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Severfield

LSE: SFR

Market Cap£193m

Last Close 62.2p

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 FY22 results confirmed a strong H2, successfully delivering orders won in the previous 18 months or so. Notwithstanding input cost inflation, absolute levels of operating profit, including JVs, increased 6.7% to £28.2m. Severfield’s Indian JV (JSSL) 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. The company’s FY23 expectations remain unchanged with strong trading being offset by inflationary pressures. A P/E of around 7x and a dividend yield of c 6% are attractive measures.

Y/E Mar
Revenue (£m)
EBITDA (£m)
PBT (£m)
EPS (fd) (p)
P/E (x)
P/CF (x)
2021A 363.3 29.6 24.3 6.68 9.3 5.6
2022A 403.6 33.4 27.1 7.00 8.9 4.7
2023E 460.1 37.8 31.2 8.30 7.5 4.3
2024E 473.9 40.3 33.6 8.88 7.0 4.1
Industry outlook

The primary strategic aim is to maintain Severfield’s position as the leading UK structural steelwork supplier. JSSL 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 30/11/2022
Content on Severfield
Severfield – Trading robust with lowest P/E since GFC
Industrials | research Update | 13 September 2022
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
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Share price graph
Balance sheet
Forecast net debt (£m) 13.7
Forecast gearing ratio (%) 6
Price performance
%
1m
3m
12m
Actual 27.1 5.4 (10.4)
Relative* 19.0 2.1 (12.8)
52-week high/low 74.4p/48.0p
*% relative to local index
Key management
Alan Dunsmore CEO
Adam Semple CFO