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Took a small position after the results came out, for some reason the market hasn't responded to what I thought are excellent prospects moving forward what's not to like with the order book plenty to look forward to, often wondered if this company is ever seen as a acquisition target.
All is right about this company,but the problem is few people are buying the shares at the moment and so shares aren't moving.Crazy price after results,on a forward p/e of 5.That's the UK market for you-move to USA!
They forecast 24.1p EPS:
"High quality projects across a range of sectors
TClarke’s FY 2023 results and forward-looking commentary are in line with the November trading statement, and we make no changes to our forecasts. Revenue of £491m in 2023 exceeded the 3-year plan to double revenue from £232m in 2020 and management have confirmed the group is well positioned to achieve growth plans for 2024 and beyond backed by the £943m order book (up +70%). FY 2023 PBT of £7.6m is down from £10.3m in 2022 due to the previously highlighted measures to protect the business from the current, very challenging construction market conditions. These measures included changing some supply-chain partners mid-contract to protect project completion dates, and the early finalisation of project accounts where customer risk had been identified. All projects are expected to be delivered according to their schedules but the one-off costs of these measures restricted the operating margin to 1.9%, below the target 3.0% (2022: 2.7%, 2024E 3.1%).
We reiterate our view that on a 2024E P/E of 5.3x (vs peers 9.1x who are subject to the same market challenges), dividend yield of 5.1% and net cash of £19m the valuation underestimates the company’s long-term growth potential, and market and financial position. The key driver for the share price will be increasing evidence as the year progresses of forecast deliverability.
- Order book up 70%. The strategy of organic growth focused on five core market sectors whilst building market presence in data centres, large projects outside of London, smart buildings and healthcare is delivering. Data centres now account for £346m within the total £943m order book. This total compares to £1.1bn at October 2023 due to the normal seasonally lower win rate at the end of the year being offset by orders completed (H2 revenue was up +37% on H1).
- Net cash £19.3m up from £7.5m. Key movements were: equity raised £10.1m, dividend cost £2.5m, and free cash flow £4.1m. Importantly, given the market conditions, bad debt expense was only £0.3m and in line with the group’s historical average. On the balance sheet contract assets increased by £30m as one of the large, multi-year contracts ramped-up activity, offset by a £30m increase in trade creditors reflecting the strong cash characteristics of this contract.
- Dividend raised 10% as expected. The 2023 dividend was raised to 5.9p from 5.35p reflecting the progressive dividend policy, net cash and growth prospects.
- Medium-term target price 197p, +55% upside. Our medium-term target price is based on a -10% discount to the broad peer group average 2024E P/E. The discount reflects the impact of the larger, highly rated renewals and infrastructure operators within peers. We do not expect construction market conditions to significantly improve in the short term and expect the share price to be driven by increasing confidence in TClarke’s revenue, margin and cash
Cheap on every metric imo. Directors' pay is high, but (1) they're doing an excellent job, and (2) it doesn't matter if the figures are good enough for long enough. People were moaning at MSI's huge directors' remuneration for years - then the shares re-rated and became a five-bagger.
Here's the tip:
Https://masterinvestor.co.uk/equities/small-cap-catch-up-fan-cto-and-stvg/
"Analysts Andrew Gibb and Guy Hewett at Cavendish Capital Markets estimate that the year to end December 2024 will see £600m revenues, with adjusted pre-tax profits rebounding to £17.1m, hoisting earnings up to 24.1p and amply covering a 6.5p dividend per share.
For 2025 they see £650m, £19.1m, 26.9p and 7.1p respectively.
Those estimates easily back up the analyst’s Medium-Term Price Objective of 197p for the group’s shares.
At the end of last week, the shares, which hit 159p last June, were fractionally lower at 122.50p – at which level they are a strong hold for existing shareholders and offer a bargain for newcomers."
Have a look at the level of director pay for this quite small cap. The figures were flagged on Stocko'. If those figures are correct, then I'm shocked.
