Renew (RNWH) focuses on securing work on the non-discretionary spending programmes that maintain the UK’s critical infrastructure. Spanning the rail, telecoms, energy and environmental markets, the overwhelming bulk of the business is in ‘engineering services’ – this now accounts for more than 90 per cent of group revenue and over 95 per cent of adjusted operating profit. Sales from the division rose by over a fifth to £565m in 2019, with accelerated activity at the end of the previous rail control period, CP5, driving 8 per cent organic growth. Adjusted operating profit also surged by 21 per cent to £39.4m, benefiting from a full year’s contribution from specialist rail contractor QTS, which was acquired last year.
Sustaining growth relies on being able to secure contracts on long-term framework agreements. The group won all the renewals frameworks it tendered for in CP6 as well as being awarded new positions – significant given that almost two-thirds of engineering services turnover is derived from rail activities. Expanding further into the wireless telecoms market, it also secured a new framework to deliver EE’s 5G roll-out.
Peel Hunt anticipates adjusted pre-tax profit of £39m and EPS of 41.7p for the September 2020 year-end, rising to £41m and 43.8p in FY2021.
| RENEW HOLDINGS (RNWH) | ||||
| ORD PRICE: | 413p | MARKET VALUE: | £311m | |
| TOUCH: | 396-413p | 12-MONTH HIGH: | 438p | LOW: 330p |
| DIVIDEND YIELD: | 2.8% | PE RATIO: | 14 | |
| NET ASSET VALUE: | 123p* | NET DEBT: | 11% | |
| Year to 30 Sep | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
| 2015 | 520 | 16.1 | 21.3 | 7.0 |
| 2016 | 526 | 19.4 | 23.5 | 8.0 |
| 2017 | 544 | 19.8 | 24.5 | 9.0 |
| 2018 | 541 | 14.7 | 13.6 | 10.0 |
| 2019 | 600 | 27.0 | 29.6 | 11.5 |
| % change | +11 | +83 | +118 | +15 |
| Ex-div: | 30 Jan | |||
| Payment: | 6 Mar | |||
| *Includes intangible assets of £115m, or 152p a share | ||||
