gretel
01 Feb 2018
Finncap: Buy with 586p target Finncap say Buy with a 586p price target (40% upside).They note that "Renew could see some benefit from Carillion's demise with rail maintenance a key target", via (1) increased market share on the national network or (2) with London Underground through the Giffen acquisition. This is all "essential maintenance work".Funnily enough, Finncap quote "Renew's strong balance sheet" and strong reputation as being attractive to ex-Carillion clients.They believe their is "significant upside", due to:- "ROCE significantly ahead of the peer group"- "strong balance sheet"- "prospect of reinvesting cash flow into enhancing acquisitions"
tejo
31 Jan 2018
Trading update Update seems to indicate that growth has stalled which is not what market expected.
Guitarsolo
31 Jan 2018
Re: Good trading update today Thanks Gretel, Trading is in line with the board's expectations......but the market seems to have wanted more! I can't see that the modest reduction in the order book warrants a 6% fall. Personally, I would say it is the quality of the order book (i.e. profit margins) that matter more. So I am happy to sit on these - as I always have been. I'd buy more if I had the funds!Guitarsolo
gretel
31 Jan 2018
Good trading update today Nice, solid trading update in line with expectations.Higher margin Engineering Services order books are up even if the overall order book is slightly down.I'd expect another acquisition soon since it's been a while since the last one:[link]
gretel
21 Dec 2017
Good news from Selafield Kudos for RNWH's Shepley Engineers, namechecked here in this big project at Sellafield, completed "three months early and under budget: [link] note that the main contractor was Cavendish Nuclear Solutions.It so happens that Cavendish Nuclear Solutions, part of Babcock, announced on Monday a 10-year contract win at Sellafield worth £95m over just the first 3 years. I suspect Shepley will be nicely involved given their record.
gretel
04 Dec 2017
Tipped by Finncap today Finncap's quarterly note on the Support Services sector is out today. In it, they highlight how infrastructure will be disrupted by smart technology.They highlight six companies well placed to benefit from this transformation. RNWH is one of them (I also hold DSCV, which is another):"Renew specialises in maintenance and renewal work for UK infrastructure. Itselectrical engineering skills mean that it is well placed to help clients implementsmarter solutions. Renew also has particular expertise in the provision of 2G, 3G,4G and Wi-Fi technologies. Communication technologies (particularly theforthcoming 5G) are key to Smart Infrastructure."Tejo, the spread is wide in name only - especially online you can usually deal well inside both the bid and offer prices.
tejo
01 Dec 2017
wide spead Does anyone know why there is such a consistently wide spread on RNWH?
gretel
29 Nov 2017
Re-opened rail lines good for RNWH? The Times reports that hundreds of miles of previously closed rail lines are to be re-opened. This should bring in much additional tunnel work, maintenance etc for RNWH - presumably including lots of preparatory work:[link] lines axed by Beeching will reopen to tackle overcrowding crisis"Hundreds of miles of rail lines shut under the notorious Beeching cuts 50 years ago will be reopened as part of plans to tackle overcrowding and boost capacity on the network.The Department for Transport will announce today that bids will be invited from metro mayors to resurrect some of the 5,000 miles of tracks closed in the late 1960s. Chris Grayling, the transport secretary, said talks had already begun to reopen five commuter lines to ease pressure on a network “bursting at the seams”. Many are freight lines that will be redeveloped for passengers. This includes the lines from Okehampton to Exeter and from Portishead to Bristol, a new passenger route through Birmingham and a new link from Ashington and Blyth into Newcastle. The reopening of the Varsity line between Oxford and Cambridge is scheduled for the mid-2020s. etc"
gretel
28 Nov 2017
Re: New Finncap Buy note today Here's the summary page from the new Finncap note FYI: "Essential services carefully selected BUY Renew provides essential repair and maintenance services for UK infrastructure. These are very large, long-term markets providing significant potential for growth, but the key to Renew’s model is being selective with a focus on profits rather than just sales. Hence, while underlying Engineering Services sales in FY 2017 were flat, underlying EBIT was up +12% and total EPS up 17%. With very high and rising ROCE, strong cash flow characteristics and the potential from large, defensive long-term markets, we reiterate our Buy recommendation.Essential services. Renew repairs and maintains the UK’s infrastructure. It has a strong position in the rail, nuclear energy and water markets, providing mechanical, electrical and civil engineering services.Large end markets. Renew provides its work through framework agreements that typically last for 3-5 years, but the requirement for the work will continue indefinitely. For instance, £3bn p.a. is being spent on nuclear decommissioning and Network Rail has £48bn of funding for 2019-24 (up from £41bn).Rising margins. Evidencing Renew's selective approach, operating margins rose to 4.6% in FY 2017 (2016: 4.2%) and are up from 3.5% three years ago. The risk to these margins is relatively low with the vast majority of work completed on a cost reimbursable or plus basis.Strong cash flow. Despite the acquisition of Giffen requiring a working capital injection in FY 2017 (as planned), operating profit conversion into cash has averaged 103% over the past three years.Highly differentiated. Renew employs staff directly, uses relatively little capital and completes relatively small, repeatable jobs in regulated industries where health & safety and technical competence are key. This is very different to the majority of contractors.Target price of 586p supported by free cash flow and ROCE. We maintain our target price of 586p, which now equates to a mkt. cap/FCF of 22.4x in calendar 2017. This is still a 9% discount to wider contracting peers who generally have a much poorer track record and very different risk profile."