I can see why companies want to move from London's markets-pathetic response to already flagged result.In fact slightly better than expected.2024 is the year that will see a big jump in eps and with it the share price.I can't understand why people would want to sell now.
The market has already priced in last year's reduction in PBT.
But the overall health of the company looks terrific, with the order book up 70% to a whopping £943m and a positive forward outlook. The move into data centres has been a huge success and should continue to thrive.
Net cash at £19.3m compares nicely to the £67m m/cap.
Cavendish have left their forecast for 2024 unchanged at 24.1p EPS. Which leaves CTO looking very cheap.
They have a 197p price target.
How do you know reporting is tomorrow? Already been delayed by 1 week.
Seems to be a complete absence of interest in this company.
Reporting tomorrow and as of now only two transactions have taken place.
Pathetic,but II am looking for increase i both turnover, profits and most importantly margins.
If we get all three, massive increase in price.
Bought another £1000 a couple of days ago.
Fill your boots chaps.
Preliminary results tomorrow.
Must be a bi lift in the shares at current price.
Nice PE ratio and prospects for a company with a record order book.....Far too cheap....Margins could easily be increased...So a company very much undervalued....
Perhaps they should be concentrating on maintaining a decent margin rather that chasing turnover.
Running to stand still.
Smell a bit fishy. Wouldn't be surprised if this is back in the black by COP today. Tempted for the day trade.
Don't look at all bad to me so why is there a 10pct drop this morning ?
Posted on CTO's web site dated 8th November, confirming it's a big one:
Https://www.tclarke.co.uk/once-again-scotland-beats-record-for-me-project-scale/
"Once again Scotland beats record for M&E project scale
TClarke Scotland has won a major project with partners Heron brothers to build the vast new Eurostampa printing facility in Cumbernauld. This win improves on our previous record for project value, as TClarke cements its presence as an M&E leader in Scotland.
Scotland Managing Director Chris Harris congratulates the teams responsible for achieving the win:
“The Eurostampa UK project is an 82,000 sq ft expansion and refurbishment to create a vast new state-of-the-art specialised printing facility. This is a major project within the market and our ability to succeed here, partnering with Heron Brothers, is another step forward for the company."
Contract win news posted yesterday - looks like a sizeable 18-month contract from happy previous customers:
Https://www.tclarke.co.uk/gpe-and-lendlease-trust-tclarke-to-deliver-again/
"GPE and Lendlease trust TClarke to deliver again
TClarke has been awarded both the Mechanical and Electrical packages to deliver 2 Aldermanbury Square for long term partners GPE and Lendlease. 2 Aldermanbury Square aims to set exceptional standards across environmental metrics, while delivering a new HQ for global legal firm Clifford Chance. Group Chief Executive Mark Lawrence commented :
“I am proud that GPE and Lendlease have once again trusted TClarke to deliver this landmark. I often talk about the ‘TClarke Way’; the culture it sets defines the values we embed within our teams across all our projects – and it is these values that create our success.
“When GPE and Lendlease trust TClarke to deliver on 2 Aldermanbury Square, that trust is based on decades of successful collaboration. Working together in recent years we have delivered successful projects such as Rathbone Square and Oxford House – now recognised as 1 Newman Street & 70 / 88 Oxford Street. The team at 2 Aldermanbury Square are the same team who delivered Oxford House.
2 Aldermanbury Square is a special project – focused on achieving ambitious embodied carbon reduction targets, as well as the NABERS 5 Star accreditation. The M&E packages include large scope of works items such as:
Tenant Life Safety Generator Package
HV / LV Package Substations
LV Systems
Gravity & Symphonic Drainage
Domestic Water Systems
Heating & Cooling Systems
Condensate Systems
Our team is now mobilised on site, undertaking key design and technical reviews, BIM Modelling and drawing production in advance of our start on site in April 2024, with a project completion in Q4 2025."
