Braemar (LON:BMS) – exposure to growth in global shipping and maritime markets
Yesterday’s interim results from the number two UK shipbroking group were excellent.
They showed a 46% growth in revenues to £69.4m (£47.4m) and a massive 95% improvement in underlying operating profits at £10.9m (£5.6m).
What is more the group’s balance sheet was strengthened by the swing from net bank debt of £9.3m in February this year to net cash at bank of £1.8m six months later.
Earnings per share roe from 7.6p at the halfway stage to 31.8p, enabling a comfortable doubling of the dividend from 2p to 4p per share.
Group CEO James Gundy stated that:
"It's clear that we've unlocked great potential through our growth strategy, are delivering the performance that I promised our shareholders on my appointment in January 2021 and are well on track to double our profits by 2024. Our growing scale and sectoral diversification mean we are also set for strong performance throughout the business cycle."
The outlook for the simplified group remains very positive with it looking forward to the second half of the year with a high degree of confidence in the ongoing execution of its growth strategy.
Braemar's growing scale provides diversification across the shipping industry, leaving it set up for continued investment to deliver growth throughout the business cycle.
Broker comment came from analyst Ian McInally at Cenkos Securities when rating the shares as a Buy with a 470p a share dividend discounted model price.
He is looking for full year to end February 2023 revenues of £127.8m (£101.3m), with underlying pre-tax profits of £19.5m (£8.9m), underlying earnings of 51.3p (27.9p) and a dividend of 11.3p per share against 9.0p previously.
The group’s shares reacted to the very positive news, gaining 13p on the day to close at 335p.
I see an easy rise to 400p, at which level the shares would still only be trading on 7.8 times current year earnings – which even then would be far too low a rating.
(Profile 05.12.19 @ 185p set a Target Price of 250p*)
(Profile 20.05.20 @ 99p set a Target Price of 150p*)
Totally (LON:TLY) – broker’s Target is 70p
Analyst James Wood at Canaccord Genuity Capital Markets rates the shares of this medical services outsourcing group as a Buy, with a price objective of 70p compared to the 31p, at which they closed last night after the group’s interim results.
They showed that turnover for the six months to end September was up 14.1% at £70.3m, while the interim pre-tax profit was £1.0m (£0.9m), with earnings easing fractionally to 1.06p per share.
Wood estimates that the current year to end March 2023 will see revenues rise from £127.4m to £140.8m, profits of £5.8m (£4.0m) with earnings of 3.3p (2.1p) and an unchanged dividend of 1.0p per share.
For the coming year he has £155.0m sales, £8.0m profits, 4.4p earnings and 1.0p dividend per share.
“We believe Totally remains well-placed to secure future growth by focussing on areas where demand for healthcare is outstripping supply with the group said to be well-advanced in securing capacity and staffing needs for the winter months.“
(Profile 12.03.20 @ 12p set a Target Price of 18p*)
(Profile 25.06.21 @ 38.5p set a Target Price of 50p)
Wincanton (LON:WIN) – getting better
The interim results to end September for this ‘class’ logistics business were released yesterday.
They displayed sustained growth despite external hassles.
Revenues at the halfway were up 9.2% at £753.6m (£690.3m) with underlying pre-tax profits were only 2.6% better at £28.0m (£27.3m). Earnings per share rose 3.3% to 18.8p (18.2p) but dividends were raised 10% to 4.4p (4.0p) per share.
At Liberum Capital analyst Gerald Khoo continues to rate the group’s shares as a Buy, with a price aim of 535p.
For the year to end March 2023 he sees sales of £1.48bn (£1.42bn), pre-tax profits of £62.6m (£58.1m), earnings of 41.8p (40.8p) and an increased dividend of 13.2p (12.0p) per share.
Khoo states that “the breadth of Wincanton’s customer base, and its strong underpinning from open book contracts, should see it remain resilient against an increasingly challenging macro backdrop, with long-term growth prospects intact.”
The group’s shares closed last night at 369p, at that price they are way above my first price aim, but some way below my early May Profile aspirations.
However, I still rate this group as a real ‘class act’ and so incredibly important to UK trade, its shares are cheap. And they are a firm hold.
(Profile 07.05.19 @ 247p set a Target Price of 350p*)
(Profile 06.05.22 @ 412p set a Target Price of 500p)
Severfield (LON:SFR) – increasing order books
Having risen from 48p at the start of this month, it is well worth noting the current price of this group’s shares, now 56p, ahead of next Tuesday’s interim results.
Capitalised at £174m, the Thirsk-based group is the UK's market leader in the design, fabrication and construction of structural steel, with a total capacity of around 150,000 tonnes of steel per annum.
The group, which has expertise in large, complex projects across a broad range of sectors, has six sites and some 1,500 employees.
Furthermore, the company has is involved in the expanding Indian market through its joint venture partnership with JSW Steel, which is India's largest steel producer.
We already know that the group’s performance is currently strong, with several ongoing contracts expected to deliver significant profits in this current half year, so next Tuesday’s statement will be interesting.
Analyst Alastair Stewart at Progressive Research is looking for the group to report revenues for the year to end March 2023 of some £460m (£404m) while adjusted pre-tax profits could rise from £27.1m to £31.2m, with earnings improving from 7.2p to 8.3p per share and a dividend of 3.3p (3.1p) per share.
(Profile 12.09.19 @ 62p set a Target Price of 88p*)
(Profile 04.06.21 @ 79p set a Target Price of 100p)
(Asterisks * denote that Target Prices have been achieved since Profile publication)