Severfield

LN: SFR

£228m market cap

75p 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

Higher order books in the UK and India are a positive way to end FY19, which concluded in line with previous guidance. UK market conditions appear to be stable while India is continuing to strengthen. Year-end net cash is similar to H1, and slightly below where we had previously expected, but Severfield retains its conservative balance sheet position. Save for the net cash adjustment, our estimates are unchanged; the P/E rating reduces from 11.1x for the trailing year to 10.3x for FY20 with EV/EBITDA equivalents of 6.8x and 5.9x respectively.

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 13.2 8.2
2018A 274.2 29.0 24.0 6.5 11.5 9.8
2019E 279.2 30.2 25.0 6.8 11.0 8.7
2020E 285.9 32.9 27.3 7.4 10.1 7.3
Last updated on 21/05/2019
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 21/05/2019
Sector
Industrials
Share price graph
Balance sheet
Forecast net cash (£m) 31.2
Forecast gearing ratio (%) N/A
Price performance
%
1m
3m
12m
Actual 1.4 9.3 (3.1)
Relative* 5.4 8.8 4.8
52-week high/low 88.2p/64.6p
*% relative to local index
Key management
John Dodds Chairman
Alan Dunsmore CEO

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