SigmaRoc puts in strong finish to 2020; broker upgrades target price

House broker Liberum has increased its price target to 73p from 70p

SigmaRoc -

SigmaRoc PLC (LONM:SRC), the construction materials group, has said it expects to report full-year results that are ahead of current market expectations.

The group said the strong trading reported in its December 9, 2020, 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 an 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 20201 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.

Financially the group remains on target and operationally the group continues to maintain robust and comprehensive safe working procedures that have resulted in good production volumes across all sites in January, SigmaRoc told the market.

The board is encouraged by governmental support to keep the construction sector open but remains mindful of the continued risk and uncertainty posed by the pandemic, with both trading conditions and cash collection monitored systematically on a site by site basis.

"Whilst we remain mindful of the backdrop, we have started 2021 well, with progress on all fronts, be it trading, acquisitions, development of our footprint or the continued operational response to COVID-19. Our confidence in the longer-term prospects for the group remains very high and we look forward to taking further positive steps in our development this year,” said Max Vermoken, the chief executive officer of SigmaRoc in the full-year trading update.

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.

Shares in SigmaRoc were up 6.2% at 68.5p.


Quick facts: SigmaRoc


Price: 109 GBX

Market Cap: £695.33 m

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