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SUR are forecast to make 8.1p EPS for the year ending in only just over 4 months. Then we'll be into a year where the forecast is 8.9p EPS - a P/E of just 9.4.
Plus SUR have a £12m cash pile, not far off 10% of the m/cap, which would drop the ex-cash P/E to around 8.5.
Not only that, but there's likely to soon be share price catalysts as regards (1) earnings-enhancing acquisitions and (2) disposals of the non-core divisions.
And SUR do every so often RNS large contract wins - there's already been two this year totalling £88m.
This for a company at the heart of the UK's ESG push and with huge visibility of forward revenues.
Hardly surprising at these bargain levels (imo!):
Http://uk.advfn.com/cmn/fbb/thread.php3?id=43316458
"The Company has been notified that Nick Winks, Non-Executive Chairman of Sureserve, has purchased 25,000 ordinary shares of 10 pence each ("Ordinary Shares") at a price of 83.75p each. Following this purchase, Mr Winks has a total beneficial interest in 150,000 Ordinary Shares representing 0.09% of the issued share capital of the Company."
Probably those who bought in pre-results looking for a short-term profit being mugged by the MMs when they tried to exit. This very rarely seems to work, I don't know why people bother!
The share price has already bounced somewhat. On a P/E almost in single figures, and with such huge future revenue visibility, the share price should be at least 100p imho.
I’m buying!
It's almost 10% down on good results, not sure what is going on
Weird. Some are just never happy!
What the hell?!? Why is the price plummeting?
Shore Capital have retained their forecasts:
- 8.1p EPS for this year to 30/9/22
- 8.9p EPS for next year to 30/9/23
The cash pile is expected to rise to £21.3m this year and £31.9m next year.
A very good performance in H1, with EPS up 38% on last year.
Remember that there's significant seasonality, so SUR look well placed to meet or beat forecasts. The outlook is confident overall - above all, revenue forecasts for the year are already 96% covered by orders.
The £512m order book is up 50% year on year!
Net cash continues to rise, now at almost £12m.
Analysis is a little muddied by the businesses for sale. Including these the 2.8p basic EPS for H1 means SUR are well on track for 8.2p EPS forecasts, given the 4.9p EPS achieved in last year's H2.
Prospects remain very good considering the long-term prospects and order books, and it seems inevitable we'll get acquisition news sooner rather than later.
Fantastic!
Bit about sure in master investor from yesterday
https://masterinvestor.co.uk/equities/small-cap-catch-up-sur-iof-and-mpac/?mc_cid=cf8f8d3cfc&mc_eid=0cda6306d6
Shore Capital have issued an update note covering today's contract win. As a reminder, they forecast for this year to 30th September:
- 8.2p EPS, i.e a P/E barely above 10
- £21.4m net cash, i.e around 15% of the m/cap
also noting interestingly that:
"Greater earnings quality
We are seeing evidence of contracts moving from typically under five years to longer in duration. In our view, a high proportion of large contracts arguably offer superior earnings quality, since they are with trusted partners and can allow greater efficiencies and better overhead recovery, with less spent on bidding teams."
"We also believe that working with sector leading HAs, such as L&Q and Guinness improves Sureserve's work winning credentials in the social housing sector".
RNS today - great to see a £68m contract extension securing revenues for the next 8 years as regards gas compliance services.
Just the kind of recurring revenues the City likes to see:
Https://www.investegate.co.uk/sureserve-group-plc--sur-/rns/8-year-contract-extension-worth--68m-with-l-q/202205090700076609K/
At the moment it will be lucky to break 90p, I'm hoping for a steady rise next week in preparation for the interim results. Surprised it's dropped almost 5% today
Brief comment from the Naked Trader overnight FYI in his fortnightly update:
"Sureserve is trying hard to break out, surely deserves to crack the 100p"
A very useful NED appointed today as regards firstly SUR's renewable energy activities, having 18 years experience at Siemens "during which she was involved in the energy, healthcare and logistics sectors. Her energy experience is predominantly around renewable power generation and transmission network infrastructure, and her healthcare work focused on PPP hospital managed equipment services".
