Today the company posted a “solid” set of H1’23 results, that was also in line with our FY’23 adjusted EBIT forecast of £45.75m. H1 sales rose +5.9% to £186.5m (vs £176.1m LY) - which alongside measured prices increases and internal efficiencies - drove ROCE up to 14.4% vs 13.5% LY, despite absorbing further input cost inflation.
Likewise, H1 adjusted PBT came in +6% higher at £21.5m (£20.2m LY), even after incurring higher interest charges, as net debt climbed 13% to £148.9m due to slightly longer debtor days and top line growth.
We also think that the UK construction market is now recovering on the back of a substantial backlog of future infrastructure work, especially in regulated areas such as roads, rail (CP6), water (AMP7) and electricity. And remember that Vp isn’t just a domestic group: TR (Australia) has returned to pre covid levels, whilst Airpac Rentals has benefitted from increased oil and gas demand and is diversifying into more downstream areas.
Vp trades on modest CY EV/EBITDA and EV/EBIT multiples of 4.5x and 9.0x respectively. Falling to 4.3x and 8.3x in the following year vs typical peer ratings of 6.0x & 10.4x. We reiterate our headline FY23 numbers and retained fair value of £11.30/share.
