SigmaRoc in strong position to step up buy-and-build strategy


  • Construction materials company with focus on the UK and Northern Europe
  • Taken a major step into Belgium with CDH acquisition
  • End-2020 cash position of £27.4mln, giving it the firepower to add to portfolio
SigmaRoc quarry

Quick facts: SigmaRoc

Price: 67.25 GBX

Market: AIM
Market Cap: £187.45 m

What SigmaRoc does

SigmRoc PLC (LON:SRC) is a construction materials company with a buy-and-build strategy focusing on assets in the UK and Northern Europe.

Founded in 2016, the firm looks to create value by purchasing assets in the fragmented construction materials market and forming them into larger groups to create efficiencies.

These assets are segmented into regional ‘platforms’: Ronez, PPG, South West and Benelux.

What it owns

The company’s portfolio includes

Ronez: A concrete and asphalt firm based in the Channel Islands consisting of the St John’s Quarry in Jersey and Les Vardes Quarry and Vale Castle in Guernsey

Allen Concrete: A precast concrete product maker with plants in Surrey and Northamptonshire

Poundfield Products: Suffolk-based precast and prestressed concrete manufacturer

CCP Building Products: Supplier of concrete and aggregates (materials including sand, gravel and crushed stone). Has manufacturing facilities in North West England and North Wales

Foelfach Quarry: Crushed aggregate and stone quarry in Carmarthenshire, Wales, containing some of the home nation’s highest quality aggregate reserves. The quarry also produces high-polished stone, a valuable material for road surfacing

GD Harries (GDH): 40% stake in GDH, one of Wales’s largest independent suppliers of aggregates. Operates seven hardstone quarries, six concrete plants, three asphalt plants, a wharf operation and four road-contracting units.

Carrières du Hainaut (CDH). the cornerstone of our Benelux platform, which comprises operations at CDH and Stone Holdings. CDH presently produce around 900,000 square metres of high quality Belgian blue stone per year.

How it's doing 

At the beginning of February, the company revealed that it expects to report results for 2020 that are ahead of current market expectations.

The group said the strong trading reported in its December market update continued through to the end of the year.

SigmaRoc expects to report revenues for 2020 of around £124mln, up 77% year-on-year, while underlying earnings (EBITDA) are expected to be 54% higher than the year at before at £23.8mln.

The group's year-end cash position was £27.4mln. The strong cash generation in 2020, together with the net proceeds of the equity issue and the new £125mln credit facilities entered into in December, mean the group is well-positioned to accelerate its strategic development in 2021.

So far in 2021 all of the group's sites have remained operational save for the sites at Les Vardes and Monmains, which are closed temporarily in line with the imposition of a brief coronavirus (COVID-19) pandemic lockdown in Guernsey.

What the boss says: Max Vermorken, chief executive 

"The group has continued to demonstrate that a decentralised business model focussed on local markets is a robust approach in our industry, particularly in challenging times.

The group is supported by a solid asset base and will continue to confront all challenges head-on while executing on its buy-and-build strategy to deliver further shareholder value."

What the broker says: Liberum 

SigmaRoc’s house broker, Liberum, has pushed up its target price for its client to 73p from 70p after upgrading its 2020 earnings forecast by 9%.

“We leave our out-year numbers unchanged, due to high levels of uncertainty. We note though that UK construction is supportive, we expect more self-improvement and conversions from the acquisition pipeline sooner rather than later. We continue to see good upside in the shares as the fund raising proceeds are redeployed and as SigmaRoc’s re-rating has further to go,” the broker said.

“2020 closed better than expected, with the strength of demand from residential RMI helping to boost revenues in Belgium and the UK,” Liberum observed.

“Guidance implies revenue growth of 77% year-on-year, of which we estimate 74% comes from acquisitions (CDH in Belgium, acquired in December 2019, and GD Harries, acquired in September 2020), with the 3% balance better than it sounds given the disruption from Covid-19 containment measures,” it added.

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