Vpwww.vpplc.com TICKER: VP. EXCHANGE: FTSE
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.
Vp plc has produced an outstanding set of Interim results this morning, showing adjusted PBTA up 27% at £16.2m, EPS up 23% at 32.8p and the Interim dividend up 39% at 5p. The big increase in the Interim dividend is partly to address the historic differential between Interim and Final dividends, but also to reflect the excellent set of results.
The company has reported that Housebuilding continued to be buoyant, and that they also saw sustained improvement in the general construction market. Reflecting this, Vp's Hire Station division produced interim profits up 78% at £4.8m, and UK Forks profits rose 54% to £2.3m.
As a result of a very strong H1, and a positive outlook statement, we are raising our forecasts for the 5th time in the last 6 months. We now forecast PBTA to rise 21% to £24.2m in the year to March 2015, and EPS to increase by over 15% to 48.4p. Our full year dividend forecast is now 16p, up 14% on 2013/14's 14p.
As a result of these increases, we raise our target price to 725p per share (previously 700p). Vp's shares still look very good value relative to their peer group.
Following better than expected full year results in early June, and a very positive AGM statement a week ago, Vp plc yesterday announced the acquisition of the trackside plant and equipment rental activity of Balfour Beatty Rail Ltd , for a cash consideration of £5.5 million.
The business will be integrated into Torrent Trackside, Vp's successful specialist rail business. The acquisition includes a 5 year framework agreement for the hire of trackside plant and equipment to Balfour Beatty Rail across the UK.
Vp has a history of successful "bolt on" acquisitions in recent years, and this looks like another such deal. Our current fair value is 687p per share.