Croma Security Share Price (CSSG)

WH Ireland say in their update note that they'll resume forecasts/full coverage soon "given the additional focus and enhanced earnings visibility which are now features of the company. We note that the company is trading in line with management plans".

They also note:

"Net cash was also healthy at £2.1m, and we anticipate further substantial payments in respect of Vigilant, with an anticipated recent c.£0.5m cash payment in March ’24 to be followed by a further nine payments of c.£0.40.5m each, and the redemption of £1.3m of Vigilant shares anticipated for July 2024.

WHI view: This morning’s announcement highlights regular earnings streams such as maintenance as well as project work, which is pleasing to see. Beyond this, CSSG is very well positioned in our view to use a meaningful funding stream deriving from the disposal to consolidate its market, making more such wins probable as it increasingly becomes a national player and providing increased growth potential to the business"."

Excellent news this morning of another NHS security systems contract win, not so much for the quantum at £0.4m but because it's a further example of CSSG spreading its wings through the NHS.

As the RNS says, "Croma now service several NHS Trust's and healthcare providers". Once a company establishes itself in the public sector it's usually the case that a series of regional organisations or Trusts follow each other once a reputation is established.

For the £9.4m m/cap CSSG this would be transformational alongside the expansion via acquisition propelled by the cash pile.

10* EBITDA is absurd

5* EBIT (or less) is pretty common atm

A very low valuation Jolly.

How about 10 x EBITDA - c£1m p.a so £10m.

Plus almost £2m cash

Plus over £5m to come - discounted by 20%.

SP c£16m valuation - c 116p a share.

How to value underlying business?

£2m perhaps...15p/share?

then cash £5m ? (discounted for risk and time) 40p?

tp 55p?