Last close As at 06/08/2026
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Market capitalisation
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Research: Industrials
John Laing Group’s (JLG) pre-close update did not contain any significant surprises. Investment commitments and realisations are on track to meet FY17 targets, and the outlook for both the primary and secondary investment markets remains strong. We maintain our expectation of continued strong growth in the NAV in FY17 (to 310p – revised from 308p previously) and see upside for the shares based on our estimates.
Written by
John Laing Group |
Further NAV growth expected |
Pre-close update |
Investment companies |
4 July 2017 |
Share price performance
Business description
Next events
Analysts
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John Laing Group’s (JLG) pre-close update did not contain any significant surprises. Investment commitments and realisations are on track to meet FY17 targets, and the outlook for both the primary and secondary investment markets remains strong. We maintain our expectation of continued strong growth in the NAV in FY17 (to 310p – revised from 308p previously) and see upside for the shares based on our estimates.
Year end |
NAV (p) |
EPS* |
DPS** |
P/NAV |
P/E |
Yield |
12/15 |
242 |
27.6 |
6.90 |
1.3 |
11.0 |
2.3 |
12/16 |
277 |
51.9 |
8.15 |
1.1 |
5.8 |
2.7 |
12/17e |
310 |
40.8 |
9.75 |
1.0 |
7.4 |
3.2 |
12/18e |
346 |
46.5 |
9.92 |
0.9 |
6.5 |
3.3 |
Note: *PBT and EPS are normalised, excluding amortisation of acquired intangibles, exceptional items and share-based payments. **DPS includes interim, final and special payments.
Progress in line with FY17 guidance
JLG’s pre-close update was in line with both our expectations and its own targets for FY17. JLG has made investment commitments so far in 2017 of £111m and reiterated that it expects total investment commitments for FY17 to be c £200m (Edison FY17e: £200m). Realisations so far have totalled £151m, including the A1 motorway in Poland (£120.4m) and the M6 road in Hungary (£22.7m). The aggregate prices achieved for the disposals are said to be in line with portfolio aggregate values and JLG retains its guidance of £200m (Edison FY17e: £200m). The investment portfolio is performing in line with management expectations and JLG achieved commercial acceptance for the New Royal Adelaide Hospital in June and will include it in its secondary portfolio as at the end of June. Talks with the Greater Manchester Waste Disposal authority regarding the future of the Manchester Waste project, where JLG has two separate but contractually linked projects (valued at c £94m), are continuing.
Outlook remains positive
JLG remains positive on the outlook for new investment in both PPP and renewable energy. The company is currently involved in 11 PPP bids (previously eight), which are due to reach financial close in the next two years, and continues to assess opportunities in related infrastructure markets. The secondary market for PPP assets and renewable energy projects is also said to remain strong. Following the pre-close statement, we have made only some small refinements to our model, which now projects an FY17 NAV of 310p (previously 308p).
Valuation: Discount to peers still remains
JLG’s share price has performed strongly over the last year and it now trades at a small premium to its last reported NAV of 277p (end December 2016). The shares, however, are below our projection for the year end FY17 NAV of 310p and continue to trade at a discount to other infrastructure funds. We would expect this valuation gap to continue to close as JLG demonstrates strong growth trajectory.
Exhibit 1: Financial summary
Accounts: IFRS, year end: December, £m |
|
|
2015 |
2016 |
2017E |
2018E |
2019E |
2020E |
Total revenues |
|
|
167.6 |
260.8 |
210.2 |
232.8 |
258.1 |
270.5 |
Cost of sales |
|
|
(0.1) |
0.0 |
(0.5) |
(0.5) |
(0.5) |
(0.5) |
Gross profit |
|
|
167.5 |
260.8 |
209.7 |
232.3 |
257.6 |
270.0 |
SG&A (expenses) |
|
|
(54.1) |
(57.6) |
(48.3) |
(49.3) |
(50.3) |
(51.3) |
Other income/(expense) |
|
|
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
Depreciation and amortisation |
|
|
(1.2) |
(0.8) |
(0.8) |
(0.8) |
(0.8) |
(0.8) |
Reported EBIT |
|
|
112.2 |
202.4 |
160.6 |
182.2 |
206.5 |
217.9 |
Finance income/(expense) |
|
|
(11.3) |
(10.3) |
(10.8) |
(11.8) |
(14.2) |
(16.8) |
Other income/(expense) |
|
|
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
Reported PBT |
|
|
100.9 |
192.1 |
149.9 |
170.5 |
192.3 |
201.1 |
Income tax expense (includes exceptionals) |
|
|
(2.1) |
(1.8) |
0.0 |
0.0 |
0.0 |
0.0 |
Reported net income |
