After finishing the year with its order book at record levels on the back of ongoing investment in upgrading and renewing the UK's energy, water and transportation infrastructures, Costain's (COST) end of year trading update suggests a bright start to the new year.
The construction and civils specialist is up 2% at 374.25p after a Little Christmas update that points to growing orders and increased visibility. Costain told investors that since the group's interim results on 20 August 2015, the £383.9 million cap has continued to perform well and expects to deliver full-year results in line with expectations.
The group's order book at year-end reached a new record level of £3.9 billion comopared to the previous year's £3.5 billion and includes over £1.1 billion of revenues secured for 2016. Management also points out that the order book also provides good long-term visibility with £2.8 billion of revenues secured for 2017 and beyond. Furthermore, over 90% of the order book comprises repeat business and Costain is also sitting on a strong preferred bidder position
in excess of £500 million, with tendering levels across all its target markets remaining high.
Investec's Andrew Gibb sees a bright outlook for UK construction and Costain in particular: 'With a significant investment programme in UK infrastructure and Costain's leading position in key growth markets such as transport and energy, the medium term outlook remains encouraging,' he says. The broker raises it target price to 410p from 370p.