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magazineNexus Infrastructure hit by contract delays
Nexus Infrastructure (NEXS:AIM) 209p
Gain to date: 9.1%
Original entry point: Buy at 191.5p, 13 July 2017
Shares in Nexus Infrastructure (NEXS:AIM) took a knock on 27 April after it issued a profit warning linked to its TriConnex business which designs, installs and connects gas, electricity,
water and fibre networks on residential and commercial property developments.
The conversion of TriConnex’s order book to revenue is taking longer than expected. The business works with customers in the early stages of development and often secures contracts prior to land being bought for property construction. It says these contracts generally contribute to revenue over four to five years.
Nexus now reveals that schemes are taking longer to get to start on site. ‘The delay is a result of an increased level of pre-commencement conditions set by the local authorities and customers continuing to appoint TriConnex very early in the preconstruction stage,’ explains the company. ‘This provides good longer term visibility, though it creates a medium term delay in converting the order book to revenue.’
Edison analyst Stephen Rawlinson says the issue looks like a ‘small wobble at worst and nothing to be too concerned about’. He points out that the business is still healthy with a £234m order book compared with revenue last financial year of £135m, plus a £15m net cash position.
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