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Severfield

LN: SFR

£242.9m market cap

78.8p last close

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 is currently being expanded.

Investment summary

Severfield’s year end trading update (22 April) led management to raise guidance following a solid performance in the UK in H2 founded on operational execution and good cost control. The Indian JV traded at break-even in H2, as expected and there has been no further COVID-19 disruption in JSSL’s main operating regions at this stage. Order books have firmed slightly in both cases in H2 with a higher proportion of domestic site projects – supplemented by the acquisition of DAM in Q4 – in the UK and stronger commercial bias in India. Severfield has ended FY21 in a £4m net cash position – after the c £18m DAM initial consideration – and the company retains a healthy liquidity position. Our estimates are under review.

Y/E Mar
Revenue (£m)
EBITDA (£m)
PBT (£m)
EPS (p)
P/E (x)
P/CF (x)
2019A 274.9 29.0 24.7 6.66 11.8 13.3
2020A 327.4 33.2 28.6 7.75 10.2 8.6
2021E 354.5 29.6 22.9 6.03 13.1 8.7
2022E 365.3 34.6 27.5 7.29 10.8 8.8
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 and the JV has recently expanded capacity.

Last updated on 05/05/2021
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Sector
Industrials
Share price graph
Balance sheet
Forecast net cash (£m) 3.6
Forecast gearing ratio (%) N/A
Price performance
%
1m
3m
12m
Actual 0.0 10.2 14.5
Relative* (4.1) 1.9 (7.9)
52-week high/low 80.2p/51.8p
*% relative to local index
Key management
John Dodds Chairman
Alan Dunsmore CEO

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