Insider: triple purchase at Harland & Wolff

A transformational deal has reignited interest in this small-cap which is already up 350% in less than a month, but the boss is still buying after a ‘truly defining moment’. There is also stake-building elsewhere on AIM.

A three-day buying spree by the boss of Harland & Wolff Group Holdings (LSE:HARL) has backed the Belfast shipyard owner after its valuation soared due to a transformational £1.6 billion contract.

Three investments totalling £40,000 were made by John Wood on successive days between Tuesday and Thursday at prices ranging from 21.75p to 24.74p.

The AIM-listed stock had been less than 10p prior to the Team Resolute consortium securing preferred bidder status on the building of three support ships for the Royal Fleet Auxiliary. These vessels will serve Royal Navy aircraft carriers, destroyers and frigates deployed at sea.

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Much of the work will be undertaken at the company’s shipyard sites in Belfast and Appledore in north Devon, with components and other parts being fabricated at its two other centres at Methil on the east coast of Scotland and Arnish on the Isle of Lewis.

Wood described the contract award as a “truly defining moment” for Harland & Wolff and a major boost both for its assets and for the shipbuilding industry in the UK.

It also breaks up the traditional dominance held by Rosyth dockyard owner Babcock International Group (LSE:BAB) and Clyde-based BAE Systems (LSE:BA.) over Ministry of Defence orders.

The Belfast shipyard is one of Europe's largest heavy engineering facilities, featuring a vast main drydock and two giant gantry cranes known as Samson and Goliath.

Wood said: “It was just under three years ago when we made our initial acquisition of the Belfast facility and at the beginning of 2020 our revenues were zero.

“We now look forward to a very material portion of this £1.6 billion contract which - alongside existing projects - provides significant revenue visibility over the short to medium term.”

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Some of the MoD contract will be undertaken by Spain’s Navantia, but with most of the workload being in Britain to support 1,200 shipyard jobs and 800 indirect roles.

In August, the fabrication and construction company said it was on track to meet market forecasts for 2022 revenues of between £65 million and £75 million. It added that it hoped to expand this to a range of £100 million and £115 million in 2023 amid confidence around potential orders within the defence and renewables markets.

The company joined AIM in January 2008 when it was known as Portland Gas, before changing its name to InfraStrata a year later. It took its current title in September last year following the acquisition of the two shipyards and two fabrication sites.

Wood previously held senior posts in the oil and gas industry with BAE Systems before becoming chief executive of InfraStrata and now Harland & Wolff.

Slump to 11-month low triggers share buying

Elsewhere on AIM, the chief executive of Marlowe (LSE:MRL) and one of the company’s senior board members have shown their support after a difficult week for its shares.

Alex Dacre, who founded Marlowe in 2015 and has overseen its transformation from cash shell to a leading provider of business-critical services and software, spent £20,000 on shares on Thursday at a price of 597p. He now holds a stake of 4.89%.

He was joined by non-executive director Charles Skinner, who made an investment worth £100,000 at 604p. Prior to founding Marlowe, Dacre had worked with Skinner to turn AIM-listed Restore into a leading office services company and consolidator in the records and information management sector.

The Marlowe share price had been 729.6p prior to Wednesday’s half-year results, when cheer over an uplift to annual earnings expectations was more than offset by a surge in borrowing costs caused by rising interest rates and expanded debt facilities.

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The increase in debt followed 10 bolt-on acquisitions in the period as Marlowe deepened its presence in compliance software, employment law and HR and occupational health.

The additions were accompanied by underlying organic revenues growth of 8% in the six months to 30 September, with the divisions of governance, risk and compliance and testing, inspection and certification both posting growth in excess of the wider market.

Overall revenues increased 66% to £222.9 million and underlying earnings increased 80% to £39.2 million. Dacre told investors that Marlowe had made a strong start to the second half, with good levels of organic growth.

He pointed out that Marlowe’s software and services are mainly non-discretionary and based on multi-year contracts, which provide “excellent revenue visibility”.

Despite the strong first-half figures, broker Peel Hunt cut its estimates for 2023/24 to reflect the impact of higher interest costs and also lowered its target price to 873p from 1,112p. The City firm said margin development and the execution of the company’s consolidation strategy will be a key focus for investors in the current half year and into 2024.