Member Info for rivaldo

Here's their DCF calculation from today's update note:

"Our valuation is 85p, indicating good potential upside Surface is now winning significant contracts and is on a path to profitability and healthy free cash generation over time. We set out our detailed DCF valuation methodology in: Solid H1, healthy pipeline, 28 September 2020. We value the Group using a 10-year DCF of post capex net operating cash flows. Our calculation of WACC is 8% for the Group using a risk-free rate of 2.5%, equity risk premium of 6% and a blended industrials, technology, and automotive sector beta of 1x. Our terminal growth factor is 2.5%. That said, potential risks remain on the path to achieving improved earnings, hence, we have applied a higher discount rate (vs. WACC) to price this execution risk. We apply a discount rate of 11%, this results in a valuation of 85p. "

They summarise:

"Recent contracting news has been positive with Surface Transforms announcing in December a £45m contract award with existing customer OEM 6. This award brings the total order book from major customers to over £115m. We calculate that the annualised run-rate for sales, when all current contracts fully kick-in, will be c.£20m, with a net margin of 25%-30%. As with scaling-up of any manufacturing operation there is execution risk, but Surface Transforms is firmly on-track to becoming a profitable volume supplier to OEMs. Our DCF-based valuation is 85p. Full results are due in April. "

Yesterday Berenberg reiterated their Buy and recently increased 134p target price:

Https://investing.thisismoney.co.uk/broker-views/CAPD

The Naked Trader said in his overnight update last night that he'd bought more SUR - and that it's now his largest holding.....here's what he said:

"I was amazed to see one of my biggest holdings Sureserve head down on results. I hadn't intended getting any more but the price was just too tempting.

This social housing energy services group is on a roll from results this week.

Operating profit is up 40% and net cash has grown to over £16m.

I think this is a great hold over the next 2-5 years. It is going to benefit from the current
energy transition agenda.

It looks like it will continue to use cash to acquire others and also has a high debt facility.

The downside is the lack of dividend. But seems to me this is fine and I would prefer it to use its cash to buy others. Given my new topup this is now my biggest holding.

For those of you who use researchtree, there is an in depth broker report on SUR today which reckons the shares are well undervalued and something I hadn't thought of which is a switch to hydrogen or other power sources could bring many new opportunities."

A very reassuring update today which should enable the share price to bounce back. Good to see such confidence from DB:

"This year will be transformational for the Company as we move into profitability. We are delighted with the progress made in January, and by the success the team had in its response to the problematic furnace. Given our order position, the priority is now production, and the Board is confident in the Company's ability to deliver on the excellent opportunity ahead."

https://uk.advfn.com/stock-market/london/surface-transforms-SCE/share-news/Surface-Transforms-PLC-Trading-and-operations-upda/87123918

Further details on Shore Capital's latest Buy note, with a 930p fair value:

"Renew^ (RNWH, Buy at 709p)
AGM statement Q1 trading in line; attractive entry point

Summary

This morning, the engineering services group, supporting UK infrastructure, announced, ahead of its AGM, that Q1 22F trading, net debt and cash generation were in line with the Board's expectations. The Group order book at 31 December 2021 was £742m (31 December 2020: £677m; 30 September: £749m) and the Engineering Services order book was £687m (31 December 2020: £583m; 30 September: £679m).

Forecasts

We expect to leave our forecasts unchanged but see scope for upgrades. Renew has consistently had a very high level of visibility with c70% of current year forecast sales usually in the order book.

This has helped the group meet or beat consensus profit forecasts in every year since the group came into its current form in 2006.

Valuation and recommendation

We believe Renew represents a good opportunity for investors seeking to benefit from the UK Government's commitment to invest £640bn in infrastructure from 2020 until 2025. Given the nature of the group's variable, cost-plus contracts, we believe Renew is very well placed to pass on inflationary pressures to customers. We also believe it is protected against economic downturns given that its revenue is driven by the public sector.

We continue to believe Renew has a lower risk profile than the market perceives, possibly due to associations with peers servicing much larger fixed contracts. Renew's ability to control costs and resilience during the pandemic has been much greater than the majority of Industrials and worthy of an even greater re-rating, in our view. It is highly unlikely, in our view, that operations will be significantly impacted by restrictions related to the Omicron variant.

