The latest Investing Matters Podcast episode featuring financial educator and author Jared Dillian has been released. Listen here.
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Great to see SUR getting a section of their own in tomorrow's Daily Mail market report:
https://www.thisismoney.co.uk/money/markets/article-9920089/MARKET-REPORT-Abingdon-antibody-test-gets-marks.html
"Stock Watch - Sureserve
Sureserve started the week on the front foot after it signed a 10-year contract extension with social housing group The Guinness Partnership.
Sureserve, formerly known as Lakehouse, will provide gas maintenance services in London and the South East for the group, which owns and manages more than 65,000 homes throughout England.
The deal is for a minimum of five and a maximum of 10 years, the firm said.
If it runs for the full term, Sureserve estimates it will generate £140 million in revenue.
Shares in the AIM-listed company rose 6.6 per cent, or 6p, to 97p yesterday."
Shore Capital retain their forecasts of 7.8p EPS for the year starting in just over a month, with 8.4p EPS the next year, but now with even greater confidence.
They say:
"Compelling mix of growth and sustainability: Both divisions offer, in our view, high revenue visibility from typically three- to five-year contracts: Compliance underpinned by the regulatory necessity to monitor the safety of gas and other utilities in social housing; and Energy Services by national and local government commitments to carbon reduction, see Energy Supplement, 9 March."
And they summarise:
"Although we are not changing our financial projections, we believe major contract renewals of this nature underpin our estimates and, importantly, improve the quality of earnings. Given the long-term growth and earnings quality, we believe the valuation remains compelling, at an FY22F P/E of 11.6x and FCF yield of 6.3% despite more than doubling."
Great work SUR as usual. Significant contract extensions with big players like The Guinness Partnership just reconfirms SUR continue to do it right and keeps me a very happy long term holder.
Great news - £140m over the next 10 years.
The City loves these types of secure revenues, and companies with such visibility going forward usually achieve premium ratings. Yet SUR are barely above a double-digit P/E - this should help increase awareness:
Https://uk.advfn.com/stock-market/london/sureserve-SUR/share-news/Sureserve-Group-PLC-10-year-contract-extension-wor/85889453
Hopefully there'll be a trading update around 19th August as per last year, though that may have been a one-off due to COVID. The post year end update on 6th October is more of a definite date, and that's not far off now itself.
In the meantime the share price continues its lovely steady rise to more new highs - yet at 92.5p the P/E for the year about to start remains just 11.8 given the forecast 7.8p EPS.
More new highs today - and very encouragingly on terrific volumes too, with 790,000 shares traded already this morning.
Looking very good - yet still on a very good value P/E.
Yesterday the IC did their latest screening of all quoted companies to see which would pass their stringent Growth At A Reasonable Price (GARP) tests.
Just two companies on AIM passed them all. SUR were one of them!
Https://www.investorschronicle.co.uk/alpha/2021/08/02/alphascreen-property-backed-companies-proving-resilient/
"Once again, companies are finding it difficult to pass all of the tests on our Growth at a Reasonable Price (GARP) screens after the pandemic played havoc with growth forecasts over the past year. Among both the large cap and Aim indices respectively only two companies passed all the tests set by the screen while among the small cap universe no companies passed all seven tests.
On Aim Sureserve (SUR) and Smart Metering Systems (SMS) topped the charts as the only two companies to pass all seven tests, although 13 companies passed six of the seven tests set for the junior market screen."
The Naked Trader has just sent out his latest update this afternoon - as below he's been buying more SUR.....which should bring in some more buying:
"I topped up in long term holding Sureserve. SUR. It seems to be getting a bit of wind behind it and it has always looked cheap at anything under 100p.
It is on the up at the mo and 100p looks in sight.
I talked about it on the new podcast - so have a listen to me banging on about it there!"
Two more decent-sized contract wins for Sure Maintenance - more great news:
This £8m-£10m win over 3 years from Sandwell Council was won today:
Https://bidstats.uk/tenders/2021/W30/755826740
This Cobalt Housing win for 5,900 properties over 3 years was won just 3 weeks ago:
Https://cobalthousing.org.uk/2021/07/cobalt-housing-awards-3-year-repairs-maintenance-contracts-to-hms-and-sure-maintenance/
Up 4.5p already today - yet at 91p SUR are on a P/E of only 11.7 for the year about to start based on 7.8p EPS forecasts - and they have a £10m cash pile to enable further earnings-enhancing acquisitions.
Plus there's huge visibility of revenues going forward.
Up 2.5p already today to 85.5p and looking strong after the big director buy and the recent raft of good news.
Yet still only on a P/E of 10.9 for the upcoming year based on forecasts of 7.8p EPS (which may soon be upgraded anyway).
