Shares in Nexus Infrastructure (NEXS:AIM) skipped 5.3% higher to 140p on Wednesday as investors responded to a reassuring trading update and news of a bulging order book.
Like many industry suppliers, Nexus is experiencing caution amid continued Brexit anxiety, yet the cashed-up small cap is on track to meet full year profit forecasts and says it is ‘encouraged by the level of growth’ in its order books.
GROWTH ACROSS THE PIECE
For the uninitiated, Braintree-based Nexus provides essential services to the UK housebuilding and commercial sectors. In a well-received update, the company said it expects profits for the year ended 30 September 2019 will be in line with market expectations.
Admittedly, Numis Securities downgraded its earnings forecasts for Nexus back in April following project delays, pricing pressure and cost inflation.
Reassuringly however, Nexus expects to achieve the broker’s £5.4m taxable profits estimate, sales having increased across the piece during the year, while Numis is looking for pre-tax profits to recover to £8.6m in the new financial year.
ON SOLID GROUND
Nexus’ civil engineering, infrastructure and concrete frame services arm Tamdown, which counts the bulk of the UK’s biggest housebuilders as customers, will achieve ‘high single-digit percentage revenue growth’.
Utility networks installer TriConnex will deliver ‘strong revenue growth following an overall increase in the number of projects secured and the acceleration of certain projects in the period’, while Nexus’ newest division eSmart Networks, which designs, installs and connects rapid electric vehicle charging points, continues to successfully scale-up.
BULGING ORDER BOOKS
Chief executive officer and major shareholder Mike Morris flagged a year-end order book of £338.9m. That represents a 17% year-on-year increase and gives Nexus ‘good visibility of earnings for the year ahead’.
Risk-averse investors who look for strong balance sheets will also note Nexus closed the year with a healthy £22.6m of net cash in the coffers, a cash pile comfortably ahead of the £16m forecast by Numis Securities.
READ MORE ABOUT NEXUS INFRASTRUCTURE HERE
Morris sounded a confident note, insisting ‘the underlying demand in the UK housing market remains strong’ and insists his charge is ‘well-positioned within the structurally under supplied and Government-backed housing market.’
