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SUR are forecast to make 8.2p EPS to 30th September, and they also have a £17m or so and rising cash pile against the £133m m/cap.
I'm very happy to hold and top up when appropriate given an ex-cash P/E of only around 8 or 9 and good growth prospects.
The interims are coming soon (next month) - it's worth remembering the strong outlook from the prelims:
"We have started FY22 strongly, continuing the momentum from FY21 and we believe the future outlook for our businesses remains strong. This is underpinned by high levels of long-term contracts and frameworks for which we have continued to see high appointment levels. We are also witnessing an ongoing trend towards regulatory services. Our client base, largely of local authorities and housing associations, provides us continuity moving forward with clients whom we regard as blue chip."
Looking at the councils spend history, this is a renewal of a existing contract with Ipswich following tender, not an outright new win, so it keeps the status quo. Its good to retain customer base, but maybe not so important on share price. and at £5.3M over 6 years its about £75k a month. But it all adds up.
However I do agree that this is undervalued.
Why no RNS Rivaldo? it seems like someone sees a better opportunity elsewhere today with those sells. This looks very undervalued by me.
Aaron Services have won a 6 year contract with Ipswich borough council value £5.3m, running to 2025:
Https://bidstats.uk/tenders/2022/W13/771686835
Big feature just now on the lunchtime BBC News about heat pumps and the Government's Boiler Upgrade scheme which opens tomorrow – it will offer grants of up to £6,000 to encourage more homeowners to install low carbon heating systems.
Interesting to see a third of Brits are keen to install heat pumps to ditch Russian gas:
Https://www.energylivenews.com/2022/03/30/third-of-brits-keen-to-install-heat-pumps-to-ditch-russian-gas/
Hi ChazC, good to see a second man here!
Interims are due in mid-end May, so not far away. Hopefully there'll be a run-up to then.
The bargain fundamentals may of course attract punters in. With 8.2p EPS forecast this year, and the £16.5m cash pile representing 12% of the m/cap, SUR at 82.5p are still on a ridiculous single-digit ex-cash P/E.
And SUR were tipped heavily in the recent Momentum Investor and bought into their portfolio, so there may be continuing interest from that source (not sure I want the herd here, just a few discerning investors like MI readers!)
And there's always the chance of (1) earnings-enhancing acquisitions from the cash pile, which have been flagged by the company, and (2) new contract wins, which are sometimes RNS'd and sometimes not.
You're a one man message board here. I'm a new investor as i liked the look of the chart. what do you see as the near term drivers of interest? It seems to be getting tipped up but no herd to be seen at the moment.
The new issue of Momentum Investor was out this weekend.
SUR were the main Buy tip in last month's issue, and this month they've bought a chunk of SUR for their main Trader Portfolio. So we should get regular updates and bursts of interest from subscribers.
Good news for SUR's Everwarm subsidiary with heavily increased funding for EV charging points just announced:
Https://www.investorschronicle.co.uk/news/2022/03/25/today-s-markets-stocks-steady-government-looks-to-charge-up-ev-infrastructure/
"Government, BP, throwing cash at EV charging anxiety
The Department for Transport has announced plans to support a tenfold increase in the number of electric vehicle charging points across the UK as the focus shifts from consumer anxiety over the range of battery-powered cars to the practicalities of keeping them charged.
A new Electric Vehicle Infrastructure Strategy will provide a £450mn Local Electric Vehicle Infrastructure fund to provide EV hubs and other on-street charging. When added to the £950mn Rapid Charging Fund announced in September last year and other commitments, the department said it was providing £1.6bn to help build a network of 300,000 charging points around the UK by 2030. This equates to almost five times the number of existing fuel pumps.
"No matter where you live – be that a city centre or rural village, the north, south, east or west of the country – we’re powering up the switch to electric and ensuring no one gets left behind in the process," transport secretary Grant Shapps said.
Oil giant BP (BP) also committed a further £1bn to develop new charging infrastructure on Friday. It will fund "more high-speed charging in dedicated hubs and on existing fuel and convenience sites" as well as providing more home charging services, BP pulse senior vice president Richard Bartlett said."
More detail here:
Https://www.edie.net/news/13/Electric-Vehicle-Infrastructure-Strategy--UK-Government-to-pledge--1-6bn-for-public-chargers/
Good to see the Chancellor using his mini-Budget yesterday to help with energy-saving - SUR provide all of the services quoted below:
Https://citywire.com/funds-insider/news/chancellor-raises-ni-threshold-and-pledges-income-tax-cut/a2383224?ref=citywire-money-latest-news-list
"For those hoping to make their homes more efficient in order to offset rising gas and electricity bills, Sunak also reduced the VAT on energy-saving materials such as solar panels, heat pumps and roof insulation from 5% to zero for five years."
The BBC news just now had a big feature on the increasing use of heat pumps and heat exchangers in the UK.
The current enrgy crisis is only exacerbating the need for net zero etc and is playing into SUR's hands to its benefit.
With 8.2p EPS forecast this year, and the £16.5m cash pile representing 12% of the m/cap, SUR at 82.5p are still on a ridiculous single-digit ex-cash P/E.
SUR have performed much better than most stocks recently - perhaps because their valuation was so low in the first place - but their valuation is, as Shore Capital put it when the share price was up at 90p, "compelling".
Excellent start today after a sizeable late buy reported last night - but still lots of upside to go for imho.
Especially with the AGM update coming soon on 22nd March (last year's AGM didn't comment on trading, presumably due to Covid).
Bonkers markdown here, with the MMs stuffing any sellers given the market conditions.
I read a number of articles on the weekend noting that the current energy crisis will only accelerate the implementation of action and legislation to speed up the amount of loft/general home insulation, installation of heat pumps etc.
