Equity Development - Speedy Hire - Making revenue progress in challenging markets

Research on Speedy Hire Plc (SDY:LON) from Equity Development

Revenue growth despite tough markets. Speedy reported 4.6% revenue growth in the first four months of FY27, driven by larger accounts and new business wins. While mobilisation and mix have been slower than initially hoped in some areas, management continues to build momentum and longer-term prospects remain intact. National accounts gaining traction. Growth is being led by national accounts and new contract wins, including ProService. Mobilisation has been slower than expected, but the difficult work of securing these accounts has largely been completed, providing scope for stronger activity levels as the year progresses. Forecasts reduced on mix and margin effects. Revenue assumptions have been trimmed and estimates now reflect a modest shift towards lower-margin Service revenues. This results in an estimated c.£12m gross profit impact and leads to a c.70% reduction in FY27E PBT forecasts, with lower expectations also carried through into FY28E and FY29E. Valuation remains subdued versus long-term potential. Following a decline below its established 19-20p trading range, the shares are trading at YTD and 16-year lows. ED's DCF valuation suggests the current share price discounts EBITDA below FY27E levels, while the 61p fair value implies EBITDA slightly above FY29E forecasts, indicating a significant gap between current market expectations and longer-term profit potential.