Vp
Ticker: VP. Exchange: LSE www.vpplc.com

Vp plc is a specialist rental business providing products and services to a diverse range of markets including civil engineering, rail, oil and gas exploration, construction, outdoor events and industry, primarily within the UK, but also overseas.    

Upgrading forecasts as FY22 “starts strongly”

Today’s upbeat FY21 prelims from equipment rental specialist Vp provided further evidence of its industry leading status, especially in terms of earning quality, ROCE and cashflow. Posting a better than expected adjusted PBT (pre IFRS16) & diluted EPS of £23.3m & 45.9p on sales of £308m, alongside providing a “positive” outlook. Indeed in our opinion, the group’s through-cycle durability justifies a sector premium, thanks to its consistent returns, adoption of all-things digital and exposure to systemically important verticals such as water, power, renewables, telecoms & rail.

Despite the 3rd national lockdown, prospects have improved dramatically over the past 6 months, with current trading described as “strong”, which we have interpreted as being just below pre-covid levels with Groundforce awaiting the usual upswing once AMP7 (water) becomes fully operational.

Consequently we have upgraded are FY22 forecasts to adjusted PBT of £36.9m (vs £33.5m B4) on turnover of £355.7m (£345m) – ending the year with £123m of net debt. The latter factoring in continued working capital control, offset by greater fleet capex (£50m).

Similarly our valuation ticks up from £11.00 to £11.30/share. Meaning the shares at 870p trade on modest 11.9x PER, 11.4x EV/EBIT and 5.3x EV/EBITDA multiples vs peer group averages.

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