Rationale for buying Speedy Hire (SDY) bought at 28p

Speedy Hire (SDY) is the UK’s largest provider of hire equipment to the construction and infrastructure market. They have 10% of the highly fragmented UK market and have also recently moved into the Middle-East market and into training and advisory services in the UK. Both of these businesses are fledgling businesses and have growth potential. However the vast majority of the business is still made up by their UK hire business.


This business has had some major problems with the economic crisis and the subsequent downturn in the construction industry. The company has however responded to this by having a rights issue to restore the balance sheet as well as streamlining the business with the closure of some overlapping branches. The result is that the current market cap(at 23p) is £117.2 million whilst the current tangible assets are £180.9 million. So there is a significant discount to the asset value of around 35%. It has to be said that the company was loss making last year due to the restructuring costs and the drop in construction industry. However I do feel they have made the steps necessary to profit from the upturn in the industry. Whilst there will be significant public sector cuts the private construction industry is expected to take over some of this demand. There needs to be significant investment in infrastructure spending especially in the power segment as current nuclear stations are closed down and green alternatives are sought for coal fired stations. The railway sector is also expected to pick up with Crossrail and new high speed lines being planned. Speedy have an exclusive deal with Network Rail for the provision of hire equipment.

In 2008 the company made over £30 in profits and if they can get back to those figures then that would be a price earnings ratio of less than 4. It is expected however that it will take a few years to get back to anywhere near this level. However I think the worst is behind the company and this is definitely a share that should come good over the long term.

If this post has wetted your appetite for doing more research then I recommend reading the following investor presentation from the Speedy Website http://www.speedyhire.plc.uk/download/Analyst_Investor_Presentation_2009_tcm6-1970.pdf