MARLOWE PLC (MRL)21 Feb 2021 12:09
I posted this elsewhere a couple of weeks ago but might be of interest to some. My initial buy is up 10% and I shall try to add.
'I've recently been at the wrong end of a fire safety assessment; supposed to be done every 5 years. Looks like we'll have to spend a few thousand getting new fire doors and several other sensible measures as the builder pulled a con-trick in 1995 and fillet dud fire doors, and they were signed off by building regs. I know of two other larger buildings in exactly the same position. There must be thousands and thousands more if I know of three within a mile of each other..
Over the weekend I looked up companies that might benefit from what I feel is going to be a huge market. One company I found is https://www.marloweplc.com One of their divisions does the assessments, fits the systems and doors etc. They've made several acquisitions in the last few years, in the safety and regulatory compliance field. I dipped my toe in this afternoon with a small purchase for the long term. I just wonder if anyone else might here might like to take a look or add to a watch list.'
Then this broker note on Feb 18:
Analysts at Berenberg raised their target price on security systems firm Marlowe from 660.0p to 900.0p on Thursday after the group announced "a set of highly ambitious growth targets" for next three years during its "impressive and informative" virtual capital markets day event.
Berenberg stated that over the next three years, Marlowe will target £500.0m of revenues and £100.0m of underlying earnings, to be achieved through a combination of 7% organic growth per annum, 20% margins, 90% cash conversion and a continuation of its existing mergers and acquisitions strategy.
The German bank stated that while Marlowe had "clearly" set itself "an aggressive" target, it was also one its analysts believe can be achieved, given the company's track record to date and the scale of opportunities that already exist in its various end-markets.
Berenberg, which reiterated its 'buy' rating on the stock, pointed to a roughly 140% upside if Marlowe can meet its targets.
"To assess what this could imply for the future profitability of the group, we have built a model where we assume that these targets are met. Given that the model also results in a peak leverage of 3.5x, we incorporate annual equity raises of £40m, keeping leverage within management's 1.5-2.5x target range," said Berenberg.
"Doing so results in a FY March 2025 EPS of 75.3p, and a 35% EPS CAGR over the next four years (note: the EPS CAGR over the last four years was 33%, highlighting that this scenario would match historical performance). Then, assuming that the group can retain its current forward-multiple of 23.1x, this would imply at least 138% of upside over the next three years."
Sign In
Follow the stocks
