Speedy Hire interims point to profit recovery, shares 28.3p, TP 35.6p

Mark Watson-Mitchell - 28.11.2025

Following the £130m-capitalised Speedy Hire (LON:SDY) reporting its Interim Results to end-September two days ago, analysts at Cavendish Capital Markets have today issued an eight-page Buy note on the group's shares, now 28.3p, with a Target Price of 35.6p.

The brokers conclude that:

"Falling interest rates should have a stimulating effect on a number of Speedy’s end markets including Construction and Housebuilders.

Speedy has positioned itself as the premium, sustainable choice for Tier 1 contractors who have carbon reduction mandates, and is an early cycle play benefiting from the point sites break ground.

While 1H results demonstrated the poor current market conditions the valuation is correctly, we believe, starting to look forwards and factor in the group’s strategic strengths, the value of the HSS deal and the operational and financial gearing potential in markets that may have a return to growth on the horizon."

The Interim Results

The group reported a revenue of £205.2m for the six months to end-September, a slight increase of 0.8% compared to the previous year, despite subdued market conditions.

The company experienced an adjusted loss before tax of £7.2m, a shift from a £0.4m profit in the prior period, primarily due to increased interest costs from fleet investment and higher operating expenses including national living wage and national insurance increases.

However, the company highlighted strategic progress, including a transformational commercial agreement with ProService, expected to generate £50-55m in annualised revenue and significant earnings accretion.

The Board's expectations for the full fiscal year 2026 remain unchanged, with confidence for FY2027 driven by new contract wins and the ProService agreement.

Management Comment

CEO Dan Evans stated that:

"We were delighted to have achieved significant further strategic progress in the first half, including the transformational commercial agreement with ProService.

This commercial agreement is now live and expected to generate £50-55m of annualised revenue and significant earnings accretion in its first full year after integration.

Speedy Hire is a fundamentally different business now to when we embarked on our Velocity strategy.

Despite subdued markets, we are gaining market share and winning significant long-term contracts, leaving us far better positioned to take advantage as and when market conditions improve.

As a result of our strategic progress, recent contract wins and the commercial agreement with ProService, we expect to offset the ongoing subdued market conditions and the Board's expectations for FY2026 remain unchanged.

We look forward to FY2027 with confidence."

The Business

Established in 1977, Speedy Hire is the UK's leading provider of tools and equipment hire services to a wide range of customers in the construction, infrastructure, industrial, and support services markets, as well as to local trade, and retail.

The group provides complementary support services through the provision of training, asset management and compliance services.

It operates from 138 Service Centres and on-site locations across the UK and Ireland and through a joint venture in Kazakhstan.

Cavendish Capital Markets view

"Speedy is an asset-based, capital-intensive business. Its type of assets are fundamental to the smooth functioning of the UK construction market, and this supports long-term demand in a market that can be highly cyclical in the short term.

Given the operational and financial gearing of the business, P&L and cash flow metrics can move fast in both directions, making their use as valuation tools problematic.

NAV provides a better view on the fundamental value of the business and is a sound base for a first step in the share price recovery."

My View

I feel that the shares of Speedy Hire have further to climb as the recovery gets underway.

My Target Price could well be beaten very shortly.

(Profile 04.09.25 @ 24.50p set a Target Price of 30.50p)