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Good to see MWM raise his target price to 120p and above:
Https://masterinvestor.co.uk/equities/sureserve-group-time-to-reassess-after-results/?mc_cid=956b3d8607&mc_eid=db9f9bbaf2
Extracts:
"Sureserve Group – Time To Reassess After Results?
25 January 2023
This group’s shares should be a great deal higher than they are currently!
Just bringing the valuation of the Sureserve Group (LON:SUR) up in line with the UK market average would see it worth at least 126p a share compared to last night’s closing level of just 88p.
If achieved that would show a significant 43% gain, certainly not to be sniffed at and well worth pursuing for any portfolio......
.....Broker’s View – Undemanding Rating
Analyst Alastair Stewart at Shore Capital believes that the group’s rating is undemanding given the cash-rich group’s growth prospects and revenue visibility.
His estimates for the current year to end September 2023 see £303.7m revenues, £18.1m adjusted pre-tax profits, worth 8.6p in adjusted earnings per share, while net cash increases to £32.4m.
For next year, without the benefit of any intervening acquisitions, he goes for £318.9m sales, £19.2m profits and 8.8p per share in earnings, ending the year with £36.7m net cash.
My View – An Excellent Example Of Sustainable Growth Currently Underrated
The shares, which last night after more than trebled the average daily dealing volume, closed up 3p on the day at the current 87.5p, only value the group at £145.5m which is far too low considering its order book, its profits growth and its strong cash generation.
I recently set a new Target Price of 106p on the shares, within months, which I believe is an easy price objective.
Further into the year I see the shares climbing steadily towards the 120p barrier and above."
There's also a new note just out today from Capital Access. It's on Research Tree, so I can't link to it.
Capital Access have consensus forecasts for the entire business of 8.95p EPS this year - a P/E of only 9.8. Far too cheap.
Capital's numbers in their note are all over the place. The P&L numbers on page 5 are "continuing only" for last year and "entire business" for the current year. And on the front page they say the year end is December!
There's an interesting section on the dividend, noting it's "unlikely to return" in the near future. There are "active live discussions" with acquisition targets and the sales of the non-core divisions are "progressing". Personally I'm very relaxed about this. If and when SUR announce a decent-sized acquisition I suspect its effect on the share price and rating will be far greater than that of a dividend.
Nice to see some coverage for little ol' SUR in the Times market report today:
Https://www.thetimes.co.uk/article/senior-moment-is-one-to-savour-for-happy-investors-b7qpg7295
"A positive set of results from Sureserve, which said strong trading momentum had flowed into the present year, pushed shares in the social housing energy provider up 3p, or 3.6 per cent, to 87½p."
Shore Capital have raised their forecasts to 8.6p EPS this year and 8.8p EPS next year. BUT - this is only from "continuing" businesses.
These forecasts therefore exclude:
- the sizeable profits from the two businesses being sold
- any cash from those disposals
- any interest receivable at all, either from the exiting £24m+ cash pile (rising to £32m by this September) or from any additional cash receivable from the disposals!
Shore DO however separately outline the revenue and adjusted PBT figures from the entire business (but not the EPS). These are:
- forecast revenue this year is increased to £339.3m (from £319.2m, and £309.3m last year)
- adjusted PBT is raised to £20.4m (from £18.6m, and £17.7m last year)
The forecast EPS for this year is 9.7p EPS if one raises the 8.6p adjusted EPS for continuing business by the rise in adjusted PBT for the entire business.
Which would put SUR on a meagre current year P/E of just 9 - and that's before taking the £23m cash pile into account.
Phew!
Well worth noting from today's RNS is:
"Our ambition is to double our sales and significantly improve our net margin and earnings per share within the next four years"
With doubled sales one could perhaps expect EPS to rise to anywhere from 18p to say 25p EPS given economies of scale etc, which would support a share price of.....much, much more than where we are today.
The short-term timeframes of many investors never fails to surprise me. After the debacle of Lakehouse, the "new" management team at SUR have taken the share price up more than 150% from early 2020 - and this during the pandemic! In fact, there can't be that many better performing shares than SUR since the pandemic began.
With such a rise it's natural there's been a period of consolidation. One might take today's terrific results as being a signal that the period of consolidation is about to end and we could be at the start of a further re-rating.
Especially as there could be news of the sale of the non-core divisions at any time - or indeed of an earnings-enhancing acquisition from the £23m cash pile.
Yes agree, sold a big chunk of my holding weeks back as no amount of good news and figures move the SP much.
Still hold a few as started from the 40s. Thinking it's in a good sector bit a bit unloved athe mo....
welll,they were down yesterday and back up today,any change on good results ? same same old story,rivaldo you do yer best i know,but its no happening here im afraid,for all the positives its just not cutting it in terms of share movement and more importantly profit for investors,all the best but you will have a long frustrating wait here to find they are going nowhere.
Forecasts for the business as a whole should now be raised for this year to say 10p EPS - even on a miserly P/E of 12 that would give good upside to 120p.
