructure assets and in particular the nuclear, rail and water markets.Group revenue (including £2.2m from a joint venture) increased by 6.7% to £560.8m, with adjusted pre-tax profits up 13.1% to £25.2m, compared to £22.3m reported for the year before. At the end of the 2017 financial year, the group’s order book stood at a healthy £511m, with a net cash position of £3.9m after the acquisition of Giffen Holdings for £7.2m during the year.High barriers to entryRenew’s share price has enjoyed spectacular growth over the past decade or so, but I think there’s plenty more to come from this £250m small-cap . The regulated markets in which the company operates have high barriers to entry and, alongside the group’s extensive expertise in delivering asset care and maintenance, provide strong opportunities for long-term growth.I believe the recent sell-off is unjustified with management confirming it has no financial exposure to Carillion. Herein lies a good opportunity for contrarians to buy on weakness at just 10 times current year earnings. Income seekers may turn their noses up at the relatively modest dividend yield of 2.7%, but payouts are covered more than three times by forecast earnings, leaving plenty of room for hefty hikes in the future."
gretel
20 Feb 2018
Re: Tipped by Numis Nice £60,000 buy at 419p was largely responsible for the move up yesterday. Hopefully bodes well for today too.
gretel
19 Feb 2018
Tipped by Numis Bouncing nicely now. RNWH have been tipped by Numis as one of those likely to benefit most from HS2 and other rail industry developments:[link] Renew Holdings "offers the greatest exposure to rail opex" in the analysts 'universe' of stocks.The rail industry has high barriers to entry which, according to Numis, which suggest that incumbents such as these "will be the major beneficiaries of increased opex and capex workloads."
dazedandconfused
07 Feb 2018
Re: Forticrete Yep. I liked the second half of your initial comment; this chimes with my experience!
smilingmickey1
07 Feb 2018
Re: Forticrete Dazed and confused ,Apologies for confusing the names of Forefront (just sold by Renew) and Forticrete (owned by Ibstock).An analysis of the financial losses incurred by Renew as a result of the acquisition and subsequent sale of Forefront is illuminating.SM
dazedandconfused
07 Feb 2018
Re: Forticrete They're still making roof tiles and other cast concrete building materials, independently.
smilingmickey1
06 Feb 2018
Forticrete I was not surprised with the notice that Renew have sold Forticrete (at a loss.) The market reaction with a price rise, following the notice that Renew have sold (at a loss) this operation is presumably one of relief. In retrospect it's purchase not so long ago, was not a great decision given the various write downs and now disposal.Those interested in the business might like to consider whether the Company is singly targeting to grow itself as a speciality engineering business as its reports suggest, or whether it might just be a conglomerate of a number of smallish independent and disparate engineering operations, acquired over time, that work more or less independently from one another.SM
gretel
05 Feb 2018
RNS re sale of Forefront Good to see RNWH being decisive and despatching Forefront, which has been a rare failure.Crazy selling going on at these levels, especially given today's RNS reiterating: - "The financial performance of the Group remains in line with market expectations" - management can now "focus on the continuing growth opportunities within the remaining parts of the Group", which hopefully encompasses new opportunities arising from Carillion as well as the 5G rollout for Clarke Telecom etc.
tejo
03 Feb 2018
Price fall I think that the sharp fall in the SP is clearly linked to the panic over outsourcing companies but the key question is whether it is justified or not. Especially in the case of Mitie, there was the outrageous policy of taking credit for the estimated profit of the whole of the contract, rather than over its lifetime. For Carillion, Interserve et al. it was the construction activities. We need to understand the nature of Renew's contracts and where the risks are and, most importantly, their accounting policies with regard to the timing of bringing revenue into the P and L account. The high proportion of Goodwill in the balance sheet does not help. We can ignore broker forecasts which are irrelevant in this situation imho
Guitarsolo
01 Feb 2018
Re: Finncap: Buy with 586p target Evening Gretel, I would still say that down 65p or so (15% in a couple of days) is still drastic!Is this just read across from Carillion's demise, Capita and Interserve's profit warnings etc? Personally, I always put RNWH in a different class/bracket to those companies. As Gretel says, there could be some good pickings in rail maintenance etc. So is this just the market disliking any outsource company on the basis that contracts may be overvalued on the balance sheet? As I say, I haven't ever had the same doubts about RNWH that I did about Carillion. They are completely different beasts. I might have a closer look tomorrow. RegardsGuitarsolo
gretel
01 Feb 2018
Re: Finncap: Buy with 586p target Worth noting that RNWH went ex-div today for the 6p final dividend, so today's move isn't quite as drastic as at first look!
gretel
01 Feb 2018
Westminster approves £billions building work It's ironic that the share price should fall just when MPs finally voted yesterday to move out of Parliament to allow repairs to begin.When this happens it will cost billions and should provide huge work for RNWH given their lead role at the building. Meanwhile, RNWH will continue to work on maintaining and improving the current buildings and potentially preparing the new venue too:[link] are now looking remarkably cheap imho on a current year P/E of only 11 and with earnings-enhancing acquisitions likely.
