Our latest Investing Matters Podcast episode with QuotedData's Edward Marten has just been released. Listen here.
London South East prides itself on its community spirit, and in order to keep the chat section problem free, we ask all members to follow these simple rules. In these rules, we refer to ourselves as "we", "us", "our". The user of the website is referred to as "you" and "your".
By posting on our share chat boards you are agreeing to the following:
The IP address of all posts is recorded to aid in enforcing these conditions. As a user you agree to any information you have entered being stored in a database. You agree that we have the right to remove, edit, move or close any topic or board at any time should we see fit. You agree that we have the right to remove any post without notice. You agree that we have the right to suspend your account without notice.
Please note some users may not behave properly and may post content that is misleading, untrue or offensive.
It is not possible for us to fully monitor all content all of the time but where we have actually received notice of any content that is potentially misleading, untrue, offensive, unlawful, infringes third party rights or is potentially in breach of these terms and conditions, then we will review such content, decide whether to remove it from this website and act accordingly.
Premium Members are members that have a premium subscription with London South East. You can subscribe here.
London South East does not endorse such members, and posts should not be construed as advice and represent the opinions of the authors, not those of London South East Ltd, or its affiliates.
10* EBITDA is absurd
5* EBIT (or less) is pretty common atm
A very low valuation Jolly.
How about 10 x EBITDA - c£1m p.a so £10m.
Plus almost £2m cash
Plus over £5m to come - discounted by 20%.
SP c£16m valuation - c 116p a share.
How to value underlying business?
£2m perhaps...15p/share?
then cash £5m ? (discounted for risk and time) 40p?
tp 55p?
Nice upwards breakout on the chart this morning after the results.
WH Ireland are still waiting to publish new forecasts. They don't add much to this morning's RNS, but conclude:
"WHI view:
Today’s update highlights a favourable start to the second half. The previously announced NHS trust maintenance renewal in respect of the security needs of a group of hospitals highlights CSSG’s strong, embedded relationships with its client-base and the fact that a noteworthy proportion of its business is longer term in nature.
Encouragingly, though the quantum is not specified, the company is highlighting a robust pipeline of potential contracts in the entertainment and utilities areas. CSSG has announced contracts with major cinema groups, and we believe there are potentially some further promising prospects for the company, particularly as it continues to roll out its product across new and extended geographies."
Yes nice little developing company. Pleasing if unspectacular results. Further acquisitions to follow and Vigilant cash to come in.
A good, solid H1 performance reported today, with net profit up 18%. The acquisitions made will help H2 further.
There's £1.73m cash too, with the additional £5.78m due from Vigilant starting to be paid from next month against the £9.2m m/cap.
Above all, the outlook is very confident. The contract pipeline looks extremely promising:
"We have had a promising start to H2. In January 2024 we acquired two profitable locksmith businesses with a combined turnover of £0.5 million, operating from Peterborough and Worthing. We have been successful in delivering a number of new contracts including being re-awarded a three-year maintenance contract by an NHS Trust to cover their hospitals' security needs. This success reflects the high levels of service that make us a preferred supplier in the health sector.
In addition, there are a number of contracts in the pipeline in the utilities and entertainment sector and we believe that these customers represent a material long term opportunity. A solid underlying performance, coupled with the success of our ongoing strategy to identify acquisitions where there is a significant opportunity to enhance sales growth and profitability, leaves us well-placed to deliver year-on-year growth despite continuing difficult macro conditions."
new buy recommendation for cssg on hotstockrockets (subscription-only though):
https://*************.com/views/72921/croma-security-solutions-positive-trading-and-nhs-trust-contract-renewal-buy
No Traa, these are small, simple acquisitions and they have said they are targeting smaller companies where the directors are close to retirement.
Essentially they will be cash deals and paid upfront - as has been the case with the last few acquisitions.
Maybe (re)listen to the last investor meets presentation.
'the piecemeal payment agreement for Vigilante will mean that cash will limit the size and frequency of these'
Not at all, there are many ways to structure a deal - as was seen with Vigilante .
Yes a solid, if slightly unspectacular, trading update.
It does appear that acquisition will be required to drive revenue growth and so the piecemeal payment agreement for Vigilante will mean that cash will limit the size and frequency of these. However, the one announced a few weeks ago looks a good fit at a sensible price.
WH Ireland are still waiting to produce new forecasts, but make some useful points:
"Croma Security Solutions (CSSG) – Corporate – H1 update: rapid pace of growth;
contract streams underpin; M&A offers good opportunities"
"We are encouraged by the continuing positive pace of growth, which we view as both organic and acquisition based. On the score of organic growth, we note last week’s release by the Home Office of data relating to outcomes following a crime, which shows a further increase in the year to September 2023 in unsuccessful investigations (“completed without suspect”) to over 40% of total crimes, in addition to c.38% described as posing “evidential difficulties”, while criminals charged are under 6% (2014:17%). We anticipate that underlying demand for CSSG’s services will continue to grow."
