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  • Writer's pictureMark Watson-Mitchell

Billington, TClarke, Renold and Foxtons

Billington Holdings (LON:BILN) – New Price Objective Of 610p


I have said this so many times before – this company is a ‘class act’ and its shares are cheap.


It is one of the UK's leading structural steel and construction safety solutions specialists.


The group is focused on structural steel and engineering activities throughout both the UK and the European markets.


In mid-November last year, it advised the market that it expected revenue and pre-tax profits would be ahead of market estimates.


In late March this year, the company reported that it had recently been awarded six new contracts worth a total of around £90m, taking its Order Book up to record levels.


Yesterday the Barnsley-based group announced its annual results to the end of December 2023 – they were record-beating!


They showed revenues of £132.5m (£86.6m) while adjusted pre-tax profits were £13.4m (£5.8m), taking earnings up to 79.3p (37.8p) and enabling a doubled dividend of 33p (15.5p) per share.


For the current year analyst David Buxton at Cavendish Capital Markets estimates revenues of £124m, profits of £8.5m, earnings at 52.1p and a dividend of 20p per share.


On the back of the results he raised his Price Objective for the group’s shares, some 13%, from 541p to 610p.


The first trading day after the 2024 Master Investor Show, at which I repeated yet again my keenness for the group’s shares, saw them in the range around the 390p level.


After hitting 538.80p at one stage yesterday morning, they closed last night at 495p, where the £64m market capitalisation compares ridiculously to the debt-free status of the group, boasting a massive £22.1m cash at bank, as at the end of last year.


Trading on a current year price-to-earnings ratio of just 9.5 times and yielding a prospective 4.05%, the shares are undervalued – especially when compared to the mass of overpriced, loss-making, debt-ridden situations available elsewhere.


I remain a total fan of the company, of its Management and its potential – its shares are still cheap and destined to rise.


(Profile 02.04.19 @ 266p set a Target Price of 314.5p*) 

(Profile 13.06.22 @ 217.5p set a Target Price of 295p*) 


TClarke (LON:CTO) – Cash Offer Jacks Shares Up 28%


Yesterday saw Regent Acquisitions make a 160p a share cash bid for this building and engineering services group.


The offer, which values the group at £90.56m, also includes allowing a cash dividend of 4.525p per share to be paid out to existing holders.


The bid, which was at a 28% premium to the overnight price of 125p, has been accepted by the group’s Directors for their paltry 3.37% holding, some 1.78m shares.


Regent is controlled by Deep Valecha, listed high upon the Sunday Times Rich List, placed at 343, with a value of £364m.


With a 21.51% stake, Valecha will go on to the CTO Board,


He set up Regent in 1995, it is based in Park Royal and supplies gas and metering services to industrial and commercial customers across the UK.


TClarke’s shares closed last night at 160.75p, valuing the group at £85m.


Just a month ago, upon its previous corporate announcement, I noted that the group’s shares at 122.50p were a strong hold for existing shareholders, while offering a bargain for newcomers.


Unknowingly that was totally prescient – ahead of what has become a 32% one-month hike in price.


In due course we shall, no doubt, hear more about what Valecha’s strategy is for the group.


Whether to sell in the market or just hold on for more news – well that is up to you if you are a holder.


(Profile 10.12.19 @ 120p set a Target Price of 165p*) 

(Profile 04.12.23 @ 121p set a Target Price of 150p*) 


Renold (LON:RNO) – Worthy Of A Good Tug Of Its Shares


This group is an international engineering business, producing a wide range of precision engineering products and owning merchanting operations in twenty countries.


Renold is a global leader in the manufacture of industrial chain, while it also manufactures a range of torque transmission products, which are sold throughout the world to a broad range of original equipment manufacturers and distributors.


It innovates in delivering globally the highest precision engineered power transmission products that are used in a wide variety of industries including manufacturing, transportation, energy, steel and mining. 