We maintain our BUY recommendation and 930p DCF-based fair value (31% upside). We see significant scope for this to be upgraded. As of yesterday's closing price, the shares trade on 13x our FY22F EPS forecast and 9x on an EV/EBITDA basis. We believe the current share price represents an attractive entry point for Renew. BUY"

Good to see CAPD featured as a Buy in the FT in their Investors Chronicle round-up:

Https://www.ft.com/content/8708e3cf-8530-4a4f-8381-cf2f23156826

"BUY: Capital (CAPD)

The value of stakes in mining and exploration companies has increased substantially, writes Michael Fahy.

Mining equipment provider Capital said revenue for 2021 came in at $226.8m (£189.7m), 68 per cent higher than the previous year and slightly ahead of recently-revised guidance.

The company posted its strongest quarter of growth in the final three months of the year, with revenue up 8 per cent on the third quarter and 92 per cent on the same period a year earlier.

Throughout 2021, the company grew its fleet by 16 per cent to 109 and increased utilisation levels substantially — 78 per cent of rigs were used, compared with 57 per cent a year earlier. Average monthly revenues per operated rig also grew by 6 per cent to $181,000.

The Mauritius-based company has also been increasing stakes in mining and exploration companies, an activity it aligns with securing service contracts. These investments recorded (largely unrealised) gains of $29.1m, doubling in value compared with the second half of the prior year.

Investment in mining activity boomed last year when compared with a pandemic-disrupted 2020. Exploration budgets increased by 35 per cent globally to $11.2bn in 2021, according to a report published in November by S&P Global Market Intelligence. It predicted that growth will moderate this year, but exploration budgets will still be 5 to 15 per cent higher than last year.

Capital’s share price rose 4 per cent, bringing its 12-month gain to 47 per cent. Broker Peel Hunt said that despite its re-rating, it is still only valued at “the lower part” of its historic trading band, suggesting it has much further to go.

The broker forecasts earnings of 13.1¢ per share for the year ahead. Capital’s shares are currently valued at nine times this level, which is below both its peers and the industry average. Given that the industry shows few signs of a slowdown, we maintain our buy recommendation."

Capital Access have a new note out today:

They state consensus forecasts of 8.13p EPS to this September and 8.7p EPS next year. That's cheap enough, but there will almost certainly be more earnings-enhancing acquisitions from their £16.5m cash pile:

"Sureserve trades on an unchallenging 11.3x FY22(cons) PE, and 8.3x EV/EBITDA, which means we still think the shares are undervalued"

"Outlook

The outlook is underpinned by a large proportion of long-term contracts and frameworks in the mix, “blue chip” local authority clients, and growing trends towards use of regulatory services. Management is “confident for the year ahead”, and is “well positioned for further organic growth in a fragmented market”. Whilst
not quantified here, the opportunity to make acquisitions was once again re-iterated.

Sureserve is participating in 81 frameworks totalling £346.5m, and encouragingly, FY22 trading has had a strong start. 73% of expected FY22 revenue is covered by the order book, which is currently worth £527.1m, up from £335.8m at the start of FY21 and £333.2m at the start of FY20"

Shore Capital remain very keen after yesterday's update:

Https://www.morningstar.com/news/dow-jones/202201263747/ftse-gains-renew-holdings-could-capitalize-on-gbp640-billion-infrastructure-spend

"Renew Holdings Could Capitalize on GBP640 Bln UK Infrastructure Spend

Renew Holdings is a good opportunity for investors looking to benefit from the U.K. government's commitment to invest GBP640 billion in infrastructure, Shore Capital says. What's more, the U.K. engineering-services company's variable cost-plus contracts leave it well positioned to pass inflationary pressures on to customers and its public-sector-driven revenue protects it from economic downturns, Shore adds. "We continue to believe Renew has a lower risk profile than the market perceives, possibly due to associations with peers servicing much larger fixed contracts," the U.K. investment group says. Shore Capital has a buy rating on the stock. Shares trade up 3.8% at 736 pence."

Very good and "high-grade" drilling results announced this morning from Altus' (ALS) Diba gold project. CAPD are the drilling contractors and get name checked as below....hopefully a lot more to come from this:

Https://www.investegate.co.uk/altus-strategies-plc--als-/rns/excellent-gold-grades-from-drilling-at-diba--mali/202201270700107797Z/

"The current drilling programme comprises up to 10,000m of DD and RC and is designed to test the potential down-dip and along-strike extensions of the Diba Deposit and the Diba NW prospect. Drilling is also planned at the Lakanfla Central prospect at the Company's 100% owned Lakanfla licence, located approximately 5km east of the Diba licence. Once completed, the drilling results will feed into an updated MRE for the Diba Deposit and a potential maiden MRE for the Diba NW and Lakanfla Central prospects. This work will be followed by an updated Preliminary Economic Assessment for the Project. We look forward to updating shareholders as further results are received."

