focusIR May 2024 Investor Webinar: Blue Whale, Kavango, Taseko Mines & CQS Natural Resources. Catch up with the webinar here.
Interesting post by GTC's CEO on Twitter (sorry, X) below:
Https://twitter.com/CleanTechRich/status/1790338619497943468
"Sad to see IQGeo leave #AIM, but awesome to see a valuation multiple of 14.9x ARR for a company similar to #GTC"
@GETECHplc has an ARR of £2.9m and is driving value from applying AI to it's geoscience data and geospatial skills"
Based on that valuation of ARR, GTC would be valued at approx 45 million or 70p a share.
Incidentally, GTC are forecast by Cavendish to have £1.9m net cash at the end of this year, rising to £3.1m by Dec'25.
More re Berenberg's increased 1200p target price:
Https://citywire.com/investment-trust-insider/news/expert-view-currys-greggs-renewi-headlam-and-bioventix/a2442398?page=3
"‘Buy’ high quality engineer Renew, says Berenberg
Renew (RNWH), the AIM-listed engineering services group, can continue the momentum it has built in the past six months given its ‘high-quality proposition’, says Berenberg.
Analyst James Bayliss maintained a ‘buy’ recommendation but lifted his target price from £10 to £12 as the shares gained 2.4%, or 24p, to £10.26, valuing the company at £812m.
The six months to 31 March ‘reflected another record performance’, with group revenue up 17.2% at £552.8m and operating profit also 17% higher at £33.1m, ‘both driven by strong demand and performance across all end-markets and the group’s high-quality, low-risk business model’.
Bayliss said net cash of £42.5m leaves the group ‘well placed for further organic and inorganic investment, while strong momentum in the first half has carried through to the start of the second half’.
Management is continuing to tender for and win new contracts and so Bayliss ‘sees no reason that this momentum cannot continue’ and he upgraded his earnings forecasts by 4% for full-year 2024.
‘We move our price target to £12 to reflect Renew’s continued momentum and its high-quality proposition,’ he said."
It looks like BMS will be promoted to the FTSE Small Cap Index in the next review on 29th May.
Which could provide some impetus for the next leg up if all goes well:
Http://www.stockchallenge.co.uk/ftse.php
OT : just noticed Clarkey1880's post below. Why he's having a go at me I don't know, since I'm merely re-posting the quote from Mark Watson-Wiliams at Master Investor. Takes all sorts I s'pose!
Https://www.investorschronicle.co.uk/news/2024/05/14/the-uk-s-need-for-infrastructure-repair-is-a-boon-for-renew/
"The UK's need for infrastructure repair is a boon for Renew
Acquisitions have helped the company widen its reach ahead of new five-year framework deals
May 14, 2024
The UK’s creaking infrastructure may be a source of complaints among users of the country’s roads, rail and rivers but it is providing a steady stream of work for Renew Holdings (RNWH).
The Leeds-based contracting group reported a 13 per cent increase in operating profit for the six months to 31 March and has continued to convert most of this into cash. It finished the period with net cash of £42.5mn (excluding leases), up from £35.6mn at the end of September and £17mn a year ago.
The company has been something of a cash compounder in recent years and it has funnelled proceeds back into the business by making bolt-on acquisitions that have added either new capabilities or expanded its geographical reach.
Chief executive Paul Scott flagged Rail Electrification – acquired for £5.3mn in 2021 – as a business that, working alongside two existing rail businesses, has placed it in a much stronger position to win work on the industry’s latest five-year framework agreements. New budgets are also being set for the next five-year programmes to be carried out across the road and water networks, with spending on the latter likely to increase by 87 per cent based on current business plans.
Renew’s focus on maintenance work means it’s less likely to be affected if whichever party wins this year’s election decides to take an axe to planned capex schemes. Although its shares look quite pricey compared with contracting peers – they trade at 15 times earnings, having risen by 40 per cent over the past 12 months – its strong track record and resilient end markets suggest they remain good value. Buy."
Agreed - I suspect Cavendish will wait until (1) the finals are announced, or (2) when they eventually release a note with forecasts for the current year to March '25, which aren't out yet, and will then raise their target price from 27p.
Loads of 1 share Buys going through. Must be code for Buy, Buy, Buy!
Yesterday Berenberg raised their target price to 205p (from 185p) and said Buy:
Https://investing.thisismoney.co.uk/broker-views/
Cavendish have a 27p target price - over 100% upside from here. They've today raised their revenue forecast to March'24 by 22% to £162m, and their EBITDA by 34% to £16.0m.
They conclude:
"We estimate that the replacement cost of OPG’s Chennai plants would be around £325m based on the projections by the Indian government for additional capacity to be installed in India by 2030. Meanwhile, on the operating cost side, we note that coal prices remain significantly lower than their levels from FY22 and FY23, with further supply expected to come online during the next two years. With favourable trends on both electricity demand and costs, we believe that OPG is well positioned to return to annual EBITDA of £3040m in the medium-term, a level which was achieved in each of FY19, FY20 and FY21.
