In their trading update yesterday, VP says that the domestic homebuilding and infrastructure markets were “supportive” in H1’22, with construction “stable”. Here the Group experienced “good” power transmission demand (re renewables & offshore wind) augmented by AMP7 water & civil engineering which both “picked up” in Q2.
We reiterate our FY’23 adjusted PBTA & EPS forecasts of £41.4m & 78.1p respectively on revenues up 4.2% to £365m, with net debt (pre IFRS 16) closing Mar’23 at £130m (ie flat YoY), equivalent to a comfortable 1.4x EBITDA.
This in turn puts Vp on attractive 4.5x EV/EBITDA and 9.2x PE multiples, whilst paying a 5.4% dividend yield and generating a 15% ROCE. Consequently, we think the stock is materially undervalued and instead estimate its worth (at least) £11.30/share – offering more than 50% potential upside from current levels.