Diba Licence: Drilling Programme

The drilling programme is being undertaken by Capital Drilling Limited and comprises up to 10,000m of DD and RC across the Diba Deposit, the Diba NW prospect and the Lakanfla Central prospect. To date, approximately 5,400m of RC and 1,360m of DD has been completed."

The interims are due in only just over a month in early March, and the outlook was excellent as per the prelims:

"Recorded positive trading period since year end, positioning the business for a good first half performance in the Group's next financial year."

At 88.5p CSSG are on a current year P/E of just 9.1 if the 9.69p adjusted EPS prediction in the thread header post is correct.

And there's a £5m or so cash pile (after the November acquisition) backing up almost 40% of the £13.2m m/cap. If you strip out the cash pile, CSSG are on an ex-cash P/E of just 5.8.

Here's a new article about the expansion of MSALabs in Saudi Arabia flagged up in the recent trading statement.

Perhaps this may also give CAPD an edge in terms of winning drilling work as part of the "major push" outlined below:

Https://im-mining.com/2022/01/18/capital-drillings-msalabs-modern-mining-testing-jointly-establish-major-analysis-lab-mining-saudi-arabia/

"Capital Drilling’s MSALABS and Modern Mining Testing to jointly establish major analysis lab for mining in Saudi Arabia
Posted by Paul Moore on 18th January 2022

Global provider of geochemical laboratory services for the exploration and mining industries, MSALABS, recently signed in October 2021 a Heads of Terms with Modern Mining Testing Company in the Kingdom of Saudi Arabia “which will seek to establish a major hub laboratory in the region for the analysis of mining samples from within Saudi Arabia and other international jurisdictions.” The lab is set to be established in Riyadh and will support Saudi Arabian mining and exploration companies as well as East African and Central Asian operations. The development is indicative of the momentum in Saudi’s mining sector, which was also highlighted at the Future Minerals Forum event last week, attended by IM.

The news was referenced in a FY 2021 trading update by Capital Drilling, which owns MSALABS, which is headquartered in Langley, BC in Canada. MSALABS analytical services are cited as being suitable from greenfields exploration through to production and include sample preparation, a complete range of analytical techniques and construction and management of on-site laboratories at minesites. Modern Mining Testing is part of Saudi company Modern Industrial Investment Holding Group, which is headquartered in Riyadh.

Saudi Arabia is pressing ahead with a major push to scale up its mining industry. On the exploration side, this has been moved completely from paper-based to a digital platform. The Vice-Minister of Mining Affairs for the Ministry of Industry and Mineral Resources of the Kingdom Saudi Arabia, His Excellency Khalid Al-Mudaifer recently told IM: “We have gathered all the existing geological and exploration information we have from the last 80 years and combined it in a new national database called the National Geological Database and spearheaded by the Saudi Geological Survey. Information is now easily accessible from anywhere. All of this is a necessary prerequisite to increase the rate of development of our mining and minerals industry.”

The Kingdom is highly prospective for a number of minerals and metals, including iron ore, gold, lead/zinc, nickel, cobalt, copper as well as a range of industrial minerals. A number of deposits have also already been identified and have the potential to be fast-tracked into production."

Https://www.fool.co.uk/2022/01/24/3-top-metaverse-stocks-id-buy-today-for-2022-and-beyond/

"#3: superfast networks

One area where the metaverse is expected to drive growth is virtual and augmented reality. Delivering this kind of service needs fast and reliable networks. That’s where my final pick comes in.

Calnex Solutions (LSE: CLX) specialises in “test and measurement solutions for the global telecommunications sector”. It’s a recent addition to the UK market that’s impressed me considerably so far, with a track record of growth, 20% profit margins and owner-management.

One risk for shareholders is that Calnex only listed on the stock market 15 months ago. I think there’s some risk of a slowdown after sales rose by 20% last year. However, long term I don’t think this should matter.

Founder Tommy Cook expects cloud computing and 5G mobile to create new opportunities. I agree. I’d be happy buying a few Calnex shares today to tuck away for the next decade."

