Construction firms set for HS2 rail link bonanza
INVESTORS snapped up shares in British contractors after Boris Johnson gave HS2 the green light.
Construction and engineering companies Balfour Beatty, Kier
Group and Costain all raced ahead as the decision on the £106bn infrastructure project got rid of lingering uncertainty hanging over their order books.
Kier, which has struggled amid a string of profit warnings, jumped 6.7pc, or 7.1p, to 112.5p on the decision to back the high-speed rail route connecting London with the Midlands and the North.
It has secured around £1.3bn of work on HS2 through a joint venture, while Balfour Beatty (up 1.8pc, or 5p, to 278p) also has a smattering of contracts related to HS2, including two worth £2.5bn through a joint venture that have not been added to its order book.
Contracts held by Costain (up 5.7pc, or 11p, to 205p) could add as much as 34pc to its earnings per share, Liberum brokers say.
And the project is expected to increase demand for geotechnical engineering, of the type offered by
Keller Group, which rose 0.7pc, or 6p, to 865p.
Critics have slammed HS2 as a waste of money, arguing the funds would be better spent on improving regional transport. To head off further criticism, the Government also unveiled a £5bn investment in bus and cycle schemes for every region outside London. This lifted bus companies First
Group 2.6pc, or 3.2p, to 127.2p, and Go-Ahead Group 1.9pc, or 40p, to 2160p. The FTSE 100 and
FTSE 250 both ended on a high as worries about the coronavirus began to subside.
The Footsie climbed 0.7pc, or 52.56 points, to 7499.44, while the mid-cap index rose 0.7pc, or 152.7 points, to 21,646.02.
FTSE 100-listed United Utilities clinched a rare double upgrade from ‘underperform’ to ‘buy’ from Jefferies as brokers said new regulations outlined by regulator Ofwat in December were better than expected. It closed 2.1pc, or 20.3p, up at 1008.5p.
And AIM-listed Boohoo rose 1.6pc, or 5.1p, to 328.7p, as Barclays analysts upgraded it to ‘overweight’ from ‘neutral’.
It reasoned that the online fashion retailer will keep growing at a rapid pace. Barclays hiked its target price on Boohoo’s stock from 310p to 380p.
Sausage maker Cranswick and thread maker Coats both edged higher as they bought smaller rivals for undisclosed amounts.
Cranswick rose 2pc, or 72p, to 3718p after it took over the Buckle family’s pig farming and rearing operations in Yorkshire and also bought the family’s 50pc share of a joint venture the two set up in 2018. Coats inched 0.9pc higher, up 0.65p, to 72.9p after it took over a North Carolina-based firm, Pharr High Performance Yarns, which supplies yarns to defence and fire service industries.
Sofa-seller ScS Group climbed 4pc, or 9p, to 237p after private equity-backed Parlour Products Holdings sold its entire remaining 26pc stake – some 9.9m shares – in the firm for £21.7m. Optimistic investors sent Premier Oil 1.9pc, or 1.94p, up to 101.90p, ahead of a meeting of creditors today when it will seek approval for a £2.2bn refinancing and a £670m North Sea acquisition spree. It already has the backing of more than 75pc of creditors. But Hong Kong-based hedge fund Asia Research and Capital Management, a creditor which has shorted almost 17pc of Premier’s shares, is expected to do its best to agitate the deal.
BP rose ahead of a speech today in which new chief executive Bernard Looney is anticipated to roll out a plan to restructure the bluechip oil giant. It closed 1.1pc, or 5.1p, up at 469.7p.