But taking into account the secure and long-term nature of SUR's revenues, the huge order books, the growth in renewables and the potential for growth both organically and via acquisition, one could easily argue for a multiple of 15 and a 150p share price target. Then add in the cash pile worth around 14p per share and you reach a target of 165p.
Terrific results - well ahead of expectations with 9p EPS (up 29% and compared to the 8.1p EPS forecast):
- 9p EPS is almost up with 9.2p forecast for this next year through to Sept'23!
- plus SUR have a £23.3m cash pile, 17% of the m/cap
- the order book is up 18% to a massive £594m
- revenue, PBT and EBITDA on continuing operations are all way ahead of forecasts
- CorEnergy acquisition is trading ahead of expectations
- huge visibility of forward revenues stretching out for years ahead
And importantly, SUR have made "a good start to trading in FY23" and are confident in this year's outlook.
SUR should be congratulated on a superb performance and excellent outlook - on a historic P/E of 9.4 SUR are very, very good value.
Looking Good
lets see what happens on results,long time holder,but to say this share is frustrating is understatement,i know where price should be but for the life,its just not happening,its all about making a wee profit and this share just not cutting it,dont matter what the results say,market find it boring and dull,althoough it should be exploding up up and away,for all the positive statements from rivaldo has anything ever happened with share price,eh yes and no,hes a trier but ****in in the wind really,give it up man and move on,theres easier fish out there
Thank you Rivaldo. That’s really useful information, that many of us would not have grasped on our own.
“Silly Billies”! Long time since I heard that one :-)
I suspect a few silly billies have sold this morning on the publication of an idiotic new note from Shore Capital.
Ironically it's meant to be a positive push for SUR prior to next Tuesday's results, noting that SUR are on an "undemanding" multiple and with "growth and resilience to continue".
But Shore's headline PBT and EPS figures on page 1 are suddenly much less than before. Why? Because - without explaining it clearly - they've recalculated on the basis of the Continuing businesses only, i.e completely excluding the profits of the businesses held for resale.
You have to go to page 2 to see that actually the total figures are exactly the same as before except for a small revision due to the now higher 2023/24 corporation tax charge.
Furthermore, the headline figures adjust out the held for resale businesses, yet fail to adjust "in" for any sale proceeds raising the cash pile or making the EV/EBITDA even better. So it's a one-way street rather than a fair adjustment, i.e failing to adjust the P/E to an ex-cash basis.
Incidentally, they have the "for sale" businesses contributing £2.6m PBT and 1.3p EPS. This might suggest they could raise say £18m-£20m on sale, lifting SUR's cash pile to well over £40m - approaching 30% of the m/cap. But of course they don't even mention this.
In total SUR are forecast to make 8.1p historic EPS and 8.8p EPS this year to Sept'23 - i.e now a single-digit P/E.
The "continuing" business numbers are 6.9p EPS rising to 7.6p EPS - but obviously if you completely exclude the businesses held for resale then you should adjust the P/E to be an ex-cash P/E rather than just ignoring one side of the equation.
This is just so avoidable and has to be the reason for the early sales. Oof, I'm really annoyed at Shore Capital!
The current drop in share price today before the results,-Could this be the result of the market makers undertaking a classic 'TREE SHAKE'? Although it appears most of the trades are sells, the total volume is still very small.
Interesting new article on how heat pumps "are becoming the technology of the future":
Https://knowablemagazine.org/article/technology/2023/heat-pumps-becoming-technology-future?utm_source=Knowable+Magazine&utm_campaign=b558c5be4b-KM_NEWSLETTER_2023_01_15&utm_medium=email&utm_term=0_-b558c5be4b-%5BLIST_EMAIL_ID%5D
by Mark Watson-Williams:
Https://masterinvestor.co.uk/equities/small-cap-round-up-sure-things/?mc_cid=be0d298619&mc_eid=db9f9bbaf2
"Sureserve Group (LON:SUR) – Deserving a Much Higher Rating
I like the way that the shares of this gas safety compliance and energy efficiency services group have been gently nudging higher over the last week or so.
Last night they closed up another 3.5p at 91.5p, valuing the business at £152m.
The shares have been down to 83.66p since I commented upon the group and its prospects just a week ago.
At that time, I fixed a new Target Price for the shares to rise to 106p this year, so the last week’s advance is a useful stride forward.
The group will be presenting its full year results on Tuesday 24 January.
Pre-tax profits have risen steadily over the last few years from £8.3m in 2019, then £9.4m in 2020, with adjusted pre-tax profits for the year to end September 2021 reflecting a 24% sales uplift in the Covid year to £244m, producing profits of £13.6m.
In the same three years earnings lifted from 4.4p to 7.1p per share.
The estimates by Shore Capital analyst Alastair Stewart suggest £304m sales lifted profits to £16.4m, worth 8.1p per share in earnings.
The group had an excellent order book of some £585m at the 2022 trading year end, which is very impressive and that is a figure that is sure to rise strongly over the next few years, underlining the group’s profit prospects.
What is more the group is boasting a strong net cash position, £23.2m at end September last.
The soon-to-be announced results will surely be accompanied by a positive outlook statement despite external pressures.
