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Lovely £2.8m contract win whilst I was on hols, guaranteeing work from 2018 through to 2020. That's £4.1m of work won in the last month alone.
And today we have a new substantial shareholder - Thomas Charlton has declared a 3% stake in PEG with 1.725m shares:
Https://www.investegate.co.uk/petards-group-plc--peg-/rns/holding-s--in-company/201807181050030331V/
From his bio it seems he was on the Board at Mercury Asset Management, was a managing director at Merrill Lynch and is a director at Feedback PLC and involved at various other small caps, quoted and unquoted.
Quite a powerful addition to the shareholder register.
Think this share is very undervalued. The contract award for qro solutions for anpr for Cheshire was valued at £10000000. Wonder why this was not highlighted in the results?? Any ideas guys
In the last few weeks and the SP barely moves. AIM is a strange beast.
High
From today's Times - news that Bombardier and Hitachi have teamed up to bid for the massive HS2 contracts.
PEG already have contracts to supply both of them:
Https://www.thetimes.co.uk/edition/business/rivals-make-joint-bid-for-hs2-contract-rn9mgqkpg
"Bombardier and Hitachi hailed “a landmark day for the UK rail sector” after joining forces to bid for the £2.75 billion contract for HS2 trains.
The two companies, both of which had been shortlisted, are the only train builders with factories in Britain and analysts said their decision to team up could give them a decisive hand.
etc"
It's worth noting that Hybridan's latest forecasts per their new note are:
this year - 2.15p EPS
next year - 2.56p EPS
putting PEG on a forward P/E of only 9.1.
Hybridan also see £1.23m net cash at the end of this year, rising to £2.37m next year.
Hybridan have issued a new note today, concluding that a 40p share price would still be reasonable and that PEG trades at a significant discount to its sector comparators.
In particular, they comment on the RTS acquisition and new Network Rail contract and say:
"Network Rail is under well documented pressures to improve efficiencies.
Automation of systems and digital enhancement are in our view an important part of achieving this.
Indeed, Network Rail in its “Supplier Qualification System” (SQS) for potential IT partners” released in January, indicated that it plans to spend some £2bn on IT goods and services over the next decade. This is against a backdrop of £48bn pledged for rail network improvements by the UK government covering the
period from 2019 to 2024.
We believe that RTS’s specialist capability and strong relationship with Network Rail leaves it well positioned to pick up more work from Network Rail and its Tier 1 suppliers, both of which it already services. We understand that RTS is engaged in projects that will increase its profile as a trusted specialist service provider to Network Rail’s larger suppliers who lack the expertise in webbased, real-time safety critical applications.
On a fully diluted basis, Petards trades on a current year PE multiple of 11.5x falling to 9.3x for 2019E and is on a price/sales multiple of under 1x. The 2019E EV/EBITDA multiple is circa 5x reflecting the strong balance sheet and lack of leverage."
"We believe that Petards merits a re-rating to at least a mid-teen PE multiple. At 40p (72% upside), the shares are on a 16x FY2019E PE multiple which we do not believe prices in any significant growth from RTS. RTS was Petard’s second acquisition in a little over two years. The Board continues to keep an eye out for acquisitions that could expand the Group’s capabilities in fields including software, data analytics and services."
Nice to see this blogger coming to the same conclusion:
Https://www.thearmchairtrader.com/news/crest-nicholson-countrywide-and-petards#
"Petards
Slim pickings again today, but a note from AIM listed Petards proves interesting. They recently bought a company called RTS who have been supplying software to Network Rail. The contact has been renewed for a further three years – with an additional two year option at the end of that. The overall deal – if running for the full five years – is worth £1.3million yet Petards bought RTS just six weeks ago for £1.5 million."
RNS - good to see a £1.3m contract renewal win today with Network Rail providing revenue visibility for some years ahead.
And won by RTS, the same company for which PEG only paid £1.5m maximum on being acquired a few weeks ago. A pretty good price which is looking better now (perhaps achieved everyone knew the renewal was up for grabs in the near future).
Quite a prestigious win considering RTS are so small:
Http://www.londonstockexchange.com/exchange/news/market-news/market-news-detail/PEG/13691177.html
"Under the terms of the contract RTS will continue to provide software licences, maintenance and third line support to Network Rail in respect of its real time failure and incident management system that supports the UK's national rail infrastructure."
