Liontrust UK Opportunities Fund on Kier Group plc
Thesis
Liontrust's holding in Kier benefited from a substantial share-price gain following its annual results. The construction group has exited underperforming legacy contracts, refocused on core businesses and returned its balance sheet to net cash. Framework positions in water, defence, energy and healthcare underpin a healthy prospective pipeline. The planned exit from its Property operation should also release significant cash flow over the coming years.
“the company’s future pipeline is in rude health.”
Key risks
- The legacy-contract problems that previously weighed on Kier demonstrate construction execution risk.
- The UK economic and interest-rate backdrop could affect activity and the wider construction sector.