Alumasc Group (LON:ALU) – Doing Better Than Its Peers
The recently announced AGM Trading Update from this premium building products supplier displayed a better performance than others in its sector.
The group continues to outperform the sector, against a challenging backdrop in commercial construction markets, through its strategic focus on sustainable building products and solutions, growing sales through customer service and innovation, and targeted export opportunities.
Obviously,
there are still pressures around and about, but I do believe that the group’s positive momentum will continue.
CEO Paul Hooper stated that:
"I am pleased that our strong trading momentum has continued into the new financial year.
We continue to demonstrate our ability to outperform our commercial markets, through execution of our proven strategy as outlined at our recent Capital Markets Event.
With strong foundations and a clear line of sight to deliver our medium-term ambitions, we remain well positioned to deliver significant shareholder value."
The group reports that its balance sheet and cash generation remain strong, supported by continued disciplined management of working capital.
While demand headwinds in Alumasc's key markets are expected to persist for the rest of 2024, the quality of the group's businesses and the execution of its well-identified strategic priorities means the Board remains confident of delivering another year of growth, in line with its expectations.
Analyst David Buxton at Cavendish Capital Markets has a Price Objective on the group’s shares at 330p, against the current 311.50p.
His estimates for the current year to end June 2025 are for revenues of £110.5m (£100.7m), with adjusted pre-tax profits of £14.2m (£13.0m), generating earnings of 29.4p (26.6p) and an increased dividend of 11.0p (10.8p) per share.
For the coming year he sees £116.4m sales, £15.3m profits, 31.4p earnings and 11.3p per share in dividend.
In early February, when the shares were trading at around 178.50p – I clearly stated that they had further to climb in price.
I believe that even at 311.50p they are still under-rated on 10.6 times current year earnings and just 10 times prospective.
(Profile 13.02.20 @ 116p set a Target Price of 145p*)
(Profile 08.06.20 @ 80p set a Target Price of 105p*)
(Profile 10.01.24 @ 183p set a Target Price of 222p*)
Chemring (LON:CHG) – Strong Build-Up In Order Book
At the start of this month this global business, that specialises in the manufacture of high technology products and the provision of services to the aerospace, defence and security markets, announced some £278m worth of new contract wins.
CEO Michael Ord stated that:
"These significant contract wins illustrate the deep long-term relationships that we have built with our customers.
It is further evidence of the sustained and growing demand for our products and supports our investment decisions to increase the capacity of our three energetics businesses, and reinforces Chemring's position as a key supplier to NATO."
Although other companies within the defence sector are suffering from delays in supplies and the winning of business, Chemring is showing a clean pair of heels to its competitors.
Chemring is organised under two strategic product segments: Sensors & Information and Countermeasures & Energetics.
Group adjusted operating profit for the year ended 31st October is expected to be in-line with consensus expectations of £70.9m.
A few months ago, Berenberg raised its Buy Rating on the group’s shares, from 415p to 460p.
Five analysts follow the group, each of them making the group’s shares as a Buy with the lowest Price Objective 450p, and the highest at 472p.
They closed the week at 428p, valuing the whole group at just under £1bn.
The momentum is right with this group, and it will soon break above the magic level.
The group’s final results for the year to end October should be announced in the first two weeks of December, so perhaps it might be wrong to take any profits ahead of the statement.
(Profile 20.06.19 @ 177p set a Target Price of 300p*)
(Profile 20.10.23 @ 278p set a Target Price of 350p*)
Premier Foods (LON:PFD) – Sustained Profits Growth
We all have some of this group’s products in the kitchen!
Last Thursday’s Interim Results for the 26 weeks to 28th September, showed a 4.6% improvement in headline revenues at £498.7m (£476.7m), while adjusted pre-tax profits were 8.9% better at £61.0m (£56.0m), lifting the half-way earnings 8.1% to 5.3p (4.9p) per share.
The group, which is one of Britain’s largest food producers with brands like Batchelors, Bisto, Loyd Grossman, Mr Kipling, OXO and Sharwood's, employs some 4,000 people across its 13 operating sites.
Analysts Clive Black and Darren Shirley at Shore Capital Markets are looking for the group’s year to end March 2025 to report sales of 1.15bn (£1.11bn), adjusted pre-tax profits of £161.3m (£155.6m), with earnings of 13.7p (13.2p) and paying a dividend of 2.1p (1.7p) per share.
Some 6 analysts follow the company, with Buy ratings up to 230p as the highest aim, the lowest 207p.
They closed last week at 180.40p, valuing the group at £1.56bn.
Although the company is now way above our normal valuation range, it is hard to cast it aside from any growth portfolio.
(Profile 29.06.20 @ 67.50p set a Target Price of 101p*)
(Profile 01.11.23 @ 117.50p set a Target Price of 152.75p*)
(Asterisks * denote that Target Prices have been achieved since Profile publication)
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