Speedy anticipates second half uplift as new contracts kick in

Trading is in line with board expectations at Newton-le-Willows-based tool and equipment hire business, Speedy Hire, which anticipates a second half uplift, it said in a trading update ahead of its annual general meeting today.

The business has performed well in the year to date, despite continuing challenging conditions in some of its end markets, it revealed.

It said it is encouraged by the new government’s plans, although at an early stage, to support residential housing market growth, and looks forward to long term infrastructure projects continuing to be supported.

The group’s year to date hire revenue is in line with this time last year.

As indicated previously, there will be a second half weighting to revenues and profits as Speedy continues to mobilise its significant contract wins.

Steps to mobilise the group’s new contract with Amey are in hand and it is anticipated that this will generate revenue in the final quarter of the financial year.

In June this year Speedy announced it had clinched a new contract with Amey Group Services worth up to £25m per year.

It said the new long term core hire and solutions contract is due to mobilise during the second half of Speedy’s financial year, subject to a transition period to allow for a seamless integration.

Amey, a provider of engineering, operations and decarbonisation solutions for UK infrastructure, selected Speedy due to its industry leading sustainability credentials and wide range of commercially sustainable eco-products, said Speedy.

As part of the agreement, Speedy will provide non-operated plant hire to Amey’s operations on a range of sector contracts including rail, highways and public estates, a significant proportion of which consists of innovative eco-products, including H-Power Generators from Speedy Hydrogen Solutions and battery storage units from Green Power Hire.

The group said it remains well positioned to respond quickly to changes in market conditions and to capitalise on future opportunities, benefiting from its diverse end market exposure, broad customer base and the progression of its Velocity strategy including operational efficiencies.

Overall, trading is in line with the board’s expectations for the full year.

Investment bank, Panmure Liberum, maintained its Buy call on Speedy’s stock following this morning’s update.

Analysts Joe Brent and Alex O’Hanlon said: “The AGM update guides to trading in line, despite continued weakness in regional.

“We remain upbeat about the outlook. We leave our earnings and net debt estimates unchanged.

“We make three key points: 1) We expect a high H2 weighting and for H1 net debt to increase, but there are good grounds for a stronger H2; 2) Operational gearing should start to work in Speedy’s favour and medium term 9.2p of FD EPS should be achievable; and 3) Infrastructure is holding up relatively well but Residential and Commercial are weak.

“In terms of valuation, we maintain our BUY recommendation and TP of 47p; a CY 25 P/E of 8.2x is attractive given the recovery potential.“