SUR.L Share Chat (SUR)

Apparently its going to happen on July 12th (info picked up from a rival ChatBoard) with monies being paid about 2 weeks later. Not sure of the source of this information but is does seem reasonable.

From the original takeover RNS, takeover expecting to be completed late June early July

I was wondering same?

Hello - Does anyone here know the timetable for the takeover. Not sure whether to wait for the full money ie £1.25 or sell in the market. Can't seem to find any info on the net. Anyone better informed that me out there?

Agreed, Rivaldo. Was a sleep easy investment given the amount of work likely coming their way over the next 10 years. I also really liked the new CEO. Saw him in a couple of interviews and he seemed to have a lot of integrity.

Might well be looking at a different story if they were able to offload the businesses earmarked for sale and redeploy the cash to meet their strategic aims. It seems the prospect of cash coming sooner was too good to miss.

Only 3% of my portfolio so can't complain - just wish I had topped up more sooner!

At 125p the premium to the share price is around 40%, which is pretty good compared to the usual 25%-30%. But then that just shows how undervalued the share price was in the first place.

I note that Slater and Harwood are taking the money and running.

If SUR had succeeded in the acquisitions that were hoped for (and/or to divest the non-core businesses) it's possible that the share price would already be at 110p-120p and the bid would be a non-starter at this level. Hmmmm.

Lowser, the timing of your post on Tuesday was impeccable! It just goes to show that value will usually win out at some point. This was one of my larger holdings and was a very sleep easy investment for me (and a multibagger). So I'm happy with a large payout and the chance to reinvest (for example, TST and SYS have both just announced very good news and are both rather good value imho, along with the likes of DKL, MWE, REAT and RNWH etc).

hxxps://news.sky.com/story/sureserve-joins-tide-of-london-listed-takeover-targets-with-200m-deal-12862052
Lower than I hoped, £200M is around £1.20

i have to say rivaldo,your a long term trier here,but surely your resources are better suited elsewhere,i gave in long ago,its just no happening here,you be making more money in the bank than staying here long term,or short

Nice comment from the Naked Trader in his latest fortnightly post at the end of last week:

"Sureserve was liked by a lot at the follow up seminar last week, and level 2 looked good.

Showed how handy level 2 is, because it rose strongly by the afternoon. Shares look worth a lot more and remain too lowly rated."

And here's the good news in summary:

Https://www.telegraph.co.uk/business/2023/03/30/gas-boiler-manufacturers-5000-fines-heat-pump-targets/

Extracts:

"Gas boiler manufacturers face £5,000 fines for missing heat pump targets

‘Soviet-style’ quotas come as ministers plan to overhaul subsidy rules"

"Boiler manufacturers will be fined thousands of pounds if they fail to install enough heat pumps under new net zero plans.

Ministers are planning to force production quotas onto large manufacturers as part of efforts to boost uptake of the devices across Britain.

Companies that fail to meet the quotas will face a fine of £5,000 per device. In an example given in consultation papers, a manufacturer with a shortfall of 100 would be expected to pay £500,000.

Heat pumps are seen as a key replacement for gas-fired boilers, which ministers want to phase out in order to cut carbon emissions."

"It comes as ministers are planning to overhaul subsidy rules to make gas-fired boilers less attractive to households.

New gas boilers could also be banned within a decade, the Government revealed in its net zero strategy.

The Government said it would consider recommendations made by net zero tsar Chris Skidmore to ban new installations of the heating systems by 2033.

If adopted, the policy would mean households would need to install heat pumps or other low-carbon systems once their gas boiler breaks down."

"Other measures to encourage the switch in the new net zero plan include making gas heating more expensive compared to electricity by redistributing green levies on to the fossil fuel, and extending the £5,000 heat pump subsidy scheme."

"Under plans set out on Thursday, ministers plan to oblige makers of heating appliances to sell a certain proportion of heat pumps each year.

They will earn “credits” for each heat pump installed, which will be used as proof they have met their heat pump targets. Under plans being considered, an initial 4pc of manufacturers’ sales above a 20,000 threshold will need to be heat pumps.

Manufacturers will be allowed to buy heat pump credits from rivals and defer some of the targets to the following year."

Tomorrow looks like a good news day for SUR, with new government funding to be announced for various energy saving measures which SUR provides including insulation and smart heating:

Https://www.thetimes.co.uk/article/uk-to-impose-green-tax-on-imports-from-polluting-factories-8xgf6n9gx

"Cheap imported products made in polluting factories abroad may face new green import taxes and middle-income families will be given grants to make their homes more energy efficient under updated government plans to hit net zero by 2050.

The measures are part of a package of proposals that will be unveiled on Thursday by the energy secretary, Grant Shapps."

"The plan will be part of a wide range of updated net zero and energy policies to be announced on what has been called “energy security day”. Ministers will confirm that middle-income households will be given grants worth hundreds of pounds to make their homes more energy efficient under a new “Great British insulation scheme”.

Shapps will announce the plan to fund loft insulation, cavity wall insulation and smart heating controls. Unlike previous initiatives, which were targeted predominantly at the poorest households, 80 per cent of the new funding will go to households that are “able to pay”.

The money is expected to be given to people in council tax bands A to D, and the government will meet the bulk of the costs of any upgrades. The scheme, which will run over three years, will be funded using a levy on people’s energy bills known as the “energy company obligation”.

Ministers believe that people will make significant savings. Installing loft insulation can cost up to £1,100 but save £640 a year, and cavity wall insulation costs as much as £2,500 but can save £525 per year. Smart heating controls such as advanced thermostats and thermostatic valves cost up to £800 and can save £525 a year.

