MARKET WATCH
More porridge for Goldilocks?
EHN’s financial analyst, Nick Spoliar of WH Ireland, assesses the outlook for the hire industry in the New Year.
This time last year, the more nervous pundits were worrying about the world economy in 2017, a potential crisis in the EU and a collapse in the bond markets. Instead, the world saw a ‘Goldilocks economy’ (not too hot, not too cold). Will this continue in 2018? And how are things likely to shape up for the UK hire market?
in the US. Better than expected 2017/18 earnings were announced by Ashtead on 12 December. In the UK, A-Plant also showed good progress while maintaining margins.
Going back a bit, Speedy Hire reported a good set of results in November. This was another company which upgraded its full year expectations. Russell Down has now been Chief Executive of Speedy Hire for just over eighteen months.
The acquisition of Brandon Hire by Vp (covered by EHN in the November/December issue) was a major sensation. While a decent price was paid, the enhancement should be substantial.
This looks like a terrific fit to us, both in terms of the geographies and the activities. Implementation is
Aggreko has been a beneficiary of the strong dollar.
Taking a wide-angle view, there are still plenty of things to feel cheerful about. The US is still motoring, and the cut in the Federal tax rate from 35% to 21% can only help. Globally, the commodities cycle continues to gather pace.
However, in the UK, falling confidence is to the fore and the recent construction sector PMI’s were the weakest in nearly five years. House building is still helped by Help to Buy, but cost-inflation makes things feel more challenging.
Beneficiaries of the strong dollar
The quoted companies are as diverse as ever. Among the larger stocks, Ashtead and Aggreko are both beneficiaries of the strong dollar/weak pound - and of any trickle-down impact from the tax cuts
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everything, but Vp has a very good track record under current management since we started following it over ten years ago.
One to watch from now out will be HSS, now under new management, and which announced new financial targets to be achieved by 2020, some of which could prove demanding. It has also identified as a strategic priority to deliver further cost-savings and “to repair the tool hire business”. Repair and maintenance services are not just for buildings.
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to
http://research.whirelandplc.com/research/regulatory.asp and
http://research.whirelandplc.com/research/conflicts_of_interest.asp for WH Ireland’s research disclosure and disclaimers and conflict management policy regarding Non-Independent Research. WH Ireland Limited is authorised and regulated by the Financial Conduct Authority (Financial Services Register number: 140773)
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