Shore Capital have already pencilled-in estimates for the current year for £319.2m revenues, £18.6m profits and 9.2p per share in earnings.
Based upon the strong cash balance and undrawn facility, upon the massive and improving order book and the current estimates – I see my Target Price of 106p being rapidly achieved, while later in the year market anticipation of improving profits will see an even higher rating.
These shares are headed higher and through the 100p, possibly within the month, if not days."
Gas boilers should be banned in a decade (i.e the ban should be brought forward by two years) says "net zero tsar" in "a leaked copy of a review being published next Monday":
Https://www.thetimes.co.uk/article/gas-boilers-should-be-banned-in-a-decade-says-net-zero-tsar-dmxrt6kn5
Lots of work for SUR then:
"About 1.8 million gas boilers are sold annually in the UK, compared with only 55,000 heat pumps last year. The government has already set a target of installing 600,000 heat pumps a year by 2028, and last year began offering households £5,000 to fit one."
Sure Maintenance have won a 5 year contract for £19.025m for Great Places housing group for "Provision of Gas Servicing, Maintenance and Installation Services":
Https://www.contractsfinder.service.gov.uk/notice/dc49d0e0-b141-493e-8c8f-5c55133594fc?origin=SearchResults&p=1
Hi, With so much positive news about SureServe, it was 'Sure' to pick up some momentum before the finals on 24th Jan. Hopefully it can reach the magic 100p before then. We will see?!
Everwarm are one of five suppliers awarded a £35m contract to run until December 2026 with Leicestershire County Council.
This is a "Domestic Energy Efficiency Retrofit Framework" - it's encouraging to see SUR involved in delivering "energy efficiency and renewable energy installations to social rented, private rented and owner occupied properties across the county":
Https://bidstats.uk/tenders/2023/W01/790036880
for K&T Heating. Note that it's over 10 years and extendable to 15, so I'm assuming that's why it's not been RNS'd as it's not material on an annual basis, even though it's a very nice win bringing in further secure revenues for some time to come:
Https://bidstats.uk/tenders/2023/W02/790429885
Https://masterinvestor.co.uk/equities/small-cap-round-up-end-of-the-beginning/
"Sureserve Group (LON:SUR) – Setting a New Target Price of 106p Before The Finals
On Tuesday 24 January this £145m capitalised compliance and energy support services group will be reporting its final results for the year to end September 2022.
The group is expected to declare over £300m (£244m) of revenues, while adjusted pre-tax profits could show a good advance to £16.4m (£13.6m) increasing its earnings to 8.1p (7.1p) per share.
Solid operational performance will have been shown for the year, despite its inflationary pressures.
The period end showed up a 16% increase in the group’s order book to £565m (£503m), while its net cash position was very strong at over £23m (£16.6m) with its £15m revolving credit facility undrawn.
Analyst Alastair Stewart at Shore Capital estimates that the current year to end September could see revenues improve again to £319.2m, helping to lift profits to £18.6m, worth 9.2p in earnings.
That very positive order book shows an excellent visibility of future earnings, as long as the group’s management can keep firm control of its costings – and I have no reason to doubt their ability to do so.
The group’s shares have been edging higher from the 66p level at which they were trading a month ago.
Now at 85p they appear to me to be significantly under-rated considering its financial strength, its order book, growing revenues and continually improving profitability.
If one used a market average pe ratio, then its shares would be trading at around 115p.
In my view I see these shares rising to well over the 100p barrier in early 2023, before heading even higher.
Accordingly, I now set a new Target Price of 106p."
Happy new year everyone.
SUR's results will be published on 24th January, so not long to wait. Hopefully we'll get a further run-up prior to then given we already know the results will be in line with 8.1p EPS expectations.
With 9.2p EPS forecast for the year already three months in, plus a £23m+ cash pile and terrific forward visibility given the £585m order book, hopefully the recent upwards trend will continue for some time to come.
Good to see the recent rise continuing - but SUR remain on a miserly P/E at 86.5p given 9.2p EPS forecast for this year, plus a £23m+ cash pile against a £143m m/cap.
Here's news of a £48m contract win going through to 2025 for Aaron Services awarded last week:
Https://www.contractsfinder.service.gov.uk/notice/c8873a2b-62d7-4fe3-a90b-ab870912e3bf?origin=SearchResults&p=1
SUR were one of Andrew Hore of i.i.i's five tips for 2022. This afternoon he's updated those five tips, including SUR - he says Buy:
Https://www.ii.co.uk/analysis-commentary/aim-share-tips-review-2022-playing-long-game-ii526358
Conclusion:
"The fire and lift services businesses are both non-core although management will not sell without obtaining a good price. These disposals could provide further cash for acquisitions, and they continue to be cash generative as part of the group.
The order book was 16% higher at £585 million at the end of September 2022. Sureserve continues to win orders and the latest is a £5.4 million PV order from the MoD.
The shares are trading on less than 10 times 2022-23 prospective earnings. The share price will eventually reflect the strength of the business and its cash generative abilities. Buy."