The Wythenshawe, Manchester-based group’s market-leading products can be seen in diverse applications from cement making to chocolate manufacturing, subway trains to power stations, escalators to quarries; in fact, anywhere something needs to be lifted, moved, rotated or conveyed.


On Monday the company published its Trading Update for the year to end March, guiding that they will be better than market expectations, in fact ‘materially ahead’ – with adjusted operating profits some 20% better than those of the previous year.


Analyst consensus for the last year is for revenue of £244.3m, and for underlying operating profit of £26.5m.


The strong momentum in the group's performance in the first half of the year continued throughout the second half, while progress continues to be made with the group's productivity and efficiency programmes, which are driving sustainable margin and profit improvement.


The closing Order Book at 31 March was £83.6m, which is close to record levels.

Strong cash conversion and careful management of working capital resulted in a year end net debt position of £24.9m (£29.8m).


Upon the positive Trading Update analyst David Buxton at Cavendish Capital Markets upped his Price Objective for the group’s shares from 58p to 65p.


For the year to end March 2024 he has estimates of £241.4m (£247.1m) revenues, while adjusted pre-tax profits could be £21.7m (£18.6m), generating earnings of 6.6p (5.9p) per share.


Buxton reckons that the current year will record some £243.2m in revenues, with profits of £22.7m and 6.8p per share of earnings, together with a return to dividends with a payment of just 0.4p per share.


“The shares look compelling value having seen a series of material upgrades and demonstrating sustainable improvements in cash generation.”


With some 225.42m shares in issue, the group is currently only valued at £88m – far too low a level for a company whose shares, which touched 46p a couple of months ago, are now trading at 42p on a mere 6.18 times price-to-earnings ratio.


The group’s final results are due to be declared on Wednesday 17th July, however before that I expect that the company’s shares will edge higher, gradually looking to close in on the broker’s Price Objective of 65p.


A very strong Hold.


(Profile 04.06.19 @ 30p set a Target Price of 60p)

(Profile 08.11.23 @ 29p set a Target Price of 36p*)


Foxtons Group (LON:FOXT) – Putting The ‘For Sale’ Sign Up


People generally expect to make money in property.


However, if you had bought shares in this group when it floated in September 2013, when it was valued at £753m, you would certainly be down on your money.


It now is capitalised at a meagre £157m.


And that is just what is frustrating a couple of the estate agency group’s larger shareholders – certainly enough to force the Foxton Management to call in Rothschilds to shake up some value or possibly a bidder or two.


The UK-based Milkwood Capital, with some 5.0% of the FOXT equity, and Canada’s Converium Capital, with 5.3%, are both agitating for action.


Now the bankers, together with its brokers, Singer Capital Markets and Deutsche Numis, have been set the major task in correcting the poor valuation.


Rothschilds have some previous form in getting values out within the estate agency sector – having been involved in the sale of the Leaders Romans agency to Platinum Equity, the US PE investor.


London’s Number One recently reported its latest results to end December 2023, showing that revenues were up 5% at £147.1m (£140.3m), while adjusted operating profit was 2% better at £14.3m (£13.9m), with its pre-tax profit being hit by a £4.5m one-off acquisition integration charge, easing 34% to £7.9m (£11.9m), leaving adjusted earnings 3% lower at 3.0p (3.1p) per share, whilst maintaining its 0.9p dividend.


For the current year broker estimates range around £158m in revenues, £15m in profits, around 3.8p per share in earnings and a 1.2p dividend.


The estimates for 2025 are some £166m revenues, £18m profits and 4.5p earnings covering a 1.45p dividend per share.


The group’s shares are currently trading at only 52.50p, which, in my view, creates an excellent buying opportunity while awaiting Rothschilds getting its engine into gear.



(Profile 07.07.21 @ 60p set a Target Price of 76p)

(Profile 08.01.24 @ 49.25p set a Target Price of 61p)

 

(Asterisks * denote that Target Prices have been achieved since Profile publication)

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