This news should be great for PEG. Petards have a framework agreement in place with Siemens, which means Petards supply Siemens' world-wide rail vehicle business with its train related products and services. With Siemens winning the Tube contract and allocating UK companies work, there must be a very high chance that PEG will win work - substantial work - from this. Remember that PEG also work for both Bombardier and Hitachi, both mentioned here re the renaissance of the UK rail industry:: Https://www.thetimes.co.uk/article/siemens-will-build-factory-in-uk-after-winning-tube-train-contract-6rmxtpz2f "Siemens will build factory in UK after winning Tube train contract The good news for British manufacturing is that the contract win will trigger Siemens’ commitment to build a £200 million factory at Goole in the East Riding of Yorkshire to make the trains for the Tube, directly employing 700 workers and a further 1,700 in the local supply chain. Siemens, which already provides trains for South West Railway and Thameslink manufactured at Krefeld near Dusseldorf, has been told to design, engineer and build an initial 94 trains for the Piccadilly line in a contract worth £1.5 billion. They will replace rolling stock that has been running since the 1970s. There will probably be a further £1 billion manufacturing contract for an additional 150 trains for the other deep Tube networks of the Central, Bakerloo and the Waterloo & City line. Siemens’ success is another fillip for a renascent train manufacturing industry in Britain. In 2011, the country only had one manufacturer left, Bombardier, at the historic Litchurch Lane works in Derby where trains had been made since Victorian times. That factory was within days of closure before a volte-face by Bombardier’s Canadian owners. The plant has since won a string of contracts, not least for the new Crossrail service across London. In 2015 Hitachi opened a factory at Newton Aycliffe in Co Durham to build the new intercity express trains for the great western and east coast main lines. Siemens had pledged to build the factory at Goole if it won the deep Tube contract. The German group will also make a pitch to win another £2.5 billion contract for High Speed 2 trains. Confirming the green light for the Goole plant, Sabrina Soussan, chief executive of the train-making division at Siemens, said: “We can further develop rail skills and our investment, something that is so important to the continued success of the UK rail industry.”
With London Transport for tube trains. PEG must get a piece of this action surely?
Good to see an early tick up on decent volumes with 100k+ already traded - including four separate 25k buys. And the buy price has been steadily rising. Hopefully this means the overhang which has been around has almost or is cleared. There's plenty to be optimistic about, especially at this price...... - a �1.2m PBT and 2p+ EPS forecast this year by both WH Ireland and Hybridan - a very positive "ahead of expectations" AGM statement - large order books and revenue visibility - an earnings-enhancing acquisition - �1m+ net cash - participation in two growing sectors (rail infrastructure and electronic counter-measures)
95, its not always a 'bad sign' when directors sell. On occasions they're actually advised to sell stock to appease investor concerns about liquidity not because they need the money or don't see any future growth etc.
Agreed hughesy65 - most encouraging that Miton UK Microcap Trust have picked up 1m shares sold by the Chairman (around 28% of his holding). Miton now own 2.64m shares, or 4.67%, and are one of the best investment funds around. Mind you, they paid 23p for them, so they're already doing pretty well..... The �10k director sale is completely immaterial and irrelevant. And the Chairman has sold a reasonable portion of his stake into institutional demand and increasing liquidity - which are good things. And he still retains a sizeable holding.
Interesting to see the 2x 1 million share trades yesterday were an exchange between the Chairman and Miton UK Microcap Trust PLC. Can be worrying sign to see a Director sell so many shares, but he obviously needs the money for something, and has been able to convince a fund to take the shares off this hands and become a new notifiable holder at 4.67% of the company.
PEG said in the recent acquisition RNS that RTS solutions "unaudited accounts for the year ended 31 March 2017 show that it generated revenues of �778,000 and reported a profit before tax of �262,000" I just noticed that RTS Solutions filed their 'Total exemption full accounts' for the year ended March 2018 to Companies House last week. Not much to draw from them, aside from that retained earnings increased by �298k, which suggests that the business is consistent in its earnings, and had another strong year, making the �1.5m purchase price very attractive, at circa 5x earnings. Given we know PEG entered 2018 with a strong order book, it will be very interesting to see what results PEG can achieve through organic growth and this acquisition.
From yesterday's Times - huge opportunities for PEG from their partners at Bombardier and Siemens via the shake-up of the UK's railways: Https://www.thetimes.co.uk/article/we-ll-need-allies-for-any-trade-war-8j6v0kl6d "An announcement on a �2.5 billion deal to build 250 carriages for the Piccadilly, Central and Bakerloo tube lines in London is imminent. Along with the �2.75 billion contract coming down the line for the fast trains on HS2, Britain�s renaissant trainbuilding industry is set fair as commitments have been made to build here. The announcements will enable ministers to don the high-viz and shake hands with folk at Bombardier in Derby or Hitachi in County Durham. Or even better, if the contract goes to a continental like Siemens, the politicians will claim to have turned the tide of history and forced them to come to Britain to open a factory."
