14.03.2025
Several delays have impacted Van Elle Holdings (LON:VANL), the UK's largest specialist geotechnical engineering contractor.
The group, which provides a wide range of ground engineering techniques and services including ground investigation, general and specialist piling, rail geotechnical engineering, modular foundations, and ground improvement and stabilisation services, has suffered challenging conditions both in the UK and in Canada, its other main operating base.
Trading Update
Yesterday the company issued a Trading Update for its year to end-April 2025, stating that its trading environment and volumes have remained supressed throughout January and February.
In the UK the group has experienced widespread project delays, including the ongoing impact of the well-publicised delays to Building Safety Act approvals, which have primarily impacted trading for Rock & Alluvium, which is focused on taller residential schemes in London and the Southeast.
That has meant that there are now over 40 projects currently in the approvals process, the majority of which are now expected to commence in FY26 and will result in a FY25 performance for Van Elle's UK operations slightly below the Board's expectations.
Van Elle Canada has experienced further delays as a strategic supply partner to the major infrastructure upgrade programme for the Toronto rail network, meaning that the division's trading performance will now be weaker than initially anticipated.
The company stated that the aggregate impact, of the Rock & Alluvium and Canada trading performance, means that it now expects underlying profit before tax for the second half of FY25 to be similar to the first half.
Broker’s Views
Despite reducing their current end-April 2025 estimates, analysts Mark Howson and Paul Richards at Dowgate Capital remain positive about the group, holding their 62p a share Target Price.
They now look for £131.9m (£139.5m) revenues and adjusted pre-tax profits of £4.0m (£5.1m), dropping earnings to 2.8p (3.5p), but increasing its dividend to 1.3p (1.2p) per share.
For the coming year, starting 1st May, they estimate revenues of £164.4m, profits of £6.9m, earnings of 4.7p and a 1.4p dividend per share.
Over at Zeus Capital, analysts Andy Hanson and Carl Smith lowered their estimates for the current year by a third to £4.0m pre-tax profits, earnings to 2.8p and its dividend estimate from 1.4p to just 0.9p per share.
Their new estimates for the year to end-April 2026 are now for £153.3m revenue, £7.0m underlying pre-tax profit, with 4.8p earnings and a 1.6p dividend per share.
Accordingly, they also dropped their DCF valuation on the group’s shares to 60p from 68.5p.
At Progressive Research, analyst Alastair Stewart reduced his 2025 profit figure by 27% and his 2026 by 14% - looking for £4.0m then £7.0m respectively.
Stewart also predicts that the 2027 trading year will show £169.3m revenues, £9.9m profits, 6.9p earnings and paying out a 1.8p per share dividend.
My View
I actually fancy this group’s shares for a good longer-term investment position.
Yesterday’s Trading Update saw the group’s shares down to 30p at one stage, a fall of 8.50p, before a recovery bounce to close at 34p.
After various non-core disposals, it has strengthened its balance sheet, which together with a stronger order book, makes its shares at this level look really quite appealing.
An ideal place for any spare cash, is my view.
(Profile 29.03.21 @ 37.5p set a Target Price of 47p*)
(Profile 14.03.25 @ 34p set a new Target Price of 42p)
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