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Severfield

LN: SFR

Market Cap£192m

Last Close 62p

Severfield is a leading UK structural steelwork fabricator operating across a broad range of market sectors. An Indian facility undertakes structural steelwork projects for the local market and was expanded in FY20.

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Investment summary

Severfield’s in-line year-end update inferred that it generated two thirds of our estimated UK EBIT in H2, successfully delivering orders won in the previous 18 months or so. Notwithstanding input cost inflation, absolute levels of profitability seem to have remained robust. Severfield’s Indian JV (JSSL) has also hit management expectations, including further profitable trading in H2. The UK and India both ended FY22 with record order books reflecting inflationary effects to some extent but the underlying order intake has clearly been healthy. We raised our revenue expectations by c 6% for FY22 and by over 10% for the following two years, leaving EBIT estimates and will revisit margin development when the FY22 results are announced on 15 June.

Y/E Mar
Revenue (£m)
EBITDA (£m)
PBT (£m)
EPS (p)
P/E (x)
P/CF (x)
2020A 327.4 33.2 28.6 7.75 8.0 6.8
2021A 363.3 30.9 24.3 6.43 9.6 6.4
2022E 396.2 35.2 27.8 7.38 8.4 29.4
2023E 422.3 38.8 31.3 8.29 7.5 5.7
Industry outlook

The primary strategic aim is to maintain Severfield’s position as the leading UK structural steelwork supplier. The Indian JV targets similar sectors to those served in the UK; management has valued the Indian construction market at c £100bn pa, with a very low penetration of steel structures currently.

Last updated on 23/06/2022
Content on Severfield
Severfield – Strong H2 performance and order book growth
Industrials | research Update | 28 April 2022
Severfield – Order book development shows the way
Industrials | research Update | 1 December 2021
Severfield – Positive start to FY22
Industrials | research Outlook | 10 September 2021
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Share price graph
Balance sheet
Forecast net debt (£m) 18.7
Forecast gearing ratio (%) 9
Price performance
%
1m
3m
12m
Actual (4.3) (7.2) (21.7)
Relative* (0.2) (1.2) (19.0)
52-week high/low 82.6p/60.0p
*% relative to local index
Key management
Alan Dunsmore CEO
Adam Semple CFO