Falling housebuilding activity fails to offset strong infrastructure as construction PMI dips | CT0, GPE
TClarke (CTO, 142p, £62m mkt cap)
Specialist electrical and building services contractor. HY (Jun) trading update and placing.
Guidance: “Trading has continued to be strong, and the Board remains highly conﬁdent that the group will successfully deliver its growth strategy such that revenues will exceed £500m for the first time in the current financial year”. Net cash at HY, £4.5m.
Trading: Forward order book +33% to record £781m.
Outlook: “TClarke is well-positioned to manage additional revenues in our various market sectors, having proactively invested in resources and capacity to support the group’s growth ambitions. Whilst maintaining the group’s strict approach to tendering, the group is experiencing increased visibility in revenues outside of London and an increasing number of attractive contract opportunities in the London region. The Board is therefore encouraged by the strength of the Group’s position in the market”.
Placing: Oversubscribed placing to raise gross proceeds of £10.7m at 122p per share, subject to shareholder approval (general meeting, 24 July). The issue price represents a discount of approximately 14% to yesterday’s closing price. The placing shares will represent approximately 16.6% of the enlarged ordinary share capital. The net proceeds will “further strengthen the balance sheet and provide additional resources with which to capture and deliver identified short to medium term attractive contract opportunities in the London region – in doing so driving further growth and margin expansion”. HY results, 13 July.
Great Portland Estates (GPE, 433p, £1,100m)
London office and retail property group. AGM/Q1 (Jun) trading update.
Guidance: “Against a challenging macro-economic backdrop that is placing upward pressure on yields, particularly for non-prime spaces, we are pleased with our strong operating performance. Whilst our low levels of vacancy means we have limited space to lease, we had another active quarter with £6.4m of new leasing deals at rents 17% higher than the March 2023 ERV, reaffirming our confidence in our rental value guidance of 0% to 5% growth for the financial year. We are also encouraged by the further £5.3m of rent that we currently have under offer, some 13% ahead of ERV”.
Trading: 22 new leases and renewals signed in the quarter, generating annual group rent of £6.4m, with market lettings on average 16.9% ahead of March 2023 ERV. Investment void rate, 3.6%; 99.2% of rent charged was collected within seven working days. Two acquisitions made for £53.0m: 141 Wardour Street, W1 (33,717 sq ft), £39.0m; Bramah House, SE1 for £14.0m. Following these acquisitions GPE’s portfolio now totals 418,000 sq ft.
Outlook: “Our focus on the best spaces, whether HQ developments, fitted or fully managed, is well suited to meet a market demand that is increasingly discerning. And with our strong balance sheet and plentiful liquidity, we are confident that we have the team and the track record to capitalise on opportunities that are emerging, particularly if the economic uncertainty persists”.
Construction activity. UK construction output slipped back into decline in June, due to a sharp fall in housebuilding, according to the latest S&P Global Purchasing Managers’ Index report. The headline seasonally adjusted index fell to 48.9 in June, from 51.6 in May, and below the neutral 50.0 threshold for the first time in five months. Residential work (39.6, from 42.7) decreased at the steepest pace since May 2020. Aside from the lockdown-related fall in house building, the rate of contraction was the fastest since April 2009, with survey respondents citing weaker demand due to rising borrowing costs. Civil engineering was the best-performing segment (53.1), the second-fastest rise since June 2022, with construction companies noting increasing work on infrastructure projects. Commercial building also expanded at a solid pace (53.0), although the rate of growth slipped to a three-month low. Rising demand for refurbishment projects was cited in June, but some firms reported more cautious decision-making by clients. Softer demand and fewer supply bottlenecks resulted in the sharpest improvement in delivery times for construction inputs since July 2009. This also contributed to an outright decline in purchasing prices for the first time in over 13 years.
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