09.01.2025
Take a good look at the shares of Galliford Try Holdings (LON:GFRD) ahead of its Interim Trading Update being issued next Wednesday morning.
It has a massive £3.8bn Order Book, and its potential contract strength comes particularly from its Tier 1 status as a contractor within the Water Company sector.
The Business
Operating as Galliford Try and Morrison Construction, this Uxbridge-based group, which employs over 4,000 people, carries out building and infrastructure projects with clients in the public, private and regulated sectors across the UK.
Its segments include Building, Infrastructure, and Investments.
The construction business operates nationwide, working on projects that include the construction of assets, and the maintenance, renewal, upgrading and managing of services across utility and infrastructure assets.
Its building business serves education, defence and custodial, health, and commercial sectors.
Its infrastructure businesses, primarily Highways and Environment, carries out critical engineering projects.
Through public private partnerships, the company arranges finance, makes debt and equity investments and manages construction through to operations.
It has investments in a number of PPP Special Purpose Vehicles, delivering building and infrastructure projects.
Management Comment
Ahead of the late November AGM the group issued a Trading Update stating that:
“At our FY24 results in October we announced another year of sequential, robust revenue and margin growth together with confidence in the outlook for the current financial year.
Momentum in the Group's operations has continued into the new financial year, with a number of recent published wins and we are trading in line with the Board's expectations.
Underpinned by the recent Budget, the UK's planned, and required, investment in economic and social infrastructure continues to support growth in our chosen markets.
Our confidence in the Group's future outlook is supported by our high-quality order book and the robust and resilient pipeline of opportunities we see across our chosen sectors.”
Its 2030 Strategy
The group has consistently delivered increases in both revenue and profit margin since becoming a standalone construction group in 2020.
Its ‘Strategy to 2030’ targets sustainable growth in core and adjacent markets.
The group declares that it remains committed to a progressive culture, socially and environmentally responsible delivery, quality and innovation, risk management and sustainable financial returns to create long-term value for its stakeholders.
The Equity
There are some 103,089,468 shares in issue.
The larger holders include Aberforth Partners (11.64%), Premier Fund Managers (10.98%), JO Hambro Capital Management (9.68%), Threadneedle Asset Management (5.30%), Dimensional Fund Advisors (5.10%), Brewin Dolphin (4.96%), Abrdn Investment Management (4.37%), Norges Bank Investment Management (2.63%), Hargreaves Lansdown Asset Management (2.22%), and Canaccord Genuity Wealth (1.50%).
Analyst’s Views
Three analysts follow the group, with an average view of 450p for its shares.
At Cavendish Capital Markets its analysts Max Hayes and Guy Hewett have recently raised their Target Price on the group’s shares to 527p against their previous 442p aim.
For the year to end June 2025 their estimates are for revenues of £1,802.6m (£1,772.8m) with adjusted pre-tax profits of £36.6m (£34.5m), lifting earnings to 26.6p (24.8p) and its dividend to 16.0p (15.5p) per share.
The 2026 year could see £1,833m of revenues, £41.1m of profits, 30.4p earnings and 18.2p of dividend.
For 2027 the analysts look for £1,970.7m revenues, £48.7m profits, 35.9p earnings and a 21.6p dividend.
At Peel Hunt, Andrew Nussey, also has a Buy out on the group’s shares, looking for 450p a share, while rating them as a ‘key pick’ offering great value.
Over at Panmure Liberum, analysts Joe Brent and Adrian Kersey have a Buy note out on the shares.
In My View
With its shares now at just 363p, this £374m-capitalised group has enjoyed a 50% advance in value over the last six months or so.
However, I feel that they are still undervalued and very capable of further price rises in 2025.
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