Research on VP (VP) from Equity Development
Vp’s H1 trading update confirms the Group is on track to meet full year market expectations and to deliver a year of profit recovery, supported by last year’s Brandon Hire Station restructuring. Whilst end market commentary is, for the most part, consistent with previous updates, there has been a notable recent improvement in the important water sector with encouraging momentum in AMP8 activity in the second quarter. Vp continues to progress its strategic priorities under new CEO Alice Woodwark with a focus on operational excellence and customer service, supported by ongoing investment in digital transformation and the strengthening of the leadership team. Whilst Vp’s shares have seen a modest upturn in recent weeks, they continue to trade on undemanding earnings multiples (8.6x P/E and 4.0x EV/EBITDA for FY27) with an attractive and very reliable 7.7% dividend yield. In our view, this does not reflect the quality of the Group, its long track record of success or the ambition of the management team, and we reiterate our 750p/share Fair Value estimate.
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