Good to see the lunch of an Alternative Energy Solutions division and a "major" contract win helping to improve EPC ratings which are going to be so important for all commercial buildings - this dated 25th September:
Https://www.tclarke.co.uk/tclarke-alternative-energy-solutions-launches-with-major-win/
"TClarke Alternative Energy Solutions launches with major win
TClarke is launching Alternative Energy Solutions to help building owners improve EPC ratings for old buildings, meet climate targets, Improve their carbon footprint and critically, make newly available technologies a practical option.
The launch is also marked by the announcement of a major Alternative Energy contract win and one of the very first commercial building energy upgrades on this scale – helping 30 Fenchurch Street substantially improve its EPC rating, within an holistic programme of design works and technology installation.
Achieving major design stage improvements
The project was taken from a stage 2 through to a stage 4a design and during this process the original plant concept was reviewed and re-designed with performance improvements and enhancements.
This was achieved with the implementation of new simultaneous four pipe heating and cooling Air Source Heat Pumps (ASHPs), along with additional air cooled chillers to be provided to the roof area. This enabled the original existing water cooled chillers in the basement and the cooling towers on the roof to be decommissioned and removed.
These new capital plant improvements enabled the property EPC rating to improve – all with zero impact to the tenant’s business operations.
Actively engaging manufacturers to ensure optimal equipment selection
Manufacturers were engaged to ensure equipment selection was robust and satisfied the design criteria, this was confirmed through our TClarke design team. A key factor was the COP and EER of the new plant. Refrigerant and compressor selection were also important to ensuring that optimum performance was obtained.
Throughout the plant replacement phase, we engaged with the client to demonstrate added value. This was shown with HV & LV electrical works, where existing aged equipment was removed and multiple LV distribution boards were amalgamated into single new larger distribution boards.
Optimised logistics plan for City location
30 Fenchurch Street is in the heart of the City; as such the plant logistics are critical to project delivery. These were analysed and modelled to reduce the total number of lifting events and provide a structured plan to meet the programme and maintain the client requirements."
Https://www.construction-europe.com/news/contractors-named-for-us10-bn-framework/8031459.article
"Contractors named for US$10 bn framework
By Leila Steed06 September 2023
3 min read
Procure Partnerships Framework (PPF) in the United Kingdom has appointed 12 demolition and site preparation specialists to the second iteration of the country’s £8 billion (US$10 billion) National Framework,
A miniture model of construction workers on a construction site (Adobe Stock)
Procure Partnerships Framework (PPF) in the United Kingdom has appointed 12 demolition and site preparation specialists to the second iteration of the country’s £8 billion (US$10 billion) National Framework....
etc"
Momentum Investor said Buy in their last-but-one September issue. Here's their summary:
"In response to an order book growing from £586m in H1'22 to the current £781m and a pipeline in excess of £1bn, electrical and mechanical contractr T Clarke has raised £10.7m gross via the issue of new shares at 122p. The funds will be deployed to deliver identified contract opportunites in London as well as strengthening the balance sheet.
The buoyant placing cam just before interim results, which were in line and showed a slight decrease in EBIT profit to £5.7m (£down £0.3m) but with EBIT margin up 0.1% to 2.8%.
This year will be a stub year (Cenkos eps: 17.4p ) before a surge to 24.2p and 27.1p.
T Clarke's markets are resilient with growth hot spots in government-backed infrastructure such as new hospitals, data centres and the move to net zero (driving office fit-outs) and with the prospective PE for next year dropping to just 4.8 and the dividend yield a useful 4.6% (5.9p forecast), I am a buyer."
Here's his commentary from yesterday afternoon:
"I've picked up some T Clarke CTO.
It looks mighty cheap! A forward PE of just 6. A peg of just 0.3 and a dividend of nearly 5% ticks a lot of boxes.
It also has major support at 130p. I've been trying to buy it on DMA so I could buy at the sell price but try as I might I couldn't find any sellers which I suppose is a good sign.
I wonder if TCO might get some work in some of these schools that will need work doing that we're all read about this week.
It offers building services across the UK, including schools, residential, hotels etc and offers engineering services and facilities management.