"We believe that many more consolidation opportunities of this kind are available for CSSG. It is important to note the cash available to the company to generate earnings enhancing growth through market consolidation, given that in addition to the last announced year end net cash of £2.1m, further substantial payments are to be expected in respect of Vigilant (£0.5m cash payment in March ’24 to be followed by a further nine payments of c.£0.4-0.5m each, plus the redemption of £1.3m of Vigilant shares anticipated for July 2024)."
"WHI view: In addition to underlining the consolidation opportunity for CSSG, this
morning’s update provides further evidence of the very reasonable prices that
the company is paying for its acquisitions, with the most recent £0.4m
consideration paying for a profitable two-site business and additionally including
a site valued at £0.35m freehold. With sites typically turning over revenues in
the range of £300-350k (though these can be more sizeable or smaller), we believe that the resources available to CSSG make a meaningful site acquisition programme, further expanding the national geographical footprint and offering operational gearing opportunities, very much within the company’s grasp.
Also in this morning’s update, it is good to see the contract renewal with an NHS trust. Historically, CSSG has announced similar contracts, and combined with contracts with national cinema chains and other major clients, we believe that these renewals indicate a helpful strand of repeat earnings where the company is effectively well embedded with its clients."
Today's 6-month trading statement looks good:
- revenues up 13.5% year on year
- major NHS contract renewal
- acquisitions trading well and looking like a bargain with the £0.35m freehold property included
- more acquisitions likely
Hopefully the first of many.
Shame the company allowed Morley and Co to buy the security arm with c10% upfront payment and mates rates loan fees. Was hoping the war chest would be bigger. Hopefully the payments will start coming in as expected from March/April this year.
News of the acquisition of two new businesses for just over £0.5m - including a £0.35m freehold property, which surely makes this terrific value - to be converted into full-blown security centres:
Https://uk.advfn.com/stock-market/london/croma-security-solutions-CSSG/share-news/Croma-Security-Solutions-Group-PLC-Acquisition/92975390
And "There are further acquisition opportunities under consideration".
new article noting cssg has "significant upside potential" - subscription only unfortunately:
https://*************.com/views/71882/croma-security-solutions-group-now-a-buy
Up 2p again today on only £10k traded, so perhaps not much stock around.
ILoq tie up definitely looks interesting
https://www.iloq.com/en-uk/
Per today's RNS, the AGM update will be on 1st December, so not long to wait. Glad to see there'll be another Investor Meet webcast.
It's particularly important that investors realise that what were simply "locksmiths" will now become retailers of entire security systems for all premises.
This is not just for the homeowner, but for all forms of industrial premises, company and property owners who may not only need key cutting, but entry systems, alarms etc who previously had to go to a number of different suppliers who didn't have the reputation, status and resources behind them of a quoted company. As per the large housing maintenance client mentioned in the results.
The opportunity is large for a £10m microcap company which is already making £950k EBITDA, generating almost £1.3m cash in the year, and has a £2.14m cash pile plus a further £5.43m receivable from the sale of Vigilant in the form of Loan Notes and redeemables.
Just watched it. Some good things - H2 trading going well and more acquisitions due etc.
Not sure i warmed to CEO. Didn't really accept that the sell off has been poorly received by the market, when it clearly is the case.
Ultimately it is a profitable company paying a decent divi. It is valued £8m and has net assets of £15m, although £5m of this is intangible.
We are also due c£5m over the next 3 years.
Yesterday's Investor Meet presentation is well worth a watch. It was interesting that the share price was rising during and after the presentation!
"Several" acquisitions per annum are promised, with apparently "dozens" in the pipeline to be assessed. There is no competition out there for these locksmith outlets.
These outlets can post-acquisition be (1) upskilled and upbranded with a much larger product range including entry alarm systems etc and (2) will enjoy substantial benefits of scale and cost synergies in terms of cheaper buying costs, use of central services and therefore cheaper overheads etc:
Https://www.investormeetcompany.com/investor/meeting/investor-presentation-482
Good to see the newly appointed CFO buying her first 15k tranche of shares:
Https://uk.advfn.com/stock-market/london/croma-security-solutions-CSSG/share-news/Croma-Security-Solutions-Group-PLC-Director-Dealing/92540364
I'd say it's very disturbing that just £15k of buys can move the sp by over 10%. Guess this is a sign that the investor presentation was well received. I've held for a very long time and still believe this is atleast 50% undervalued. Let's hope another £100k of buy orders come in and push the price back into the 80's
Good to see only around £15k's worth of shares bought this morning having a nice effect on the share price.
Encouraging news this morning that CSSG are being proactive and presenting via Investor Meet on November 13th - not something they've done before as far as I'm aware. Perhaps they're now confident they have a good story to tell:
Https://uk.advfn.com/stock-market/london/croma-security-solutions-CSSG/share-news/Croma-Security-Solutions-Group-PLC-Notice-of-Investor-Presentation/92492815
Good to see a mere £800 moving the share price up. Hopefully indicates not much stock around.