Last close As at 05/08/2026
GBP0.37
▲ −0.30 (−0.80%)
Market capitalisation
GBP111m
Research: Industrials
Severfield’s trading update indicates that FY23 results are expected to slightly exceed market expectations and the company ends the year with a record UK and Europe order book. Furthermore, with a positive trading outlook and net debt coming in lower than expected, Severfield has announced a £10m share buyback, highlighting the cash-generative nature of the company and management’s confidence in its position. The stock trades on an FY25 P/E of less than 6x and yields 7%, which we believe appears compelling.
Severfield |
Multiple positives should excite investors |
FY23 trading update |
Construction and materials |
17 April 2024 |
Share price performance
Business description
Analyst
Severfield is a research client of Edison Investment Research Limited |
||||||||||||||||||||||||||||||||||
Severfield’s trading update indicates that FY23 results are expected to slightly exceed market expectations and the company ends the year with a record UK and Europe order book. Furthermore, with a positive trading outlook and net debt coming in lower than expected, Severfield has announced a £10m share buyback, highlighting the cash-generative nature of the company and management’s confidence in its position. The stock trades on an FY25 P/E of less than 6x and yields 7%, which we believe appears compelling.
Year end |
Revenue (£m) |
PBT* |
EPS* |
DPS |
P/E |
Yield |
03/22 |
403.6 |
37.1 |
7.2 |
3.1 |
7.5 |
5.7 |
03/23 |
491.8 |
32.5 |
8.4 |
3.4 |
6.4 |
6.3 |
03/24e |
482.9 |
35.2 |
8.7 |
3.6 |
6.2 |
6.7 |
03/25e |
550.5 |
37.5 |
9.3 |
3.8 |
5.8 |
7.0 |
Note: *PBT and EPS are underlying, diluted, company basis, excluding amortisation of acquired intangibles, and exceptional items.
Severfield secured significant new work in H223 and ended the fiscal year with a UK and Europe order book at £511m, a record level, up from £482m on 1 November, with £397m due to be delivered in the current financial year. The order book was supported in Europe via the Voortman acquisition, and continental Europe and Ireland now account for 32% of the total, up from 13% on 1 November. Demand for data centres in particular has been strong.
Demand opportunities exist across both the Commercial and Industrial, and the Nuclear and Infrastructure divisions in the UK, continental Europe and Ireland from a range of sectors, including the broad low-carbon economy, which includes battery plants, manufacturing facilities for renewable energy and offshore wind projects, as well as nuclear reactors, carbon capture initiatives and rail projects.
Severfield’s Modular Solutions division has continued to grow the higher-margin Severstor product ranges with a focus on renewable energy and data storage. Revenues and the client base are growing and the division is now expected to report a small profit in FY24.
JSSL, the JV in India, performed well in H2 in particular and is expected to deliver good profit growth, having exceeded 100,000 tonnes of output for the second year running. The order book declined from £165m in November to £142m on 1 April, but with an improving pipeline of orders and numerous growth opportunities in existing and new sectors, the outlook is encouraging, which will be supported by capacity expansion on adjacent land.
Management believes that the business is performing well and is positioned in markets with ‘excellent’ long-term opportunities in which it is seeing improving trends despite uncertainty in the wider economy. With this in mind and the net debt coming in at c £10m, lower than the company’s expectations, due to a permanent working capital improvement, Severfield has announced a share buyback of a similar size. This is not expected to restrict potential M&A activity.
Separately, the company has appointed Charlie Cornish as the new non-executive chair, taking over from Kevin Whiteman after the 30 July AGM.
|
|
Research: TMT
IP Group’s NAV declined by 13% in total return (TR) terms in FY23, affected by continued soft valuations across venture capital (VC) markets, as well as funding delays at some of its holdings. That said, management indicated that many of IP Group’s portfolio companies continued to make strong progress. Its maturing portfolio offers a number of potential NAV triggers and is now available at a wide 59% discount to NAV. We note that, as at end-2023, only 14% of IP Group’s portfolio was valued based on funding rounds completed more than 12 months ago and 46% of its private portfolio was valued by a third-party specialist. IP Group’s holding-level liquidity was solid, with gross cash of £227m (or 19% of NAV) and 87% of its portfolio holdings (by value) had a cash runway to 2025 or beyond.