Seems a decent well run company at a great price. Initially targetting a lift back up to 150-160 but it could end up a longer-term hold.
TCO boss Mark Lawrence has been with the company for 37 years, that is some experience!"
This morning on the back of the Midas update. Purchase not showing. Made at 0900 at 134.5
Bit surprised see no upward movement.
Https://www.thisismoney.co.uk/money/investing/article-12375975/MIDAS-SHARE-TIPS-UPDATE-TClarke-versatile-firm-spark-genius.html
Conclusion:
"Midas verdict: Midas recommended TClarke in 2017 when the shares were 76p. By last year, the price had surged to £1.53. Today, they are £1.30. That decline should swiftly reverse. TClarke is known for delivering top-notch work, 90 per cent of its customers come back for more and the recent fundraise highlights management confidence in the future. Existing investors should hold. Newcomers to this business could also find the current price attractive."
The tip for CTO in July's Momentum Investor write-up hasn't been posted here, so here's its concluding summary:
"Order book up £135m
Looking ahead, prospects are rosy with the AGM statement noting that following strong trading in the early months of 2023, the order book has increased from £585m to £720m, covering most of this year's forecasts right through to 2025. As well as data centres it has great prospects in healthcare, ranging from fitting out single MRI rooms to two new hospitals in Bournemouth and Scarborough as the Government's much delayed 40-strong new hospital program swings into action. Even the mature commercial office refurb market is gaining a kicker from legislation to upgrade the energy saving credentials of a building to band E or better before from April 2023 and band B by 2030. Lawrence says the overall bidding pipeline is now over £1 billion and crucially Clarke's capacity investment means it could handle turnover above £700m without recourse to further spend.
With next year's prospective P/E just 6.4 (me - at the then 153p) and underpinned by a useful 3.9% (5.9p forecast) dividend yield, the shares have both short term and longer term potential. I am a buyer."
In addition:
"this month's front-page write-up, mechanical and electrical contractor TClarke, is benefiting from a massive boom in data centre construction. A confluence of factors ranging from growing cloud adoption, the Internet of Things, emerging technologies like AI, big data and blockchain, data compliance (driving demand for its storage) and the roll-out of 5G infrastructure have all led to a steep increase in demand for data centres."
For the record, Cenkos' latest note forecasts 17.4p EPS this year, rising to 24.2p EPS and then 27.1p EPS.
The cash pile is forecast at £9.2m at the end of this year, rising to £11.3m then £16.9m.
And the dividend is 5.9p rising to 6.5p and 7.1p.
They summarise (extracts):
"TClarke Plc
Momentum into H2 and beyond
Following the successful placing, todays interims are in-line with expectations, with revenues at a similar level last year (with significant growth forecast for H2) and an improvement in the margin to 2.8%. The group has excellent revenue visibility and is taking strong growth momentum into H2 and beyond, particularly with contract opportunities in the London region. On a FY24E PE of 5.5x, EV/EBITDA of 2.6x and an attractive 5% yield, we believe the valuation significantly underestimates the ongoing growth potential and quality of earnings. BUY."
" Forecasts: We make no changes to forecasts post our recent upgrades, following the placing. The proceeds of the placing will provide additional resources which will enable the group to capture and deliver identified short- to medium-term attractive contract opportunities in the London business, (which are expected to be margin enhancing). The placing is expected to be significantly accretive to underlying profitability. We forecast an operating margin improvement to 3.2% in FY25E, up from 2.4% in FY23E, with a 2-year CAGR (FY23-25E) in EBITA and EPS of 30% and 25% respectively.
View: In our view, management’s track record of delivery to date of its growth ambitions, which has been achieved without acquisitions or fully supportive endmarkets has been excellent. The recent placing will allow another step change in the growth profile of the business, whilst also (and importantly) improving the quality of its earnings. There looks to be significant opportunities ahead, backed up by supportive end markets, such as government backed investment in infrastructure, the move to net zero and the significant expansion in the Data Centre market. On this basis, TClarke looks very well positioned to benefit and we retain our BUY."