gretel
27 Nov 2017
New Finncap Buy note today Finncap have issued a big new 9-page note this morning, reiterating their Buy and 586p target price.They note that even this 586p target is "still a 9% discount to wider contracting peers who generally have a much poorer track record and very different risk profile".....Which would imply a 644p target price to put RNWH on the same rating as its peers, i.e around 50% upside from here.More extracts at a later date.
gretel
24 Nov 2017
The IC says Buy today Here's their tip as posted elsewhere:"You can only delay infrastructure spending for so long. That forms one of the underlying investment themes for Renew (RNWH), particularly over the long haul. The Leeds-based group provides support for the UK’s infrastructure, in areas such as rail and water; where the imperative to commit funding for maintenance and renewal has moved from desirable, through to compelling, and in some cases critical.The 4 per cent rise in the engineering services order book in the year to September is therefore welcome, not only because the division generates four-fifths of group revenue, but as it underlines an “established position in long-term" – and crucially – "non-discretionary programmes”. Another telling metric is the 40-basis point increase in the underlying operating margin. Renew has tried to boost the quality of earnings to ratchet up margins. To this end, the group has exited its lossmaking small diameter gas pipe replacement activities. However, disregard the resulting £5.8m impairment charge and amortisation, and underlying profit was 16.4 per cent up at £25.6m.After a strong increase in the year to September, revenue at the specialist building business could reduce by as much as £35m this time around. Despite this, Renew is confident the division's operating profit will hold steady.Broker Numis gives adjusted pre-tax profit of £26.7m for the September 2018 year-end, giving to EPS of 34.3p, compared with £25.3m and 33.1p in FY2017.IC ViewAs Simon Thompson has pointed out, even a slight improvement in margins will amplify profitability, so impressive is Renew's top-line growth. With the shares changing hands at an undemanding 12 times forecast earnings, we reiterate our buy call."
gretel
22 Nov 2017
Re: Results are ahead of expectations Good coverage of the results here, with some good quotes from the CEO:[link] ​Leeds-based group works on critical infrastructure assets, such as nuclear, rail and water maintenance, so money has to be spent on projects despite what is happening in the wider economy. Renew's chief executive Paul Scott said: "We are accessing non-discretionary funding programmes. Not doing them is simply not an option.""The (Giffen) acquisition broadened our offering as a major engineering services provider to Network Rail, as well as​ ​providing services to London Underground and Train Operating Companies​," said Mr Scott.​ "The integration of Giffen is going well. We've made good progress. We are now working with London Underground. These are areas we couldn't get into before.""Renew operate​s​ across the energy market for clients including Sellafield, SSE, Magnox​ and​ E.ON​. ​"​We are well positioned on key frameworks associated with high hazard risk reduction operations at the​ ​Sellafield nuclear site in Cumbria​," said Mr Scott​. ​"​We are strategically placed on all three lots of the ten-year​ ​Decommissioning Delivery Partnership Framework that has an estimated value of £500m with the headroom to increase to £1.5bn over the term to 2025. "Renew was appointed as sole supplier on the national seven-year MEICA Framework for Canal and​ ​River Trust which will see ​it​ support 1,000 water assets for this new client. At the Palace of Westminster, ​Renew said ​the cast iron roof restoration is progressing well and puts ​the group​ in a good position​ ​for future opportunities at this World Heritage site. During the year, the Courtyards Conservation Framework​ ​was extended to 2025."
dazedandconfused
21 Nov 2017
Re: Results are ahead of expectations i would have thought their earthmoving and land regeneration arm, VHE, was distinctly right IN the 'construction' sector? But i agree much of their rail and west cumbria business is in the maintenance side of work, but still see it as 'construction'. And therefore cyclical, as governmental whims and winds change...
wineberry
21 Nov 2017
Re: results There's nothing wrong with taking some profits, although run your winners is usually good advice. This is a company with its business in the UK; it's achieving steady growth of earnings etc and increasing its dividend. The PE is c21 which I don't find excessive. No debt. Boring, clear visibility of earnings etc - looks good to me.
gretel
21 Nov 2017
Re: Results are ahead of expectations I do like this company dazed! Very much so.RNWH are not in the construction sector (except for a small involvement in the niche luxury residential sector via Walter Lilly).They are in specialist repair and maintenance areas which aren't cyclical, and which should benefit nicely from increased governmental expenditure in the forthcoming Budget.RNWH's sectors are in the likes of nuclear, rail, flood defence etc, all of which have to have a certain - and usually increasing - level of spending each year. This spending is mostly non-discretionary, so is not subject to budgetary whims, cutbacks etc.
