Renewi shares slide after Credit Suisse downgrade

Oliver Haill WebFG News | 13 Oct, 2017 10:08 | | |

Shanks waste sorting line
  • 101.30
  • 2.58%2.55
  • Max: 101.30
  • Min: 98.50
  • Volume: 1,757,025
  • MM 200 : n/a
17:17 15/12/17
  • 20,048.61
  • 0.21%42.34
  • Max: 20,048.61
  • Min: 19,962.70
  • Volume: 0
  • MM 200 : n/a
17:25 15/12/17
  • 7,774.83
  • 0.35%27.11
  • Max: 7,774.83
  • Min: 7,726.60
  • Volume: 0
  • MM 200 : n/a
17:25 15/12/17
  • 4,162.18
  • 0.51%21.06
  • Max: 4,162.18
  • Min: 4,133.41
  • Volume: 0
  • MM 200 : n/a
17:25 15/12/17
  • 4,108.96
  • 0.50%20.38
  • Max: 4,108.96
  • Min: 4,081.00
  • Volume: 0
  • MM 200 : n/a
17:25 15/12/17

Credit Suisse downgraded its rating on Renewi, the former Shanks Group, as the shares are pretty much up with events after the strong gains since its merger with Van Gansewinkel first emerged.

Renewi has delivered around a 59% total shareholder return since reports of the VGG merger in May 2016, with the deal completing in February this year and synergies of €40m from the merger now priced-in.

"We now see the earnings accretion reflected in the shares," said the Swiss bank, raising its target price to 105p from 100p
but downgrading to 'neutral' from 'outperform' as the shares closed almost at that level overnight.

Credit Suisse analyst Guy MacKenzie think merger synergy targets look conservative given the overlap between the two businesses, estimating every €5m per year of synergies in excess of the base case implies circa 6p per share in present value.

Dutch construction volumes are up 6.5% over the last 12 months to July and forecasting Dutch real GDP to grow 2.2-3.3% over "this should support continued growth in revenue, while synergies enhance margins" even though solid waste is a competitive market.

There are risks seen outside the commercial segment, with hazardous waste EBIT predicted to fall circa £5m in the year to next March and by around £10m the year, though the loss-making UK municipal business is given a zero value that offers upside from a potential sale.

"We think upgrades to guidance are needed for a further re-rating. Key risks include further costs pressure in Municipal and delays to full operations in Hazardous Waste. Deterioration in the Benelux economic growth outlook would also be a potential risk."

Shares in Renewi fell 5% to 99.2p by just after 1000 BST on Friday morning.

More news

15 Dec London close: Footsie gains as pound drops, Wall Street hits fresh highs

The top flight index recovered some ground on Friday, but mostly on account of weakness in Sterling after German Chancellor Angela Merkel reportedly echoed other European Union officials, saying "the most difficult phase is ahead of us".

15 Dec Week ahead: US data, Catalan elections in focus

The focus in the coming week will continue to be on the ebb and flow of data out of the US, including Republicans' progress on securing passage of their tax cuts.

15 Dec US open: Stocks jump as Republicans move to secure passage of tax cuts

Wall Street is heading higher again on Friday amid news that Republicans were tweaking their proposed tax cuts in order to secure prompt passage of the US tax bill.

15 Dec Airbus chief executive to step down in board shake-up

The chief executive of French planemaker Airbus will step down from his position in 2019 as the company announced a major shake-up of its management team.

15 Dec FTSE 250 movers: TalkTalk rises but Serco gives back gains

London’s FTSE 250 was up 0.1% to 20,023.23 in afternoon trade on Friday as the Christmas lull kicked in.

15 Dec US industrial production rises slightly less than expected in November

Industrial production in the States rose slightly less quickly than expected last month, despite higher output of business equipment and materials.

15 Dec Strategic Minerals renegotiates acquisition of Leigh Creek Copper Mine

Diversified mineral production and development company Strategic Minerals announced on Friday that, after the successful completion of technical and financial due diligence on the Leigh Creek Copper Mine company, it has agreed to continue with the acquisition on renegotiated terms.

15 Dec FTSE 100 movers: Sky jumps but retailers retreat on H&M sales

London’s FTSE 100 was up 0.3% to 7,469.23 in quiet afternoon trade on Friday.

15 Dec Gfinity partners with Microsoft for next Halo World Championship

International esports entertainment group Gfinity has been named as a preferred event partner to Microsoft for the forthcoming ‘Halo World Championship 2018’ for the next season, it announced on Friday.

15 Dec Hutchison Chi-Med begins fruquintinib trial in US

Hutchison China MediTech, known as Chi-Med, has initiated the United States Phase I bridging clinical trial of fruquintinib, it announced on Friday.