Property & Construction Daily

The Property & Construction Daily provides a sector-specific comment from leading analyst Alastair Stewart. His daily perspective provides a round-up of market statements, news, economics and views from the property and construction sectors.

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July 11, 2023


Company research

Forterra (FORT, 162p, £345m mkt cap) – FORT is a client of PERL

UK’s second largest brick producer and leading building materials producer. HY (Jun) trading update. Link to Progressive Equity Research note, Resilient H1 but more gradual recovery in H2:

“Forterra has announced it expects to report ‘resilient’ H1 23E results broadly in line with its expectations despite challenging trading conditions. However, the recent industry-wide fall in brick deliveries and general market uncertainty mean that an anticipated recovery in the second half is likely to be more modest than previously expected. We are cutting our FY23E EBITDA estimate by 20% but believe new efficiency measures will leave the group well positioned to benefit when housebuilding recovers.”


Galliford Try Holdings (GFRD, 195p, £204m)

UK construction and infrastructure services group. FY (Jun) trading update.

Guidance: “Full year pre-exceptional profit before tax expected to be at the upper end of current analyst forecasts [£22.1m to £23.3m; FY22, £19.1m]. c. £220m of cash at 30 June 2023 (2022: £219m) and average month-end cash [the key metric] during the financial year of circa £135m (2022: £174m). Orders +9%, £3.7bn. Already-announced 12p special div. Trading: “Strong performance across all operations. This performance has been achieved against a backdrop of macroeconomic challenges, including delays in signing new contracts during calendar year 2022, which are now easing. We are successfully managing and mitigating the risks of material shortages and inflation, which are now subsiding. We have successfully integrated our acquisitions of nmcn’s water businesses, in October 2021, and more recently MCS Control Systems and Ham Baker and we are starting to see the positive impact of these specialist teams in our Environment business and across significant AMP 8 opportunities”.

Outlook: “The group’s operations are predominantly in the public and regulated sectors and we are well placed to deliver on local and national commitments to improve the UK’s economic and social infrastructure. Our strategy is founded on a disciplined approach to bidding and overall risk management. The delays to new contract awards seen during 2022 have now eased, contributing to a very strong orderbook at 30 June 2023 and increased level of revenue secured for the new financial year. The group expects to report another year of strong performance across all its operations with increased revenue and profit before tax and we continue to progress our Sustainable Growth Strategy, supporting our financial targets to 2026”. FY results, 20 September.


Travis Perkins(TPK, 193p, £1,684m)

Leading UK builders’ merchant and owner of Toolstation.

Crest Nicholson Group Finance Director Duncan Cooper will step down from the Board to take up the role of CFO at Travis Perkins. He joined the group in 2019 and will continue in the role until January 2024. The Board is commencing a process to appoint a successor. Alan Williams will be retiring as CFO in 2024, after seven years in the role.


Kingspan Group (KGP, €57.15, £8,904m)

Insulation and building envelope supplier. HY trading update.

Guidance: “We expect to report a record H1 2023 trading profit in the region of €435m, modestly ahead of the €434m reported for the first half of 2022”. Trading: “Market and category performances have varied widely with the Americas overall outpacing European activity. Certain applications are performing strongly particularly those seek

ing ultra energy efficiency and lower carbon in categories such as tech and automotive production. The demand for data applications remains strong with artificial intelligence projects an emerging feature. The residential sector worldwide is subdued in a higher interest rate environment although the underlying need for housing appears strong in most markets”.

Outlook: “The group is positioned favourably overall as it enters the third quarter although it is still early days. Kingspan is positioned strongly overall for the medium term and beyond given the global focus on energy efficiency, our high-performance product suite, our distinctive Planet Passionate agenda and ever-growing diversity of our end markets”. HY results, 18 August.


Kinovo (KINO, 42p, £26m)

Property services provider, formerly Bilby, specialising in compliance and sustainability. FY (Mar) results. Rev +18%, £62.7m; PBT +58%m £4.4m; EPS +63%, 6.0p; div, 0p (0p); net cash, £1.1m (FY 22, net debt, £0.3m).

Trading: “The business continues to benefit from legislative drivers and a streamlined focus on three key areas: Regulation, Regeneration and Renewables”. Regulation contributed 56% of total revenues (FY22, 59%); Regeneration 28% (FY22, 20%); Renewables 16% (21%). “Operational efficiencies continue to mitigate inflationary pressures”; EBITDA margins, 8.7% (7.9%). 98% of the three year visible revenues are recurring; “greater number of contract wins with longer average lengths”. Significant progress made regarding contractual obligations relating to former construction division, DCB Kent. Seven of the nine projects expected to be completed within FY 24 and group remains in constructive dialogue to agree contracts regarding the final two”.

Outlook: “Confident of delivering strong performance going forwards, and is exploring partnership and other strategic opportunities to accelerate Kinovo’s growth objective. Looking ahead, we are confident that our strategy, business and underlying market drivers position the business well to achieve further growth on an organic basis. We also continue to assess the market for value accretive opportunities”.


British Land Company(BLND, 303p, £2,811m)

Leading UK commercial property investment, development and services group. AGM.

Trading: Campuses – 552,000 sq ft of leasing across the portfolio in the first quarter, 11.0% ahead of ERV, with a further 1.2m sq ft under offer, 15.5% ahead of ERV. Occupancy, 96% with 164,000 sq ft of leasing completed, 11.4% ahead of ERV and a further 102,000 sq ft under offer, 5.7% ahead of ERV. “We have c. 1m sq ft in negotiations and have seen a noticeable uptick in viewings in the last few months as demand continues to gravitate to best in class space”. Retail – 387,000 sq ft of Retail leasing completed. This includes 227,000 sq ft of deals across Retail Parks,13.5% ahead of ERV, with a further 738,000 sq ft under offer, 17.7% ahead of ERV. Occupancy, 99%. Footfall +1% Y/Y and sales are +6%.

Outlook: “We continue to see strong operational momentum in the business, despite ongoing macroeconomic uncertainty, with good leasing activity. Campuses are benefiting from the trend towards best in class space, while retail parks continue to be the winning retail format given their affordability, omni-channel compatibility and low capex requirements. We have also made strategic progress in life sciences and innovation, with one of the largest lab lettings in the market and the launch of modular lab space at Canada Water”.

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