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  • Writer's pictureMark Watson-Mitchell

Marlowe, Kitwave and Everyman

Marlowe (LON:MRL) – cashed-up with continuing business looking good


I was very pleased to see the latest piece of research on the Marlowe group, which recently saw Lord Michael Ashcroft going on to its Board to protect his major 12.27% shareholding in the company.


Analyst Peter Renton at Cavendish Capital Markets has reassessed the group and its potential after the proposed disposal of certain of its Governance, Risk & Compliance software and services assets.


The buyer, Inflexion Private Equity, is valuing that side at £430m, which will clear the group borrowings, enabling it to return a big £150m chunk to its shareholders, while leaving it with sufficient extra working capital for the furtherance of the rump of the group’s activities.


Renton, who has a continuing basis valued Price Objective of 775p on the group’s shares, has updated his estimates.


He is looking for the year to then end of March to have seen revenues down from £465.7m to £400.00m, with adjusted pre-tax profits significantly lower at £13.5m (£53.5m), while earnings could come through at 10.3p (44.6p) per share.


However, going forward it all looks massively more encouraging, with his figures suggesting £416.0m sales for the current year to end March 2025, while profits could leap to £31.0m, generating 23.7p per share.


For the 2026 year he goes for £433.0m turnover, £36.5m profits and 27.9p earnings.


After touching 534p early yesterday morning, the group’s shares closed last night at 526p up 6p on the day, valuing the group at £518m.


A very good hold until more is known about the ‘cashback’.


(Profile 30.01.20 @ 468p set a Target Price of 550p*)


Kitwave Group (LON:KITW) – really powering away


With its shares now progressing like a ‘full steam’ locomotive the group has done well with its latest acquisition.


It is paying £21m in cash for Total Foodservice Solutions, which is a leading independent food wholesaler in the North of England.


The 130-year-old company delivers wholesale catering supplies of around 4,000 product lines including chilled, frozen and ambient food, non-food and cleaning products.


CEO Ben Maxted stated that:


"We are delighted to announce the acquisition of Total Foodservice, which is a one-stop shop for wholesale commercial catering supplies and enables us to further expand our product range offering across the North of England and in particular Yorkshire and the North West, complementing our existing foodservice offering.


Total Foodservice is a well-established business in the catering industry and we look forward to welcoming its team to Kitwave and integrating the business into our Foodservice division.


This acquisition is in line with Kitwave's growth strategy, and we will continue to seek to identify further opportunities in the UK's highly fragmented wholesale market to deliver further value to the Group and its shareholders."


Analyst Mark Photiades, at Canaccord Genuity Capital Markets, rates the shares as a Buy, having upped his Price Objective from 435p to 455p a share.


I continue to like this £259m capitalised group and its potential, considering that its shares at the current 368p should be tightly held.


(Profile 14.02.22 @ 145.5p set a Target Price of 180p*)


Everyman Media Group (LON:EMAN) – looking out for the finals in the next fortnight


Just ahead of my favourite luxury cinemas group announcing its finals in two weeks’ time (on Tuesday 16th), I reckon that it is possibly good enough to right now to tuck a few away.


The shares, which were up to 69p in late January, are looking appealing at the current 56p ahead of the figures.


Estimates for the year to end December 2023 suggest a pickup in takings to £90.9m (£78.8m), while pre-tax adjusted losses could well have more than doubled to £2.9m (loss of £1.3m).


For the current year, however, it is very likely that we will see revenues of £108.0m helping to significantly cut its losses to only £0.8m.


Then jumping forward into 2025 suggestions are for £136.0m receipts, pushing the group into a good £2.4m pre-tax profit, worth 1.83p in earnings per share.


The growth of this premium chain, the UK’s fourth largest, has been impressive, which is what could well be inspiring Private Equity investors like Blue Coast who now hold 25.80m shares, representing some 28.3% of the Everyman equity.


With some good sales and profits on the horizon, could a bid soon be in the offing?

Whatever happens, I still like this £51.5m capitalised group’s shares and see them easily breaking my Target Price this year.



(Profile 23.08.23 @ 59p set a Target Price of 73.5p)

 

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

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