Severfield

LN: SFR

£200.6m market cap

66p last close

Severfield is a leading UK structural steelwork fabricator operating across a broad range of market sectors. An Indian facility currently undertakes structural steelwork projects for the local market and is fully operational.

Investment summary

H119 operating profit was broadly equal to the prior year (which contained a higher than usual benefit from favourable contract completions) and, taking into account an improved associate contribution, PBT was slightly ahead y-o-y. The UK order book is steady currently – with an increasing proportion of smaller, relatively short cycle jobs – while the Indian JV equivalent continues to grow. Consequently, an expansion at the Bellary fab is set to get underway during FY19. Healthy ongoing cash flow is sufficient to meet Severfield’s £4m share of equity funding for this project and leave the expected year-end cash balance at £30m+. Management guidance for the full year is unchanged. A capital markets event (29 January) showcased the complexities of the current Bishopsgate 22 project (62-floor tower in the City) and the Indian JV’s progression and current market opportunities.

Y/E Mar
Revenue (£m)
EBITDA (£m)
PBT (£m)
EPS (p)
P/E (x)
P/CF (x)
2017A 262.2 25.7 20.3 5.7 11.6 7.2
2018A 274.2 29.0 24.0 6.5 10.2 8.6
2019E 279.2 30.2 25.0 6.8 9.7 7.7
2020E 285.9 32.9 27.3 7.4 8.9 6.4
Last updated on 20/03/2019
Industry outlook

The primary strategic aim is to maintain Severfield’s position as the leading UK structural steelwork supplier. An Indian JV (established in 2010) is fully operational and targeting 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 20/03/2019
Sector
Industrials
Share price graph
Balance sheet
Forecast net cash (£m) 31.2
Forecast gearing ratio (%) N/A
Price performance
%
1m
3m
12m
Actual (1.1) (7.0) (8.3)
Relative* (1.9) (14.7) (10.3)
52-week high/low 88.2p/64.6p
*% relative to local index
Key management
John Dodds Chairman
Alan Dunsmore CEO

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