Renew Holdings ‘on track’ as it grows in engineering sector after

The Leeds-based group has shifted into infrastructure, energy and environmental work in recent years, shrinking its exposure to the battered construction sector.

As of last year it earned 63 per cent of its revenues from engineering services, with the remaining 37 per cent in specialist construction.

The group closed its struggling Northern construction business last year.

“The group is now firmly established as an engineering services business supporting UK infrastructure and has recently secured further non-discretionary frameworks with the Environment Agency, Northumbrian Water Limited, Network Rail and at Sellafield,” said Renew in a statement.

Analyst Michael Parkinson at N+1 Brewin said its 110p price target offered 50 per cent upside from the company’s current level. Shares in Renew closed unchanged at 73.50p yesterday.

Mr Parkinson went on: “In our view the current rating of the shares at just over six times current year earnings fails to reflect the material strategic progress made by the group over the last 18 months.

“These (new) frameworks are all consistent with the ongoing strategy to position the business in areas of non-discretionary maintenance work.”

Panmure Gordon analyst Andy Brown said: “We have a positive view on the outlook for infrastructure spending.

“Renew has good exposure to the key infrastructure areas of energy, environment and rail.

“While spending can be lumpy the importance of maintaining and improving existing structures is of national economic importance. This along with its attractive valuation means we stay positive.”

He added: “The growth of its engineering services division remains the key investment driver. Not only are the barriers to entry higher but the margin potential is greater than within its building division.”

The group expects to report results for the six months to the end of March on May 22.

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