- Investment conclusion:
Based on medium-term prospective EBITDA of £30-40m, the current valuation represents a multiple of 1.4-1.8x. The company also benefits from a low degree of balance sheet leverage relative to other electricity utilities in India, as well as an asset base which positions OPG at the lower end of the cost curve for Indian electricity producers. We reiterate a target price of 27p, which would represent a 2.5-3.3x EBITDA multiple based on our mediumterm estimate range of £30-40m EBITDA."
SDI have confirmed on their web site that the trading update will be on the 20th - next Monday.
Which is I suppose mildly encouraging for the optimists here since Monday updates are on the whole more positive than (say) Friday updates!
Plus if anything was materially wrong then SDI would have been obliged to announce something already:
Https://sdigroup.com/investors/financial-calendar/
It's worth reflecting on Zeus's increased forecasts and where they might take the share price (translated at $1.25 exchange rate):
Dec'26 : 29.6p EPS
Dec'25 : 25.2p EPS
Dec'24 : 22.8p EPS
Dec'23 : 18.6p EPS (actual)
And that's without any further acquisitions or share buybacks.
Edison state that TIG's global ad-tech peers trade on average P/E's of 12. And TIG's Online Presence peers trade on P/E's of 25.
If you value TIG on a relatively conservative P/E of 15 based on those numbers, and apply them to the 29.6p EPS you get to a 444p price target which could be achieved in say winter '25/spring '26 with the market looking forward as usual.
So almost 200% potential upside in around the next 18 months to two years.
Assuming TIG continue to perform smoothly, merely meeting those forecasts without surprises as they've been doing, then there should be a strong re-rating from the miserly current year P/E of 6.9 at 156.6p.
Lovely stuff:
"the Company expects to report FY24 revenues and EBITDA of no less than £160 Mn and £16 Mn, respectively, exceeding market expectations"
Plus net debt is down to a measly £12m.
Could be a big move up here. Particularly as apparently Cavendish were forecasting adj EBITDA of £12m and net debt of £16.4m. So today's numbers have smashed those out of the park.
Extremely encouraging H1 report today both re H1 and looking forward.
The H1 performance suggests forecasts will be beaten for the year given the acquisitions during the period and the increased order books.
Particularly as the higher margin Engineering Services order book has increased beautifully to £831m from £780m - it's the very low margin Building order book dropping to £67m which has meant the overall order book is only up by £8m overall.
The cash pile has roared ahead to £42.5m and is way ahead of forecasts - with tghe suggestion today that more acquisitions are on the cards.
With the big Rail and Water divisions thriving, and Roads, Telecoms, EV Charging and Nuclear all looking good too, RNWH look set for impressive multi-year growth.
Zeus's research summary today has now been posted elsewhere, so here's some useful extracts:
"Q1 results
Revenue grew 8% organically in the trailing twelve months (TTM) to March. The Online Presence division continued to benefit from price rises and the shift toward alternative Top Level Domains (TLD), whilst the Online Marketing division continued to see declining click prices offset by visitor volumes. The company remains confident in meeting expectations for 2024, supported by new products, vertical integration initiatives and international expansion plans. We update our forecasts for the acquisition of Shinez, completed on 26 April, and lower tax rate assumptions marginally, which increases FY24 Adjusted basic EPS by 12%. Team Internet shares trade at a very attractive 5.3x FY24 EV/EBITDA, 6.7x P/E with a 15.1% FCFF yield. We believe the Group is considerably undervalued for its levels of earnings quality, growth, and cash generation."
"Shinez acquisition and forecast upgrade: On 26 April, Team Internet Group completed the acquisition of Shinez I.O. Ltd. The deal diversifies Online Marketing division revenue and expands its traffic monetisation options and capabilities (discussed on pages 4-5). The $43.2m initial consideration, funded with existing cash reserves and debt from its RCF, is equivalent to 4.2x adjusted FY23 EBITDA of $10.4m. An additional $12.3m of contingent consideration is tied to ambitious financial targets over two years, which we would expect to enhance earnings accretion if met. The deal is expected to create high-single digit percentage EPS accretion on combined pro-forma numbers for FY23, before accounting for potential synergies. As a result, we upgrade Adjusted EBITDA forecasts by 7% to $105m for FY24, by 10% to $115m for FY25, and by 16% to $131m for FY26, not including any impact of potential synergies. We also reduce effective tax rate assumptions in all years from 27.5% to 25%, driving an even greater uplift in EPS.
Valuation: Team Internet is well positioned to take market share with a full suite of products that uniquely addresses all stages of the advertising funnel from ‘Awareness’ (Shinez) to ‘Consideration’ (TONIC) to ‘Conversion’ (VGL). Despite its strong market position, its shares trade at only 5.3x EV/ EBITDA 2024 and 6.7x PE, with a 15.1% FCFF yield. In comparison, Online Presence peers trade at 10.3x EV/EBITDA 2024 and Online Marketing peers trade at 6.5x, 94% and 22% valuation premiums to Team Internet."
They've only just completed the $43.2m acquisition of Shinez, so I'd be surprised if there are any more material acquisitions for a little while.
The AGM last month renewed the authority to purchase their own shares, so I'm sure there will be more buybacks in due course.