At first glance, investors did not appear to take kindly to Renew Holdings' (RNWH) final results, marking the shares down by 5 per cent in the hours after their publication. On balance, those sales look like profit-taking rather than a vote on the group's robust operational momentum. In fact, strip out amortisation costs and operating profit increased by 8 per cent to £22m, pushing up the margin by 30 basis points on largely flat revenues.
Recently installed chief executive Paul Scott thinks there are two potential fillips to revenue growth in the core engineering services division. This month's £7m purchase of rail specialist Giffen - which recorded revenues of £22m and pre-tax profits of £0.7m in the year to September - could open the door to civil engineering work for London Underground, a long-time client of the acquired firm. Secondly - and perhaps more importantly - Mr Scott believes larger peers' focus on newly sanctioned major capital projects such as Hinkley Point and the second-phase route for HS2 could leave a vacuum of competition for the kind of maintenance contracts that Renew has been so adept at hoovering up.
Broker Numis is forecasting pre-tax profits of £25m in the year to September 2017, giving EPS of 32.1p. That's up from £22.3m and 27.1p in 2016.
RENEW HOLDINGS (RNWH) | ||||
|---|---|---|---|---|
| ORD PRICE: | 400p | MARKET VALUE: | £246m | |
| TOUCH: | 394-400p | 12-MONTH HIGH: | 418p | LOW: 292p |
| DIVIDEND YIELD: | 2.0% | PE RATIO: | 17 | |
| NET ASSET VALUE: | 35p* | NET CASH: | £4.8m | |
| Year to 30 Sep | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2012 | 337 | 8.4 | 7.9 | 3.2 |
| 2013 | 298 | 13.0 | 16.6 | 3.6 |
| 2014 | 465 | 13.1 | 16.8 | 5.0 |
| 2015 | 520 | 16.1 | 21.3 | 7.0 |
| 2016 | 526 | 19.4 | 23.5 | 8.0 |
| % change | +1 | +20 | +10 | +14 |
Ex-div: 27 Jan Payment: 28 Feb *Includes intangible assets of £57.5m, or 94p a share. | ||||
