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.

<< Back to Property & Construction Daily archive

April 10, 2024

VTY, WINK, EPWN, SDY | News – Saudi Arabia slashes planned 170 km ‘linear city’

Company news

Vistry Group (VTY, 1,170p, £3,987m mkt cap)

Formed from the mergers of Bovis Homes and housebuilding and partnerships divisions of Galliford Try (GFRD) and Countryside Partnerships; currently transitioning to a high volume, high ROCE partnerships model. Development deals. Vistry has been appointed by Homes England to deliver two developments totaling 1,000 new homes. The group has worked with Birmingham City Council and Sandwell and West Birmingham Hospitals NHS Trust to deliver the regeneration of City Hospital. The site has outline planning permission for 750 homes, of which more than 50% will be affordable or private rent tenures, with the remaining homes for open market sale.  The site will also have more than 8,000 sq ft reserved for commercial and community space. A second partnership deal in Hardingstone, Northamptonshire, will deliver 250 mixed tenure homes with more than 50% presold.  The site is also formerly owned by Homes England and has outline planning permission. The majority of the 1,000 new homes will be manufactured off-site using timber frames from the Vistry Works East Midlands factory in Leicestershire.

M Winkworth (WINK, 160p, £21m)

Franchised estate and lettings agency, focused on London and SE. Dividend declaration. Q1 (Mar) dividend, 3.0p (Q1 23, 2.9p).

Epwin Group (EPWN, 84p, £120m)

Low maintenance building products manufacturer. FY (Dec) results, Board changes. Rev -2.9%, £345m; adj PBT +9.1%, £18.0m, “modestly ahead of expectations”; stat PBT +11%, £13.2m; adj EPS +8.5%, 9.7p; div +7.9%, 4.8p; net debt, £14.4m (FY 23, £17.9m). Share buyback extended.

Trading: “Revenues were slightly behind a strong 2022 comparative, following lower volumes and surcharge reductions as inflated PVC input prices reduced. Margins returned towards pre-pandemic levels, an increase of 140 basis points over prior year. Raw material cost inflation continued to ease, although PVC resin and other raw material prices remain elevated. Inflationary pressures in respect of energy and labour continue to be managed carefully. The integration of 2022 acquisitions are progressing in line with management expectations. Capital investment programme to expand materials re-processing capacity and margin at Poly-Pure completed and progress is being made on increasing the use of recycled materials within extruded products as well as developing market opportunities for reprocessed material. Our focus on wider product range extension continues, with new products added to core ranges”.

Outlook: “Current trading is in line with the Board’s expectations. Positive medium and long-term RMI market drivers remain”.

Board: Andrew Eastgate has given notice of his intention to retire as Chairman after almost 10 years in the role and step down at the AGM on 21 May. He is to be replaced by Stephen Harrison, an independent Non-Executive Director since November 2022, and prior to that CEO at Forterra (FORT.L). He has over 20 years experience in the construction materials sector.

Speedy Hire (SDY, 25p, £117m)

UK and Ireland tool, equipment and plant hire services provider. FY (Mar) trading update.

Guidance: “While the group expects to report results for the year towards the lower end of the Board’s expectations, it is encouraged by the commercial progress in the business and the outlook for FY 25 given recent contract wins”. Free cash flow expected to be in excess of £20m, with net debt to c. £102m, within the group’s target leverage range.

Trading: “The group has performed resiliently in the year against a challenging market backdrop. Total group revenue of c. £420m was down c. 5% versus FY 23, impacted by underperformance from our Regional base, the reduction in wholesale fuel prices and the performance of our seasonal products, which were affected by the warmer winter period. The cost inflation and softer demand faced across much of the construction sector mean that revenues from our Regional customers closed 6% down year-on-year, although these stabilised in the last quarter of the year and in FY 25 trading to date. Revenues from our National customers, whilst declining in the last quarter, had continued to trade positively year-on-year. The group has secured additional annual turnover in excess of £40m across multi-year contracts which, whilst slow to mobilise and only providing marginal benefit in FY2024, give confidence for growth in FY2025 and beyond. Our Kazakhstan joint venture, following a record year last year, returned to a more normalised performance due to the timing of various projects. The partnership with B&Q has evolved to a more digitally-focused model during the final quarter of FY 24 and the group has now fully exited the remaining 22 concessions, incurring trading losses and closure costs in the region of c. £2m in FY 24 “which will not recur under the new, low cost-to-serve model”.

Outlook: “The momentum from securing major opportunities and progressing operational efficiencies, positions the group well to benefit from the anticipated recovery of the wider macroeconomic environment during the second half of FY 25”.

In other news …

Middle East. Saudi Arabia has scaled back its ambitions for Neom, its $1.5trn ‘linear city’ on the Red Sea coast, from 170 km to just 2.4 km, Bloomberg and other news sources. The government had initially projected 1.5 million people to be living in The Line, a sprawling, futuristic city at the centre the development, by 2030. Now, officials expect it will house fewer than 300,000 residents by that time.

Download Insight as PDF

This communication is provided for information purposes only, and is not a solicitation or inducement to buy, sell, subscribe, or underwrite securities or units. Investors should seek advice from an Independent Financial Adviser or regulated stockbroker before making any investment decisions. Progressive Equity Research Ltd (“PERL”) does not make investment recommendations.

Opinions contained in this communication represent those of PERL and/or our affiliates at the time of publication and PERL does not undertake to provide updates to any opinions or views expressed. PERL does not hold any positions in the securities mentioned in this communication, however, PERL’s directors, officers, employees, contractors and affiliates may hold a position,  and/or may perform services or solicit business from, any of the companies or related securities mentioned.

Any prices quoted in our research are as at the previous day’s close.