Decent boating weather, despite challenges

EHN’s financial analyst, Nick Spoliar of WH Ireland, gives his assessment of the current economic picture.

Economy, economy, economy. “As idle as a painted ship / Upon a painted ocean.” Maybe. However, we should be clear, the economy is soft, not in recession.

Looking at the indicators from a rental perspective, “Construction output falls at the steepest rate since April 2009,” is a challenging headline (CIPS/Markit, 02/07/19). The Financial Times followed up with, “Dark clouds gathered over the UK economy today” (04/07/19). No one can deny that companies are feeling the pain. Only at the end of June, international insulation supplier, SIG plc, reported a challenging trading environment and spoke of a “marked deterioration in the level of construction activity in the UK as the year has progressed”.

While the economy might be becalmed, it is not in recession.

However, a glance at the construction PMI (Purchasing Managers Index) details shows that while negative, they are nowhere near 2009 levels, thankfully.

Mixed picture

How about the equity markets? The picture they paint is mixed. Does the UK, having underperformed by global standards thanks to Brexit, stage a rally after the end of October? This clearly begs a few questions. And how much downside might there be in global equity markets in the light of rumblings over trade? These issues will no doubt be chewed over between now and the end of the year. Answers on a postcard, please.

In the rental sector, life carried on as usual. Ashtead results on 18 June were excellent, with pre-tax profits up 19%, slightly ahead of market expectations. A little bounce for the shares on the back of this, consolidation at a higher level.

With Russell Down starting his fifth year as CEO of Speedy Hire on 1 July, full year results a few weeks earlier showed that the efficiency drive continues.


Vp’s results on 4 June showed profit (adjusted) up 15% and spoke of good progress with Brandon Hire. The CMA cloud persists for the present, however.

One more company to throw into the mix, Northbridge Industrial, which is involved in load banks and related products, as well as tools used in the oil and gas sector, lifted trailing EBITDA by 78% in the twelve months to April 2019. Sentiment improving in oil and gas can float quite a few boats, painted or otherwise.

While the equity market has been choppy for IPOs (fund-raisings); however, funds remain available both in the public markets and in the private sphere for good quality companies. So - decent boating weather in spite of the manifest challenges.

WH Ireland disclaimer: WH Ireland states that this is not an offer or a solicitation to buy or sell any security. Please refer

to and 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)

Page 1  |  Page 2  |  Page 3  |  Page 4  |  Page 5  |  Page 6  |  Page 7  |  Page 8  |  Page 9  |  Page 10  |  Page 11  |  Page 12  |  Page 13  |  Page 14  |  Page 15  |  Page 16  |  Page 17  |  Page 18  |  Page 19  |  Page 20  |  Page 21  |  Page 22  |  Page 23  |  Page 24  |  Page 25  |  Page 26  |  Page 27  |  Page 28  |  Page 29  |  Page 30  |  Page 31  |  Page 32  |  Page 33  |  Page 34  |  Page 35  |  Page 36  |  Page 37  |  Page 38  |  Page 39  |  Page 40  |  Page 41  |  Page 42  |  Page 43  |  Page 44