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bid has moved up to 63p
Almost entirely buys today. Feel this should pop soon!
unsurprisingly, the real offer has crept up (again) to 67p
the real spread is a dispiriting 61.2-67p (9-10%!)...bloody MMs
btw bought 3k more @65.5p
the bid is creeping up, and there was a delayed buy @68p??
yes, too harsh
a business' working capital should be taken as a single "unit" (receivables plus inventory minus payables) that needs to be financed (usually)..to use payables in EV would split up this unit, and would also be a little odd cos payables don't usually have an interest charge!
Ahh see I was literally including ALL of their liabilities (both current and non-current) into my calculation, but perhaps that was too harsh?
Either way, I'm confident that this is great value, that it's a resilient company that's going to continue to grow nicely in the years to come, and is due a re-rate once the financial results come out later this month!
EV is approx £8-9m (market cap of £9-10m minus net cash of c£1m, cash minus lease/debt)
==> EV/EBITDA of c4-5* (not your 9*) @ EBITDA of £1.6-2m/year
(I focus on EV/fcf...which is still low given their modest capex versus depreciation & amortisation)
OK decided to join the party @ 65.5p
Thought process as follows:
H2 is never as good as H1 is for this company but they’ve made it clear that the business has been “barely dented” by covid-19, and 80% of their contracts are recurring anyway (their clients cannot stop them), so I’m going to assume 2020 H2 will equate to 90% of the 2019 H1 figures. I’m then going to add 1 month of that new £5m contract which replaced a £3.6m contract .i.e. £1,400,000 x (11/12) = £116.6k
On this basis (which is fairly conservative), the 2019/20 Full Year figures should be as follows:
Revenue - £32.5m (vs £34.6m)
EBITDA – £1.7m (vs £1.9m). – Appreciate this is higher than the £1.6m mentioned previously but that was a “worst case scenario” figure.
EV/EBITDA ratio (using the H1 cash and debt figures) = approximately 9 --- considerably lower than P/E ratio thanks to the level of cash!
P/E ratio should be about 10. Also low.
Looking ahead, you can take the £1.4m of new business (from existing) mentioned above, plus the £1.3m per year contract won since then, and if we then assume just a couple more similar-sized new business wins are made in the year ahead (there may well be many more!), you can see how the company will grow nicely to record levels of revenue and profits. On this basis, the forward EV/EBITDA figure is only about 7 = Incredibly good value.
In addition to the organic growth above, CSSG has also spoken about using the cash they have for acquisitive growth as well.
So, in conclusion, CSSG is:
- A resilient business that has barely been affected by covid-19, with a high % of their revenues coming from long-term contracts.
- They have entered into 2 new long-term contracts that will boost revenues by £2.7m in due course. [We will not really see the effects of either in the Full Year results coming up unfortunately]
- Their increasingly impressive “CV” will help them win more contracts in the future. A jolly snowball effect.
- There is the possibility of the cash pile of £2.3m (roughly 20% of the Market Cap) being utilised for value-adding acquisitions.
- Healthy growth should therefore resume in the 2020/21 year.
- GREAT VALUE at present !
- It is a British based company that should not be affected by Brexit.
- This used to trade about 100p and I could see it reaching that level again soon.
Target: 100p - which is 53% up from here.
bought 5k more @65p
Hahaa I've been waiting for sub 70p for a while!
However must say I'm more hesitant now than before because many events (festivals, concerts, football games, etc) do not look as though they'll return any time soon, and I'm unsure how (in)significant this is for CSSG.
Otherwise looks v good value and it's hugely encouraging to see those contract wins earlier in the year.
2k more...hold 12k @ v low average
want sub 70p to load up
(but from drift / boredom...not on bad news lol)
Nice 25,000 share buy at 78p just reported.
The final results are due on or around 21st October per the last couple of years, so not long to go.
As a newbie here I've gone back to the 15th June interview with the Chairman, which is the last one I can find unless someone else can correct me?
Encouraging stuff, including:
- CSSG have 25% of the FTSE 250 companies as clients
- 80% of turnover is recurring on long-term contracts
- there's the suggestion of acquisitions to take advantage of COVID-19's effect on competitors - the Chairman says they've "got a lot of cash"
- such activity would be opportunistic, to "really jump forward"
Https://www.proactiveinvestors.co.uk/companies/news/921932/croma-security-solutions-says-coronavirus-has-barely-dented-its-manned-guarding-business-921932.html
..and again now after a 12k buy
A tick up on the bid - perhaps the seller is running out of stock.
I'm in :)
It's worth noting the company have stated that the £1.6m EBITDA is the minimum indicated, so hopefully we're looking at an actual result of say £1.65m EBITDA or even more.
WH Ireland have issued a new note this morning - note the £1.6m EBITDA indicated for the year just ended, plus the record cash pile:
"Croma Security Solutions(CSSG)–Corporate–
Impact from Covid only “slight”, DPS to be reinstated, a further contract win for VigilantMarket Cap £10.2mShare Price 77.5p
Yesterday’s update from CSSG reconfirms the positives highlighted in the company’s trading update on June 8th, notably the slight impact of Covid-19, the strong cash position, and the success of its premium guarding services. On the back of these drivers, the dividend is tobe reinstated at a 0.75p levelfor an interim DPS to be paid on September 4th, and this in itself should serve to reflect the company’s confidence in the outlook. In so doing, the Board is carrying through on its promise to review the original decision to suspend, taken early in lockdown, and paying tribute to the resilience of the business.
In addition to the comments on trading and the reinstatement of the dividend, the company has announced a new contract win today, worth £1.3mp.a. and starting ten months into the current financial year (year to end June ’21). The contract is to manage the security at the Edinburgh St James centre –a prestigious award which saw a high level of competition, according to the company, and which will include CSSG’sfront of house security service for offices which the company has developedin recent times.
WHI view: The typical H1 weighting of the business is present in 2019 / 20, in which the company has indicated that it expected to make £1.6m EBTIDA or more. With some one-off business concluding during the year, this remains a strong number, particularly against the Covid backdrop, which had some impact on CSSG’s retail businesses.The contract win is encouraging as displaying CSSG’s ability to win against strong competition, and the record levels of cash highlighted are also a real positive for the company in the current environment."
diminishing
with this buying above 70p
I like the decent "skin in the game" that the management team of CSSG has...
Not wildly excited by a random £10k here or there by a NED
yep, I bought a tiny stake near 40p, and was expecting it to drift down thru the 30ps for a top up.....but the newsflow is too good for that! I'll have to look to buy on a dip
sounds a little low, but would be welcome
btw well done on TST
seems so...
when to top up??
yep, that's a decent summary
I'd also caution that the EBITDA of £1.6m+ (in the trading update that gave the sp a little lift) was hardly that scintillating.
I'm hoping this drifts back into the 6xp range for some top ups
Ostensibly you seem to have found a good solid one here which looks a bit undervalued.
I wonder though that there is a serious amount of illiquidity. Also a complete lack of interest from (your favourite term) the 'market'. How do you drum up the interest in a dull looking security stock?
Otherwise I agree your £1 target looks very reasonable.