Vp, an equipment rental specialist who said today that it was “trading in line expectations and making excellent progress…. despite some areas (eg commercial property, outdoor events, oil & gas) still not back to historical norms. With H1 revenues coming in at 96% of pre-Covid levels (Est £179.1m vs £186.6m H1’20) vs 94% in H2’21 & 76% H1’21.
Vp is not only tightly managing costs, but also materially enhanced its operating leverage (eg depot rationalisation) during the pandemic, and is “in excellent shape to capitalise” as the economy rebounds.
HS2 is ‘going like a train’ (eg Groundforce), housebuilding is buoyant (eg Brandon Hire Station & UK Forks), overseas markets are improving (eg TR) and RMI is robust - with both rail (CP6 eg Torrent Trackside) and Water (AMP7) set to add further momentum in H2. Longer term too there’s an enormous amount of work coming down the track. Not least fibre-to-the-home, offshore wind, Hinkley Point & the Lower Thames crossing.
Consequently, we retain our forecasts and £11.30/share valuation. Alongside reiterating that Vp’s through-cycle durability justifies a sector premium, reflecting its consistent returns, adoption of all-things digital, and exposure to systemically important verticals such as water, power, renewables, telecoms & rail.
