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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January 30, 2024

HWG, RNWH, SDY | Economics – Mortgage approvals rise for third month, BoE

Company news

Harworth Group (HWG, 127p, £410m mkt cap)

Land regeneration group, including in former coalfields. FY (Dec) trading update.

Guidance: “The group anticipates that EPRA net disposal value as at 31 December 2023 will be slightly ahead of current market consensus [194p]. This is the result of management actions undertaken on development sites to unlock high value uses, and positive progress with planning applications, which have underpinned valuation gains”. Year-end net debt, £36.4m (FY 22, £48.4m), a pro-forma LTV based on 30 June 2023 valuations of 5.3% (30 June 2023, 8.6%); YE liquidity, £192m (YE 22, £176m) with no major refinancing requirement until 2027.

Trading: 193,000 sq. ft of industrial & logistics space developed during the year, with a remaining pipeline of 37.7m sq ft. 1,170 residential plots sold, with an extensive remaining pipeline of 27,190 plots; nine transactions completed with six different national and regional housebuilders; headline sales proceeds of £52.1m, with all transactions at prices in line with, or ahead of, book values.

Outlook: “As we enter 2024, there are some signs of optimism in the macro environment whilst our key markets remain characterised by structural undersupply. We are encouraged that we are seeing continued good demand into the new year for our serviced residential land as well as occupier interest in our employment sites. We are well positioned to take the management actions that will generate further value gains from our portfolio in the year ahead”. FY results, 19 March.

Renew Holdings (RNWH, 850p, £673m)

Engineering services group supporting UK infrastructure. AGM.

Guidance: “The trading momentum experienced through FY 23 has continued into the new financial year and the Board is pleased to report that trading for the first quarter was in line with the Board’s expectations”. YE (Dec) 23 +1.5%, £874m; Engineering Services orders +9.9%, £795m.

Outlook: “The long-term structural growth drivers in the UK’s regulated infrastructure markets, combined with the expertise across our businesses provides significant opportunities across the Group and the Board looks to the future with confidence. Trading update, 2 April.

Speedy Hire (SDY, 36p, £166m)

UK and Ireland tool, equipment and plant hire services provider. Q3 (Dec) trading update.

Guidance: “We continue to make good progress with the implementation of our Velocity strategy, which will deliver benefits and opportunity for Speedy for the long term. Nevertheless, with weakness in some of our end markets and seasonal product lines, and some delays in mobilisation of significant contract wins, the Board expects the full year profits to be below its previous expectations”. With the acquisition of GPH, net debt increased to £117m at 31 Dec, which marks the normal seasonal high point. “Working capital continues to be well controlled and we expect net debt to reduce from this level in the last quarter of the financial year, to end the year comfortably within our target leverage range”.

Trading: Rev from National customers +3% Y/Y at end of Q3 (HY, +5%); revs from Regional customers -6%, unchanged from the position reported at H1. “The warmer winter period has also impacted our revenue from seasonal products, despite us being ready for the usual cold weather and the important support we provide to our customers”.

Outlook: “We continue to see revenue growth from opportunities with both new and existing National customers. These contracts represent attractive growth opportunities but have taken longer to mobilise, due to contract specific delays. Therefore, new contract revenues will have only marginal benefit in FY24 with the full effect coming in FY25. This new business has been secured with good pricing discipline and demonstrates the attractiveness of Speedy’s customer offering”.

Economic data

Housing activity. Net mortgage approvals for house purchase rose for the third consecutive month on a seasonally-adjusted basis in December, according to the latest Money and Credit statistics from the  Bank of England. Approvals rose by 2.3% to 50,459, following a 2.5% increase in November and 9.1% in October. The latest total is, however, 23% below the 10-year average of 65,845 per month.

Mortgage approvals
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