QTS buy boosts annual profits at Renew Holdings

Renew Holdings on Tuesday reported a surge in annual profit after a full contribution from its QTS rail services acquisition.

The engineering services firm booked an 83% rise in pre-tax profit to £27m as revenue rose 11% to £599.9m after new contract wins and renewals in target markets. A final dividend of 7.67p a share was declared for a total of 11.5p, up 15%.

Engineering services revenue jumped 21% to £564.5m, boosted by QTS, a specialist rail services provider acquired last year, while the unit's order book grew 6% to £542m.

Meanwhile, turnover from the smaller specialist building division was slashed by 51% to £36.1m, in line with expectations.

Shore Capital analysts said the stock's current rating "fundamentally undervalues the business" possibly due to its association with contractors that had a "much higher risk profile, in our view, due to the relative size and low-volume of their contracts compared to Renew’s".

"We maintain our 'buy' recommendation but we are unlikely to make significant changes to our 2020 forecasts," the broker said.