Shares in Nexus Infrastructure (LSE: NXS) took a 16% dive on Friday, after the firm issued a warning about expectations at its TriConnex division.
TriConnex, which works in the energy, water and fibre networks field, has seen a 44% rise in its order book. But it’s experiencing unexpected delays in turning those orders into works in progress. Projects are taking longer to get under way on-site, apparently due to extra layers of red tape being imposed in the early pre-construction stages.
Though that might sound worrying in the short term, the result is only likely to be a flat year for the infrastructure engineer, with revenues and operating profit for the full year now expected to come in only around 2017’s levels. That’s below previous expectations.
But the order book is still predicted to grow further by the end of this year, “based on the current pipeline opportunities,” and with the division’s contracts generally covering four to five-year periods, the longer-term outlook still looks pretty healthy to me.
The firm’s other division, Tamdown, which focuses on things like highways and drainage systems, is still on track to meet previous expectations.
Nexus boasts a total order book of £234.1m, for a 30% year-on-year increase, and is predicting revenue and operating profit for the first half ahead of the same period in 2017.
While EPS forecasts are likely to dip a little now, from the current consensus of a 14% gain, I think we’re still looking at a bargain valuation. By the end of the 2019 year, the forward P/E multiple is likely to be around 10, and that looks attractive to me.
What better to accompany a growth prospect like Nexus than a top dividend payer? The one I have in mind at the moment is Intu Properties (LSE: INTU), a real estate investment trust (REIT) investing in shopping centres. It’s offering forecast yields of around 7% for this year and next.
There are two things I like generally about REITs. One is that they provide a great way for investors to get some of their cash into the commercial real estate market without having to be wealthy enough to buy a whole shopping centre or a factory. And even those who can afford to do so should face considerably less risk as part of a big and diversified portfolio.
The other thing I like is that investment trust rules allow the company to smooth out its dividend payments over the long term, which can be a boon in this kind of business where earnings can be lumpy over the short term.
On that score, I see one of Intu’s strengths as being its record of steadily progressive dividends. Rises have only been modest, but with consistently decent yields, I see that as fine.
Priced at 197p as I write, Intu shares are on a forward P/E of around 13.6, and that’s expected to drop slightly by 2019. That’s a middling valuation, but what really grabs me is the trust’s assets.
At the end of December 2017, Intu boasted a net asset value per share of 411p. After Friday’s price fall, the shares are trading at less than half that, which is a big discount.
Barring a catastrophe around the corner, which I can’t see, Intu looks like a bargain to me.
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Alan Oscroft has no position in any of the shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.