Looks like a severe shortage of stock at present - even moving up on a buy of just over �1k just now.
Nice 50k buy at 26p has caused today's tick up. WH Ireland have a new Buy note out and have increased their target price to 34p (from 30p). They have been EXTREMELY conservative as regards new forecasts - and say so themselves. They've left this year's forecast at 2p EPS, and have raised next year's to 2.4p EPS. They also forecast �1.4m net cash at 12/18, rising to �2m at 12/19. They summarise as follows: "Acquisition of RTS Solutions; FY 2019E earnings raised 14% Petards supplies advanced security and surveillance systems to the Rail, Defence and Traffic Technology markets. This morning, the Group has announced the successful acquisition of RTS Solutions for a maximum net consideration of up to �1.5m, satisfied in cash alongside a new �1.25m five year bank facility. The addition of the business not only broadens Petards� portfolio of products in the wider rail market but has the added attraction of a high degree of recurring revenue; this at an historic PER multiple of sub 6x. The Board expects the acquisition to be earnings accretive in the first full financial year of ownership. We cautiously assume no impact in our FY 2018E earnings estimate, whilst we raise our FY 2019E earnings expectation by 14.0%, implying the shares currently trade on a lowly FY 2019E PER of 11.0x and 5.5x EV/EBITDA. Reflecting the change to our forecasts, whilst placing an inline Support Services sector rating to the shares would imply fair value of 34p (previously 30p)."
The acquisition should increase EPS this year to say 2.15p-2.2p EPS, and next year to say 2.4p-2.5p EPS. At 26p that's a pretty low P/E getting towards single-digits. And there's the potential for much more given the strong outlook for the global rail and defence counter-measures sectors in the next few years.
Excellent acquisition of a company with significant profit margins. What's not to like!
Excellent - a sizeable and earnings-enhancing software company acquisition, adding around �300,000 of PBT, and with 50% recurring revenues too. Plus it's complementary to the existing business. Nice: Http://www.londonstockexchange.com/exchange/news/market-news/market-news-detail/PEG/13638984.html
Chelverton Growth Trust have just issued their interims to 28th February. In it they have this to say about PEG, in which they now have �460,000 invested: Https://www.investegate.co.uk/chelverton-grwth-tst--cgw-/rns/half-year-report/201805011346127680M/ "Part of these cash proceeds were used to re-acquire shares in Petards, taking the shareholding back to the level we had previously held. These purchases were however at much lower prices than the previous shares had been sold at. The company has just produced a very positive statement and the future prospects look good and the share price has started to recover strongly."
Hybridan have a 35p target price. They go for 2.15p EPS this year, with a closing cash pile of �2.5m. They note that earnings-enhancing acquisitions are firmly on the table. The following extract also stresses the potential for large �1m+ contract wins from the rail rolling stock boom from already existing customers: "The 2018 opening order book of �18m has been maintained and coverage of 2018 revenues from that order book and from the first quarter's revenues has now increased to over �15m. This gives 85% coverage of our FY Dec 2018E revenue forecast of �17.5m (+12.3% year on year). Our PBT forecasts for the same period are �1.2m. The Board has expressed confidence that the 2018 full year results will show further progress over those achieved in 2017. Petards remains in discussions for major new projects across all areas of the business. We are hopeful that some of these can be converted over the rest of the year although it is likely that revenue recognition would be weighted towards future periods. Further headway has been made with the MOD with the recent �1.1m extension of an existing support contract. Investment in new rail rolling stock continues, and there are a number of UK new builds where we believe Petards state of the art rail technology solutions stands a great chance of picking up seven figure orders. Bombardier, a Petards customer has been awarded contracts for over 1,000 vehicles in total for the South Western and West Midlands Railways. Other major contracts out for tender to train builders include South Eastern (800 vehicles), New Tube for London (3,000 vehicles) and HS2 (800+ vehicles). The good news is that the majority of likely contenders for these tenders are already Petards customers."
- revenues trading ahead of management expectations - large forward visibility of revenues - confidence in this year's results Http://www.londonstockexchange.com/exchange/news/market-news/market-news-detail/PEG/13608390.html