All of which will be of benefit to SUR.
I see Momentum Investor note that Slater Investments have recently increased their stake to 15.16%.
They also have Peel Hunt's forecasts (which aren't on Research Tree) as follows - which the CEO says "are conservative":
Y/E Sept'22 - 8.2p EPS
Y/E Sept'23 - 8.8p EPS
Which puts SUR on a P/E of just 9.4 going forward - with further acquisitions likely from the £16.5m and rising cash pile.
Se81 has posted as follows elsewhere, noting that SUR were tipped in this weekend's Momentum Investor magazine, which should bring in some more interest - well deserved imo at these bargain levels, given a P/E of barely 10 and a large cash pile which will be utilised for earnings-enhancing acquisitions:
"Tipped in The Momentum Investor this weekend. Some interesting bits from Peter Smith- aiming to double turnover in the next 5 years, organic sales growth c 10% pa, winning around 2 out of 3 contracts tendered for with 60-70% of the weighting ascribed to contracts out for tender based on quality metrics, within renewables he is aiming to buy in expertise in the areas of solar, lighting, battery technologies and heat pumps (@6-8 x EBIT), in compliance looking to improve geographic coverage (@4-5x EBIT), its order book already covers 73% FY’22 revenue, 46% FY’23 and 33% of FY’24"
SUR are highlighted in the new Shares Magazine in an article about investing in energy-efficient companies:
"Working mainly in the public sector, including social housing, energy services firm Sureserve (SUR:AIM) designs and installs heating systems ranging from gas boilers to air source and ground source heat pumps.
There are around 4.1 million social houses in the UK and the market in energy services is worth around £1.9 billion every year, giving the firm plenty of headroom to grow.
Sureserve also installs other energy-saving measures like cavity wall and loft insulation and smart meters to maximise fuel efficiency and financial savings for its customers, who include homeowners and landlords as well as local authorities.
Lastly, the firm also provides energy, fire, electrical, and water and fire compliance services to schools and colleges, other public buildings and the industrial and commercial sectors."
wee tip in shares magazine to buy today,i will hold and see what unfolds
lowzer, I've always thought with a lot of the larger groups, they potentially need these wins just to standstill. It takes a lot of new work to maintain a high turnover/demonstrate growth. Also a lot of wins on frameworks need closer attention, e.g. is it a new framework or have they just retained their place on it for a further period of time, Frameworks also offer no guarantee of works etc etc. We also dont hear the bad news when they dont retain a spot on a framework or lose a contract that was up for renewal. so I always think these things just balance themselves out or add up slowly over the long term and its the financial statements/summaries, changes to personnel, Innovation etc etc that will drive a healthy and maintained price.
With regards the PA housing wins, SUR have been a long time supplier to PA, so is this brand new work or a retention of existing contracts (I dont know the answer). would the bigger story/impact have been if they hadnt won the works?
I'm invested here and holding long as I think there is good potential, but I do have my doubts on things like the Grenfell investigation, where I believe they are now looking at things surrounding the service providers to the building of which SUR's fire safety division (allied fire at the time of Grenfell) were one. There may not be a financial hit to the business, but a reputational hit?? who knows.
so why does all these contract wins not equate to a higher share price?is it because these are boring companys that have no excitement in them?they are not technology or biotech companys?i have shares here but becoming frustrated at no movement in good news,we all here to make money,not to see stagnation,not the name of the game.oh its not easy i have to say,buy,sell or hold
Two of SUR's subsidiaries (K&T Heating and Aaron Services) have won £28m of new business in this up to £53 million long term contract in the London area:
hTTps://bidstats.uk/tenders/2022/W06/768475150
From today's Times - respected energy transition providers like SUR will have the opportunity to do rather nicely given these figures:
Https://www.thetimes.co.uk/article/households-face-big-bills-for-green-upgrades-pdhgw8bs6
"Households face big bills for green upgrades
Britons are going to have to spend upwards of £100 billion improving their homes if they are to meet the government’s energy efficiency regulations, analysts have estimated.
After sifting through the publicly available energy performance certificates (EPCs) of 15 million homes, a team of research analysts at the investment bank RBC calculated that 60 per cent of the nation’s housing stock was graded below a level C. The actual figure could be even higher, given that EPCs were introduced only in 2007, meaning that many older houses still do not have a rating.
etc"
SUR presented their prelims on Capital Access yesterday, and I was as impressed as always.
Worth noting that at the results SUR had already secured 73% of this year's revenues - that's now increased to 84%.....
Terrific news once again today. SUR now has a £151m m/cap, and slowly but surely the City will become aware both of SUR's defensive qualities and growth potential.
And of SUR's "compelling" valuation on such a low P/E, as Shore Capital reiterate this morning:
Extracts:
"Another ten-year contract announced
Compliance and energy services provider Sureserve has announced a domestic gas service contractwith Tower Hamlets Homes for up to ten years. This is the same duration as with its long-standing client, The Guinness Partnership, but in this case is with a new client. As with the Guinness agreement, we are not changing our financial projections, but believe major contract renewals of this nature underpin our estimates and, importantly, improve the quality of earnings. It also supports our view that the Group's order book is becoming longer and higher quality in profile.
Given Sureserve's earnings quality and long-term growth prospects enhanced by the recent growth strategy we believe the valuation is compelling, at an FY22F P/E of 11.0x and FCF yield of 5.9%. House stock."
"Still compelling valuation: Despite the shares rising by 47% Y/Y, we believe the value remains compelling due to the growth and earnings quality, at a FY22F P/E of 11.0x and 5.9% FCF yield."
Sureserve Group PLC - 10-year £20 million win for Tower Hamlets Homes