Thanks rivaldo another good contact win and director buy.
GLA
On the move now - and buyers paying the full 85p offer price.
More very good news from SUR's Twitter account that KT Heating has won a contract for domestic heating contractors for London and the south east for PA Housing...this link indicates that this is, if not RNSable, quite a big deal nevertheless:
Https://www.pahousing.co.uk/latest-news/2021-july/introducing-kt-heating/
"2021 - July, Latest news
We’re very pleased to announce that from 1 August 2021, K&T Heating have been appointed as our domestic gas heating contractors in London and the South East."
"Who we are
We are a registered provider of social housing offering more than 23,000 homes across the Midlands, London and the South East with a range of housing solutions from affordable rent, independent living and shared ownership for those in need."
Excellent - the Chairman's just bought a maiden stake of a chunky 100,000 shares at 82.47p....
Https://www.investegate.co.uk/sureserve-group-plc--sur-/rns/director-pdmr-shareholding/202107281427587985G/
Buyers paying the full 83p offer price or thereabouts now. Looks like the overhang has cleared. Ready for another surge perhaps....
The IC's Growth at a Reasonable Price screen shows that in the entirety of AIM, only 3 companies pass all 7 tests.
SUR is one of them:
Https://www.investorschronicle.co.uk/alpha/2021/07/05/flagging-aim-growth-opportunities-still-in-play/?xnpe_tifc=4fPux._ZOkodxILsOkY74MpsafeWaeiWhFW.RkeZakUDt9PWakU8nyBvVjQNajLsVjUgayQ_tu4vt9UgrF1J4u4shIh_4dQNbuUNOfHT&utm_source=exponea&utm_campaign=IC%20Alpha%20email%205%20July%202021&utm_medium=email
Good to see this from Slater Investments in their Income Fund Commentary dated 8th July (last week):
Https://slaterinvestments.com/financial_posts/commentary-slater-income-fund-annual-report-for-the-year-to-30th-april-2021/
"Major Contributors – Growth Companies
The biggest contributor was Sureserve, the safety surveyor for social housing. It rose +116% and contributed +3.30%. This performance had little to do with the general market but rather was thanks to the company’s full return to health. Between 2016 and 2019 it struggled with the dead weight of its construction operations. After these were jettisoned the building safety business was able to shine through. In the year to March 2021, its sales rose 5%, its operating profits rose 22% and its adjusted earnings per share rose 26%. This performance came despite a 58% fall in profits in the Energy division, which is much smaller than Compliance. Energy had geared up for a rapid increase in demand for installing smart meters. This was impacted by Covid-19 but it is seeing a pick-up in demand. We think there is great scope for Sureserve to expand by acquisition."
He has also said something along the lines of the quiet shares can sometimes be the ones that make substantial gains when writing about SUR previously. Looking good to me.
Promising stuff from today's Times:
Https://www.thetimes.co.uk/article/payouts-for-families-to-offset-green-energy-bills-in-drive-towards-net-zero-emissions-jdg2lk6js
"Ministers are also examining proposals for a boiler scrappage scheme to reduce the upfront costs of converting from gas to renewable energy.
The government is expected to inject hundreds of millions of pounds into the new Clean Heat Grant, due to start next April. The scheme will offer people £4,000 towards the cost of green heating systems. It is expected to be particularly targeted at those living “off grid” who rely on LPG and oil to heat their homes."
The Naked Trader's latest column was only late this afternoon and had this to say, so hopefully it'll create further interest:
"Elsewhere Sureserve (SUR) where I have a patient long-term holding announced today a super contract worth £36m with PA housing.
It continues to win nice contracts and I think Sureserve shares are worth north of 100p."
Naked Trader values this at over £1
I bought in yesterday noting a rise in SP. Probably the first time ever i've timed something right!
Terrific news - an 8-year contract worth £36 million, and for a new client too. The markets love secure long-term revenues like this.
And yet the P/E here is barely above 10. Crazy:
Https://uk.advfn.com/stock-market/london/sureserve-SUR/share-news/Sureserve-Group-PLC-8-year-contract-worth-GBP36-mi/85542503
FYI here's Shore Capital's forecasts from their last note on 26th May - remember that the current year ends in less than 3 months' time:
to 30/9/21 : PBT £12.9m, 6.6p EPS, 1.5p dividend
to 30/9/22 : PBT £15.4m, 7.8p EPS, 2p dividend
to 30/9/23 : PBT £16.9m, 8.2p EPS, 2.6p dividend
On an imminent P/E of 10, falling to single figures, 1 I'd suggest SUR are already well into bargain territory.