Construction boom coming down the track

Given Britain’s successful vaccine rollout, prospects have improved dramatically over the past 12 months, with Vp saying this morning that FY21 results were “in line with expectations”, and it exited the period on a run-rate of c.“95% of pre-Covid levels”. Despite “some sectors (eg events & hospitality) remaining closed and infrastructure (eg AMP7 and CP6) not yet fully up to speed”.

We are forecasting FY21 adjusted PBT of £23.0m on sales of £299.6m – ending the year with £124m of net debt. The latter reflecting tight working capital control (re debtors), lower fleet capex and approx £8m of deferred VAT to be repaid in FY22.

Similarly, we have upgraded our FY22 PBT by 12% to £33.5m, alongside increasing the valuation from £9 to £11 per share. What’s more, in light of Vp’s consistent track record of innovation, execution & above-average returns, we could readily see the stock tracking towards £16.80 by 2024 - assuming 5% organic top line growth can be achieved across the economic cycle.