Diagnostics, bricks, homewares and kettle switches
Medica Group (LON:MGP) – when will these shares get re-rated?
A strong reading was evident in the latest results from this international provider of high-quality telemedicine services.
The year to the end of December 2022 reported a 24% increase in group revenues to £76.99m (£61.91m), however the underlying pre-tax profit was only up 12% at £12.90m (£11.47m), with earnings 29% better at 5.88p (4.56p) and a dividend of 2.8p per share.
CEO Dr Stuart Quin stated that:
"Against a market backdrop in which demand for Medica's services is higher than ever, we are pleased to report a period of double-digit growth underpinned by the expansion of our acute services, new contract wins, the continued strong performance of Medica Ireland and RadMD, and the recovery of Elective capacity after some mid-year capacity constraints.
Following the progress we have made over the last year, Medica remains well-positioned for continued growth and is on track to deliver on the strategic and financial targets we presented to the market in September 2021."
Analysts Edward Thomason and Seb Jantet at Liberum Capital continue to rate the group’s shares as a Buy looking for 220p.
Their estimates for the current year are for £85.8m revenues, profits of £16.2m, earnings 10.5p and a 2.9p dividend.
For the 2024 year they have £97.0m sales, £20.0m profits,12.9p earnings and an ungenerous 3.0p dividend.
The brokers are suggesting that profits in 2025 could be double those of last year.
This £192m capitalised group has not been a successful selection to date, but based on Liberum’s estimates I am feeling more positive about the group’s share price progression over the next couple of years.
They have been down to 118p in the last year but closed last night at just 156.5p.
(Profile 07.01.20 @ 155p set a Target Price of 215p)
Michelmersh Brick Holdings (LON:MBH) – strong 2022 results and a resilient outlook
Analyst James Wood at Canaccord Genuity Capital Markets reiterates his Buy rating on the brick manufacturing group’s shares after last Wednesday’s results announcement.
His current year and prospective year estimates remain the same, except that he has upgraded his dividend projections to 4.3p for 2023 and 4.5p for 2024.
However, he has now inserted his figures for the 2025 trading year, going for £88.4m sales, £14.1m profits, 11.2p earnings and a 4.7p per share dividend.
He maintains his discounted cash flow valuation on the group’s shares, giving a price objective of 180p.
Over at Berenberg, their analyst Robert Chantrey has a 170p price objective on the shares.
He believes that the £89m capitalised group’s current rating is very cheap considering its long track record of delivery, its near-term resilience versus its peers and the strength of its balance sheet.
Last night they closed at 93.5p, at which level I consider that they still offer excellent value.
(Profile 27.03.23 @ 91p set a Target Price at 115p)
UP Global Sourcing Holdings (LON:UPGS) – 9.5 pe and 5.3% yield = cheap
The first half figures from this £123m branded homewares group for the six months to end January this year showed a minimal 2% uplift in sales at £87.6m (£85.7m) while adjusted pre-tax profits fell 5% to £9.4m (£9.9m).
Earnings were 6% lower at 8.4p (8.9p), while the dividend was 6% higher at 2.43p (2.30p) per share.
Consensus estimates for the full year to end July suggest £165.3m (£154.2m) revenues, with EBITDA at £20.1m (£18.8m) and adjusted earnings of 14.8p (14.3p) per share.
CEO Simon Showman stated that:
"We have delivered a robust performance, with exceptional growth from online, amidst a tough trading environment. Our amazing team has built a resilient and scalable business, based on a strong portfolio of homeware brands with a wide range of products and channels to market.
The business has been tested by some of the toughest trading conditions and headwinds seen in recent times, but we are emerging stronger, more focused and more profitable than ever.
This resilience puts us in a strong position to accelerate our growth as the macroeconomic uncertainty starts to clear. We therefore remain confident in the future prospects for Ultimate Products."
At the group’s brokers Shore Capital their analysts Clive Black and Darren Shirley rate the group’s shares as materially undervalued and looking for capital appreciation in the medium term.
For 2023 they estimate £166.4m sales, £20.0m EBITDA, earnings of 14.6p and a 7.3p dividend per share.
For the prospective 2024 trading period they see £176.7m revenues, £21.4m EBITDA, 15.5p earnings a dividend of 7.8p per share.
Analysts Chris Wickham and Hannah Crowe at Equity Development have current year estimates at £163.4m sales, £16.6m profits, 15.1p earnings and 7.4p dividend per share.
For the coming year they go for £173.2m revenues, £18.2m profits, 15.4p earnings and a 7.7p dividend.
They have a 250p ‘fair value’ on the group’s shares.
With the group’s shares closing at 138p this has been a healthy Profile choice, they have even been up to 174p this year but have since drifted back with the market.
Give it more time and I believe that they will more than double my selection price and then some.
(Profile 13.07.20 @ 74.8p set a Target Price at 100p*)
Strix Group (LON:KETL) – can Billi help the recovery?
There is no doubt about it – 2022 was an awful trading year for the kettle safety controls group.
Revenues were down 10.5% at £106.9m (£119.4m), while pre-tax profits fell 31.1% to £22.2m (£32.2m), earnings were off 28.3% at 10.9p (15.2p) and the dividend was lowered 28.1% to 6.00p (8.35p) per share.
Even net debt was hit – jumping form £51.2m to £87.4m, a rise of 70.7%
CEO Mark Bartlett stated that:
"Following a period of uncertainty across a number of Strix's key export markets in Q4, recent sales data in 2023 indicates some green shoots are appearing and the path to a return of growth is opening across all segments.
The successful integration of Billi will propel Strix into a new growth phase, further diversifying away from the core Kettle Controls business with strong potential for greater top line growth and improved margins going forward.”
Analyst Andy Hanson at the group’s NOMAD and Joint Broker Zeus Capital is estimating that the current year to end December 2023 will show sales of £155.6m, upon which the group could well make adjusted pre-tax profits of £29.7, worth 12.1p in earnings and covering a 6.3p dividend per share.
Looking ahead he sees further recovery taking sales up to £171.6m, profits to £33.8m, earnings up to 13.8p and enabling a 6.8p per share dividend.
The question now is – will the Billi acquisition help to kick upwards the group’s profit recovery. It will not be quick, but a steady progress would be beneficial.
Capitalised at £219m, the group’s shares at the current 97p look appealing, trading on less than 8 times price-to-earnings, while yielding a very handsome 6.5%.
I now set a new Target Price for the shares at 120p.
(Profile 31.12.19 @ 196p set a Target Price at 250p*)
(Asterisks * denote that Target Prices have been achieved since Profile publication)