And secondly she has an "extensive knowledge of M&A". A rather good fit then:
Https://uk.advfn.com/stock-market/london/sureserve-SUR/share-news/Sureserve-Group-PLC-Appointment-of-Non-Executive-D/88015522
Good to see SUR arranging an Investor Meet presentation three days after the 17th May interims:
Https://uk.advfn.com/stock-market/london/sureserve-SUR/share-news/Sureserve-Group-PLC-Notice-of-Investor-Presentatio/87984889
The bounce continues. Looks interesting chart-wise with new recent highs - hopefully back to say first 92p-93p and then over 100p again in the period prior to the interims on 17th May.
Good to see Robbie Burns (the Naked Trader) very positive on SUR in his fortnightly update last night:
"Sureserve seems to have found its bottom and is flying today, you'd have thought it was worth over 100p"
Featured on Stockopedia today:
Https://www.stockopedia.com/articles/quality-and-value-could-be-major-drivers-of-this-small-cap-stock-267570
Good to see the coverage, but is that really responsible for the surge? Seems unlikely to me.
More likely imo an institutional investor taking advantage of the dip, combined perhaps with a time when supply of shares is scarce.
Https://masterinvestor.co.uk/equities/small-cap-catch-up-featuring-d4t4-tly-cbox-and-sur/
"Sureserve Group (LON:SUR) – soon to edge over 100p again
We will have to wait until Tuesday 17 May to see the interim results announcement from this social housing energy services group.
It is a fair bet that the group’s order book has grown since the end of January this year, when it stood at a massive £527.1m. That certainly gives the company a very good longer-term visibility of where it will be making its money.
Early February saw the group declare it had signed a £20m ten-year contract with Tower Hamlets Homes for domestic gas servicing, repair and maintenance for the homes group’s 11,500 tenanted properties.
In the middle of January, the group’s shares were trading at around the 106p level, since when they eased back to 79p before closing last night at 82p.
I see them advancing again up over the 100p barrier as good news continues to flow through to investors."
The interims will be out on 17th May per today's RNS:
Https://www.investegate.co.uk/sureserve-group-plc--sur-/rns/notice-of-interim-results/202204140700063297I/
They should be good given the outlook from the prelims where SUR were "Confident for the year ahead" and "The Group's momentum has continued with a strong start to trading in FY22".
The Chairman also said "with a strong start to the current year, I look forward with confidence to the year ahead."
Further to the Momentum Investor tip I noted earlier, it's worth noting that SUR are also to be bought into the magazine's Trader Portfolio.
On the portfolio page they state:
"This time with markets still volatile I feature Sureserve, which provides inspections and services for gas boilers, fire alarms and lifts on behalf of social housing organizations and enjoy terrific recurring revenues from multi-year contracts. A smaller, but faster growing business supplying insulation services, exploiting the drives towards net zero and away from fuel poverty, provides added excitement.
The core business looks copper-bottomed and the CEO plans to double turnover by 2026 accompanied by higher margins. He told me acquisitions are expected. No surprise to see Slater Investments increasing its stake as the PE will shortly drop to single digits. I will add a unit shortly."
Good to see the Naked Trader mention SUR briefly in his update yesterday:
"Sureserve still looks undervalued at the current price"
Last month's issue of Momentum Investor had SUR as its main Buy tip. The new issue has been out for a while now, so it should be OK to copy parts of the conclusion from the tip FYI:
"Sureserve is a highly cash generative business and has swung from net debt of £11.4m at FY'18 to net cash of £16.5m at '21 and Smith is determined to put this cash, alongside that debt facility, to good use through further acquisitions.
Within Compliance this will be in the form of in-fill gas service businesses to improve its geographic coverage and utilise their staff, vehicle fleet and contracts......Within renewables he is aiming to buy in expertise in the areas of solar, lighting, battery technologies and heat pumps with the target ideally making revenues of £5m-£15m and EBIT margi of 10-15%. Such a deal would likely cost 6-8x EBIT, he says.
Slater increases stake
One final point in its favour is that Sureserve's contracts provide a block of strong earnings visibility and its order book already covers 73% FY'22 revenue, 46% FY'23 and 33% of FY'24. Anyone buying the shares is in good company; Slater Investments, the investment vehicle run by Mark Slater, recently increased his holding to 15.16%. Trading on a P/E of 10.4 falling to just 9.7, the shares are cheap. I am a buyer."