Ashtead plans primary listing move to New York

Given previous speculation and the US-focused nature of Ashtead's (AHT) business, it was no surprise that it announced plans to move its primary listing to New York within the next 12-18 months alongside its half-year results. 

The North American market delivered 98 per cent of total operating profit in the latest year, and the executive team is based over the pond. So, while the loss is a further blow for the London exchange, Ashtead's conclusion that the US with its deeper capital markets is its "natural long-term listing venue" seemed inevitable. 

There was also some big news for shareholders regarding the return of capital. Ashtead announced a $1.5bn (£1.17bn) buyback programme, to be completed over the next 18 months. The surge in the dividend was down to the rebalancing of the split between the interim and final payouts. 

The actual trading figures contained no real surprises. Rental revenue was up 6 per cent, and cash profits rose 4 per cent with an improved margin of 47.4 per cent. The leverage ratio sat at 1.7 times. 

However, the shares were marked down by double digits on the back of a guidance cut, as the trading backdrop remains tough for the general tools business. Annual guidance is now for rental growth of 3-5 per cent, down from 5-8 per cent. Gross capex is also forecast to come in lower, at $2.5bn-$2.7bn, while the free cash flow outlook was raised from $1.2bn to $1.4bn. 

It remains to be seen to what extent a primary listing move could boost Ashtead's rating. The shares trade on 19 times forward consensus earnings, compared with the 18 times on offer at rival United Rentals (US:URI). But the long-term growth narrative remains attractive. Buy. 

Last IC view: Buy, 5,266p, 18 Jun 2024