Renew Holdings (RNWH) has made a strong start to FY2019, clocking up a record performance in the six months to March. This is partly due to the benefit of last year’s acquisition of QTS, but new framework agreements secured in energy and infrastructure have improved prospects for the engineering support services group.
It acquired rail contractor QTS last May in a bid to strengthen its rail infrastructure business ahead of a planned 25 per cent increase to spending on operations, maintenance, support and renewals in the current regulatory ‘control period’. The deal appears to have been a wise move; Renew reported a 110 basis point increase in the adjusted operating margin, while adjusted EPS rose 15 per cent. Statutory profits benefitted from an exceptionally weak comparator after the group took a loss on the disposal of gas pipe business Forefront in February last year. Still, on an adjusted basis profits rose 39 per cent.
Much of the non-discretionary work that Renew targets is won through framework agreements, and it succeeded in joining a wide range of such agreements in the period. It won places on, among others, a decommissioning services framework for the Dounreay nuclear reactor, the Environment Agency’s flood and coastal risk management programme for the South-East, and its first framework related to 5G cellular technology. It’s order book now sits at £580m, up from £558m in September.
Broker Numis is forecasting EPS of 39.9p for the Sept. 2019 year-end, up from 35.6p in FY2018.
| RENEW HOLDINGS (RNWH) | ||||
| ORD PRICE: | 422p | MARKET VALUE: | £ 318m | |
| TOUCH: | 422-434p | 12-MONTH HIGH: | 430p | LOW: 330p |
| DIVIDEND YIELD: | 2.5% | PE RATIO: | 15 | |
| NET ASSET VALUE: | 109p* | NET DEBT: | 21% | |
| Half-year to 31 Mar | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
| 2018 (restated) | 261 | 2.4 | 0.17 | 3.33 |
| 2019 | 301 | 14.5 | 15.58 | 3.83 |
| % change | +15 | +511 | - | +15 |
| Ex-div: | 06 Jun | |||
| Payment: | 12 Jul | |||
| *Includes intangible assets of £118m, or 157p a share | ||||
