Speedy Hire (SDY) saw a modest 0.9 per cent increase in revenue from its UK and Ireland hire business in the first-half, against a more competitive equipment rental market. Yet this belies an impressive 27 per cent increase in sales to higher-margin small- and medium-sized enterprises (SMEs), which helped to offset price deflation elsewhere.
Aided by expanded use of technology, asset utilisation improved by 0.3 percentage points to 56.5 per cent, with depot stocking levels of the most popular products now based on predictive demand. Return on capital employed (ROCE) remains above the weighted average cost of capital – meaning Speedy is generating value from its investments – and increased by 0.4 percentage points to 12.7 per cent.
Accounting for over two-fifths of overall revenue, growth in capital-light services should move ROCE closer to the medium-term 15 per cent target. With sales from equipment testing, inspection and certification business Lloyds British up by a fifth, services revenue increased by 14.2 per cent. Geason Training, which was acquired last year, is enabling cross-selling to the hire division.
Net debt has come down by 5 per cent since the year end to £85.3m, equivalent to 1.1 times cash profits. This should reduce further following the post-period sale of surplus land to Bellway Homes for a pre-tax profit of £3.9m.
Peel Hunt expects adjusted pre-tax profit of £37.5m and EPS of 5.8p for the full year, rising to £41m and 6.3p in 2021.
| SPEEDY HIRE (SDY) | ||||
| ORD PRICE: | 56p | MARKET VALUE: | £294m | |
| TOUCH: | 53-56p | 12-MONTH HIGH: | 65p | LOW: 45p |
| DIVIDEND YIELD: | 3.8% | PE RATIO: | 12 | |
| NET ASSET VALUE: | 40p | NET DEBT: | 41% | |
| Half-year to 30 Sep | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
| 2018** | 195 | 14 | 2.1 | 0.6 |
| 2019 | 206 | 16 | 2.6 | 0.7 |
| % change | +6 | +21 | +25 | +17 |
| Ex-div: | 5 Dec | |||
| Payment: | 10 Jan | |||
| *Excludes lease liabilities of £75.1m, **Restated | ||||