|
|
104.5 |
190.3 |
149.9 |
170.5 |
192.3 |
201.1 |
Basic average number of shares, m |
|
|
358.3 |
366.9 |
366.9 |
366.9 |
366.9 |
366.9 |
Basic EPS |
|
|
27.6 |
51.9 |
40.8 |
46.5 |
52.4 |
54.8 |
|
|
|
|
|
|
|
|
|
EBITDA |
|
|
113.4 |
203.2 |
161.4 |
183.0 |
207.3 |
218.7 |
NAV (p/share) |
|
|
242 |
277 |
310 |
346 |
389 |
433 |
Total DPS (p) |
|
|
6.90 |
8.15 |
9.75 |
9.92 |
10.09 |
10.27 |
|
|
|
|
|
|
|
|
|
Balance sheet |
|
|
|
|
|
|
|
|
Property, plant and equipment |
|
|
1.0 |
0.3 |
0.5 |
0.7 |
0.9 |
1.1 |
Goodwill |
|
|
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
Intangible assets |
|
|
0.2 |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
Other non-current assets |
|
|
966.7 |
1,258.5 |
1,401.4 |
1,561.6 |
1,744.1 |
1,954.3 |
Total non-current assets |
|
|
967.9 |
1,258.8 |
1,401.9 |
1,562.3 |
1,745.0 |
1,955.4 |
Cash and equivalents |
|
|
1.1 |
1.6 |
1.0 |
4.5 |
51.1 |
53.9 |
Inventories |
|
|
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
Trade and other receivables |
|
|
8.3 |
7.4 |
10.4 |
11.5 |
12.7 |
13.3 |
Other current assets |
|
|
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
Total current assets |
|
|
9.4 |
9.0 |
11.4 |
15.9 |
63.8 |
67.2 |
Non-current loans and borrowings |
|
|
0.0 |
0.0 |
0.0 |
250.0 |
350.0 |
400.0 |
Trade and other payables |
|
|
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
Other non-current liabilities |
|
|
46.3 |
70.8 |
51.3 |
26.6 |
1.5 |
1.5 |
Total non-current liabilities |
|
|
46.3 |
70.8 |
51.3 |
276.6 |
351.5 |
401.5 |
Trade and other payables |
|
|
19.6 |
14.7 |
26.5 |
26.5 |
26.5 |
26.5 |
Current loans and borrowings |
|
|
14.9 |
161.4 |
194.7 |
0.0 |
0.0 |
0.0 |
Other current liabilities |
|
|
6.9 |
4.1 |
4.2 |
4.2 |
4.2 |
4.2 |
Total current liabilities |
|
|
41.4 |
180.2 |
225.4 |
30.7 |
30.7 |
30.7 |
Equity attributable to company |
|
|
889.6 |
1,016.8 |
1,136.5 |
1,271.0 |
1,426.6 |
1,590.4 |
Non-controlling interest |
|
|
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
|
|
|
|
|
|
|
|
|
Cash flow statement |
|
|
|
|
|
|
|
|
Profit before tax |
|
|
100.9 |
192.1 |
149.9 |
170.5 |
192.3 |
201.1 |
Net finance expenses |
|
|
11.3 |
10.3 |
10.8 |
11.8 |
14.2 |
16.8 |
Depreciation and amortisation |
|
|
1.2 |
0.8 |
0.8 |
0.8 |
0.8 |
0.8 |
Share based payments |
|
|
0.7 |
2.0 |
0.0 |
0.0 |
0.0 |
0.0 |
Fair value and other adjustments |
|
|
(124.8) |
(78.4) |
(206.4) |
(230.5) |
(257.9) |
(265.5) |
Movements in working capital |
|
|
(3.2) |
(2.3) |
14.0 |
0.6 |
(0.0) |
0.1 |
Cash from operations (CFO) |
|
|
(13.9) |
124.5 |
(31.0) |
(46.8) |
(50.6) |
(46.7) |
Capex |
|
|
(0.6) |
(0.1) |
(1.0) |
(1.0) |
(1.0) |
(1.0) |
Cash transf. from inv. Held at FV |
|
|
(54.0) |
(73.4) |
39.0 |
43.8 |
49.1 |
54.6 |
Portfolio Investments - Disposals |
|
|
(56.6) |
(161.6) |
0.0 |
0.0 |
0.0 |
0.0 |
Cash used in investing activities (CFIA) |
|
|
(111.2) |
(235.1) |
38.0 |
42.8 |
48.1 |
53.6 |
Net proceeds from issue of shares |
|
|
124.7 |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
Movements in debt |
|
|
19.0 |
146.0 |
33.3 |
55.3 |
100.0 |
50.0 |
Other financing activities |
|
|
(19.6) |
(35.1) |
(40.9) |
(47.8) |
(50.9) |
(54.1) |
Cash from financing activities (CFF) |
|
|
124.1 |
110.9 |
(7.6) |
7.5 |
49.1 |
(4.1) |
Currency translation differences and other |
|
|
(0.1) |
0.2 |
0.0 |
0.0 |
0.0 |
0.0 |
Increase/(decrease) in cash and equivalents |
|
|
(1.0) |
0.3 |
(0.6) |
3.5 |
46.6 |
2.8 |
Currency translation differences and other |
|
|
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
Cash and equivalents at end of period |
|
|
1.1 |
1.6 |
1.0 |
4.5 |
51.1 |
53.9 |
Net (debt) cash |
|
|
(13.8) |
(159.8) |
(193.7) |
(245.5) |
(298.9) |
(346.1) |
Movement in net (debt) cash over period |
|
|
(15.9) |
(146.0) |
(33.9) |
(51.9) |
(53.4) |
(47.2) |
Source: Edison Investment Research
|
|
Research: Energy & Resources
Hurricane has provisionally raised up to $535m through a $300m equity placing (plus $5m follow-on offer) and a concurrent $220m (with $10m over-allotment) convertible bond offer. Equity is being placed at a price of 32p/share while the convertible offers investors a 7.5% coupon and conversion price of 40p/share – a 25% premium. We had assumed EPS funding in our valuation with an approximate 60/40 equity/debt split (see our May Outlook note); confirmation of funding should provide increased confidence in Hurricane’s ability to keep to a H119 first oil target. The fall in Hurricane’s share price over the last two months has led to greater dilution than we had previously anticipated with Edison’s Lancaster NAV falling from 102p/share to 81p/share (c 21%) assuming convertible dilution.