Good to see Investors Champion are very keen in their AIM market update this morning:

Https://www.investorschampion.com/channel/blog/upgrades-in-the-aim-sell-off

"Sureserve: impressive results

Sureserve (AIM:SUR), which now calls itself a social housing energy services Group, having previously been a compliance energy services group, announced excellent results for the year ending 30 September 2021.

Revenue rose c25% to £244.0m, pre-tax profit was 77% higher at £13.8m and basic earnings per share up similarly to 7.1p.

Operating cash inflow was an impressive £14.1m and the free cash inflow £12m, equating to a free cash flow yield of 8.1% at the current 90p share price and £148m market capitalisation, leaving year-end net cash a highly supportive £16.5m (2020: £9.8m).

Having experienced a near death experience three years ago, Sureserve’s swift recovery in the middle of a pandemic has been nigh on miraculous.

Despite the strong cash flow, we also like the company’s decision not to pay a dividend and conserve cash to invest in growth and acquisitions – if only other AIM companies would do this.

73% of 2022 revenue is covered by the order book, worth £527.1m at the start of the financial year, providing excellent visibility.

Broker forecasts for the financial year ending September 2022 were lifted to pre-tax profits of £16.4m and earnings per share of 8.2p (growth c14%). The 11x current year PE multiple therefore looks very modest (and there don’t appear to be any adjustments in forecasts), although prospective investors would probably like to know more about the make-up and risk in the current order book.

Look out for more 'bolt-on' acquisitions and disposal of non-core operations."

Good to see Investors Champion are very keen in their AIM market update this morning:

Https://www.investorschampion.com/channel/blog/upgrades-in-the-aim-sell-off

"Fonix Mobile: upgrades

Mobile payments and messaging provider Fonix Mobile (AIM:FNX), which we covered previously in our premium report here: ‘Fast-growing arrival on AIM from 2020 is still looking good’ issued a positive update bringing an upgrade from its broker.

Gross profit and adjusted EBITDA for the 6 months to 31 December have grown ahead of management's expectations with gross profit up 20% to £7.0m with adjusted EBITDA similarly higher at £5.5m.

This business has a very attractive cash flow model, as our note highlights, and with continuing strong cash generation, Fonix now intends to pay an increased interim dividend in March 2022.

Total payment volume of mobile payments grew by 12% to £138m with 116 (H1 FY21: 105) active customers at the period end.

Fonix remains the leading provider of charity telethons, including ITV's Soccer Aid, BBC Children in Need, Comic Relief and The Ruth Strauss Foundation, and has added several new clients in the period.

In response to the latest update the Group’s house broker upgraded their June 2022 and June 2023 adjusted EBITDA by +5% to £10.1m and £11.1m – given recent performance those still far too low to us. Their target price has been upgraded to 230p from 200p, well above the current 160p share price.

We aren’t big fans of the fairy tale ‘adjusted EBITDA’ measure and prefer to focus on free cash flow. In the case of Fonix this is even more compelling with the forecast free cash flow yield for 2022 a highly attractive 4.6%.

Its resilient business model should appeal to investors worried about current events."

Here's the full tip:

"Questor: Anexo helps drivers involved in accidents so more traffic boosts business, but a low valuation also offers protection

This column continues to cast around for companies that could benefit from an end to lockdowns and restrictions and what just might be a return to a degree of normality – all while seeking some protection from falls should a new variant emerge to confound everyone’s best-laid plans.
Legal services and credit hire for motorists might not seem like an obvious choice but that is one reason why Anexo has the potential to deliver some positive surprises, while its undemanding valuation offers some protection.
First researched some 16 months ago, Anexo helps drivers who are involved in car accidents that were not their fault by handling legal claims and replacement vehicles, which are charged to the at-fault drivers’ insurers.

Business levels dipped in 2020 as lockdowns meant there were fewer drivers on the road, fewer accidents and thus less need for the company’s assistance. But a trading update last week said revenues were better than expected and profits would come in “materially higher” than analysts’ forecasts for 2021.
Moreover, the three positive trends that are driving that improvement should continue in 2022. The number of cars back on the road should continue to recover this year and that is likely to mean more claims from fault-free drivers.
Meanwhile a surge in second-hand car prices means claim values are rising and a gradual reopening of the courts is allowing more cases to be heard and settled. Improved case resolution should in turn help cash flow, which has been crimped by higher trade receivables (hence the weak cash conversion).
December’s announcement of a new service for people who live in substandard housing adds another string to Anexo’s bow, while the firm continues to represent some 15,000 claims from Volkswagen drivers in a class action suit over the “dieselgate” emissions scandal. A verdict in favour of the claimants would further boost Anexo’s earnings, although analysts are sensibly not including this in their forecasts.