The scheme is part of measures that will be announced by the government in an effort to cut people’s energy use by 15 per cent by 2030."

Great finish yesterday, up around 6p on the day. Likely the closing of an overhang and a sudden lack of stock for the MMs.

There's plenty to look forward to in terms of news flow from acquisitions and disposals. Even better for this to be announced in the next few weeks if/when there's not much stock around.

Very unusual share move in the late afternoon, on no news. Ill be watching the RNS column tomorrow , to see if anything pops up up tomorrow. I bet that person who sold 15k worth at 79.7 p will be gutted now....

With 8.6p EPS forecast this year SUR are on a P/E of just 9.5.

In addition SUR have a £23m cash pile - approaching 20% of the entire m/cap. The ex-cash P/E must therefore be around just 7.6 or so.

And there's a new £320k contract win for Sure Maintenance with Staffordshire Council.

Https://bidstats.uk/tenders/2023/W08/793378922

SUR are newly tipped on the AIM Prospector web site - you can download the article for free:

Https://www.aimprospector.co.uk/product/34

Conclusion:

"A full year contribution from December 2021 acquisition CorEnergy will help and there is a wave of legislative/regulatory change that will increase demand for Sureserve's services.

While shares of this type typically do not attract a high rating, Sureserve has an excellent record, customer base and balance sheet.

The market valuation for the business appears mean bordering on outright wrong."

5%+ M Rawlings. Vote of confidence.

SUR's Warmworks JV was yesterday reappointed for another year by Orkney council to manage the rollout of up to £2.1m of funds to help local households with heating and insulation - with the council having just been given another £600,000 for this purpose:

Https://www.orkney.gov.uk/News?postid=7161

This time as part of a £35 million contract for Everwarm with Leicestershire County Council - the second that Everwarm have had with the same council - for domestic retrofit of "energy efficiency and renewable energy installations to social rented, private rented and owner occupied properties across the county".

And more long-term revenue visibility through to 2026:

Https://bidstats.uk/tenders/2023/W06/792527130

A new interview with the rather buoyant CFO of SUR "at the forefront of the energy transition":

Https://www.proactiveinvestors.co.uk/companies/news/1004740/sureserve-group-to-be-at-the-forefront-of-the-energy-transition-1004740.html

"I've added what will probably be a final lot of social housing energy services group Sureserve.

I've had these tucked away for some time, and added on weakness.

A very nice report was published, net cash, profits and order books all much higher.

I think it deserves a much higher rating but happy to remain patient. I guess most traders think it's too dull!"

Https://www.nakedtrader.co.uk/

SUR's Everwarm are part of a £30m-£35m Leicestershire Council framework contract win "to deliver a programme of domestic retrofit – Green Homes Leicestershire – securing a range of funding streams to deliver 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

Looks like SUR's Aaron Services and Sure Maintenance are two of the ten winners of places on this £175m Gas Servicing and Repairs framework over the next 4 years from Bolton local authority dated 18th January:

Https://bidstats.uk/tenders/2023/W03/791019797

There's also this £10m-£100 framework win from the same source for SUR's two subsidiaries:

Https://bidstats.uk/tenders/2023/W03/791019892

Looks like an overhang has been cleared, with the buy price steadily moving up this morning and now at the full 90p publsihed offer price.

SUR have highlighted a £19m 5-year contract win from Great Places Housing Group for "gas servicing, maintenance and boiler installations":

Https://www.sureservegroup.co.uk/plc/media/press-releases/sure-gas-contract-extension-great-places-housing/

"27 Jan 2023

Sure Maintenance has secured a five-year contract with Great Places to continue carrying out gas servicing, maintenance and boiler installations. Worth in the region of £19m over five years, the new contract will commence on 1st April 2023.

etc"

https://www.investorschronicle.co.uk/news/2023/01/24/gas-business-heats-up-sureserve-s-prospects/

"Gas business heats up Sureserve’s prospects

Longer contracts offer greater visibility over revenue, CEO says

January 24, 2023

Sureserve’s (SUR) shift towards focusing on providing energy services to social housing landlords was fortuitously timed, given the greater focus on tackling fuel poverty following Russia’s invasion of Ukraine.

The company now installs and maintains gas heating, smart meters and renewable energy systems. The gas division continues to bring in most work, though, and the
average contract length has increased from five to six years, providing greater revenue visibility, chief executive Peter Smith said.

Its order book grew by 18 per cent to around £594mn at the year-end and it had 93 per cent of this year’s expected revenue secured as of 1 January. More than 90 per cent of gas contracts are also index-linked, providing protection against rising costs. Sureserve's cash profit margin widened from 5.7 per cent to 6.1 per cent.

The company has cash in the bank, but opted not to pay a dividend for the second year in a row, keeping its powder dry for acquisitions. Smith acknowledged this hadn’t played well with retail investors, but said he was “very clear why we’re
doing that” and that he had the backing of institutions.

Its M&A activity has been slower than anticipated – it changed advisers last year and deals were harder to complete due to a gap between buyer and seller expectations. It has faced the same issue with the two businesses it is selling – Sureserve Fire & Electrical and Precision Lift Services. It recorded a £3.5mn goodwill impairment against the carrying value of the lift business based on the value of offers received.

Broker Peel Hunt lifted its earnings per share estimate by 7 per cent to 9.3p. The shares trade at just over nine times this level, well below peers. Buy."

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."