Even without any success in the VW case, Anexo’s shares hardly look expensive on less than 10 times earnings for 2021, a multiple that consensus profit forecasts of a one-fifth increase in earnings per share suggest could fall to barely eight in 2022.
Such a tempting price tag may explain why asset manager DBay Advisors, a shareholder with a 29pc stake, tried to buy the whole firm at 150p a share last summer, albeit without success.
DBay’s holding, coupled with the 38pc stake held by three senior executives, may make the shares less liquid than some and the spread between brokers’ buying and selling prices (2pc at the time of writing) could be wider than investors are used to, especially for larger stocks.
However, we already have a double-digit percentage paper gain on Anexo and there could be more to come. Hold."

Desert Gold's shares were up 15% overnight on positive drilling from Mali. CAPD announced in 2019 that they'd won an exploration contract in Mali from Desert Gold, so I assume this is their drilling work, and there's more to come:

Https://finance.yahoo.com/news/desert-gold-traces-gourbassi-north-103000260.html

"Additional AC drilling and auger drilling is planned to test for extensions to the Gourbassi West North Zone and to delineate potential parallel mineralized structures.

Bybacks seem to have settled at a decent amount of around 50k-60k shares per day now.

As always today's AGM update is short, and is relatively sweet. Q1 trading and cash generation is nicely in line, the overall order book is steady at similar levels to the year end record highs, and the higher margin engineering order book has continued to increase.

Not long either until the H1 update on 1/4.

Today's year end update shows trading is nicely in line with the increased figures from the last update for revenues and profits, with $64m of cash in hand.

There's also a rather promising closing paragraph:

"The Group's 2021 revenue performance amid the pandemic is a clear reflection that demand for its technology is strong and its market opportunity is significant. Venue operators are increasingly focused on leveraging technology to meet their guests' mobile-first expectations while operating more efficiently. This has resulted in increased utilisation of accesso solutions within the Group's existing client base as well as robust levels of interest from new customers wishing to sign on."

ANX have also been tipped overnight by Simon Thompson in the IC - though it's another article I can't read!

Here's the opening bit which is free to read:

Https://www.investorschronicle.co.uk/ideas/2022/01/24/bargain-shares-on-the-results-and-m-a-beat/

"Our small-cap stockpicking expert highlights four investment opportunities including two bid targets
January 24, 2022
By Simon Thompson

One of the strongest drivers of share prices is positive earnings momentum.

Liverpool-based Anexo (ANX:146p), a provider of a litigation claims processing focused on the recovery of credit hire and repair costs for impecunious non-fault motorists involved in road traffic accidents, fits the bill. Analysts not only upgraded full-year earnings estimates ahead of the half-year results last September, but a bullish pre-close update has prompted low double-digit earnings per share (EPS) upgrades to 16.7p, 19.9p and 20.6p for the 2021 to 2023 financial years, too.

A sustained recovery in Anexo’s core credit hire division (driven by strong growth in motorcycle courier market and withdrawal of rivals due to Covid), and the reopening of courts (which has enabled faster settlement of claims) means both units are trading well ahead of previous runs rates. The group is also actively engaged with 15,000 claimants who are pursuing claims against German carmaker VW in relation to the emissions scandal. Panmure Gordon estimate these claims could generate £16m of operating profit for Anexo, a sum that’s not embedded in forecasts for the £172m market capitalisation company.

etc"

Cheers buysell!

Shore Capital have - they say "possibly conservatively" - raised their forecasts to:

this year : 8.2p EPS
next year : 8.9p EPS

On a P/E of barely above 10 SUR are "compelling" value per Shore.

To back this up Shore have also raised their forecasts for the cash pile - they now see £21.4m net cash at September'22 rising to £32.1m cash at 9/23.

Plenty of headroom for further earnings-enhancing acquisitions. And much better to go (in a responsible way) for growth than pay a 1% or so dividend which really doesn't impact half as much as profit growth will on the share price.