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Writer's pictureMark Watson-Mitchell

Portmeirion, Alumasc, Kier, Frasers, and Billington – Inexpensive Upside

Portmeirion Group (LON:PMP) – I Set A New Target Price Of 295p


Despite first half sales down 17%, the Trading Update from this owner, designer, manufacturer and omni-channel retailer of leading homeware brands in global markets, still exudes hope for a better full year.


The six months to end June were impacted by lower order levels into its important South Korean market, while elsewhere sales were up 5%.


The US continues to be the group’s biggest market saw an uplift at the interim stage.


The company states that it expects its 2024 profit will be up on the prior year with improved operating margins, with sales in the second half in its South Korean market to be back to broadly in line with the prior year, while the group has healthy order books for Christmas across both the US and the UK.


Analyst Rob Sanders at Shore Capital Markets has estimates out for £100.0m (£102.7m) revenues, while adjusted pre-tax profits could be 50% better at £4.5m (£3.0m), lifting earnings up to 25.1p (21.3p) and dividend of 7.5p (5.5p) per share.


For the next two years he goes for £105.0m then £110.0m sales, with adjusted pre-tax profits of £7.0m then £10.0m, taking earnings per share up to 38.9p in 2025 and 56.1p in 2026, with dividends lifting to 12.0p then 17.5p for those two years.


Sahill Shan at Singer Capital Markets only has a Hold rating on the group’s shares, while having similar revenue and earnings projections for the 2024-2026 years.


The £33m capitalised group will be announcing its half-timers in late September.


I consider that its shares, at 237.5p, now look to be a good recovery Buy for investors looking for growth and I am now setting a new Target Price of 295p.


(Profile 28.08.20 @ 376p set a Target Price of 480p*)

(Profile 20.10.23 @ 240p set a Target Price of 300p*)

(Profile 22.07.24 @ 235p set a Target Price of 295p)


Alumasc (LON:ALU) – Ready To Run Again, Appealing


The Full Year Trading Update from this £77m valued sustainable building products, systems and solutions group was very encouraging.


For the year to end June the company expects to be able to show 6.5% revenue growth despite other suppliers in the UK construction market not faring as well.


Underlying pr-tax profits are likely to be around £12.6m (£11.2m) for the period.


CEO Paul Hooper stated that:


"Against such a challenging commercial market backdrop, I am delighted with the Group's strong performance, which is testament to our robust business model and the significant progress we have made in delivering against our strategic aims.


We are optimistic that our growth strategy, with a focus on environmentally sustainable solutions, new product development, investment in capability and ongoing self-help initiatives will drive further strong growth in returns as market conditions improve."


David Buxton at Cavendish Capital Markets is estimating that the end June 2024 revenues will be £100.5m (£80.1m) while adjusted pre-tax profits could be £12.6m (£11.2m), lifting earnings to 26.1p (24.7p) and dividends of 10.8p (10.3p) per share.


For the current year the analyst predicts £110.5m sales, £13.5m profits, 28.0p earnings and 11.0p per share in dividends.


He has a Price Objective of 315p on the group’s shares.


As far as I see it, the shares of this group at 213p represent a great opportunity to participate in the envisaged boom to come within the housebuilding and construction sector under the new Government proposals.


The Finals will be reported on Tuesday 3rd September.


(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*)


Kier Group (LON:KIE) – Massive Order Book And Cash Balance And Cheap


Ahead of announcing its full year results on Thursday 12th September, late last week this leading infrastructure services, construction and property group issued its Trading Update for the year to end June.


It declared a massive £10.8bn (£10.1bn) order book, with some 90% from the public sector and regulated companies, and with a massive net cash position of £165m (£64m) as at the year-end – compared to its £714m market cap.


The company stated that its full year results are anticipated to be above the prior year and in line with market expectations, reflecting a strong operational performance.


CEO Andrew Davies stated that:


"The Group has had a strong year with volume and profit growth, increased orders and material deleveraging.


We have enhanced our resilience and strengthened our financial position in line with the objectives set out in our medium-term value creation plan.


Our order book remains strong and provides us with multi-year revenue visibility.


The Group is well positioned to continue benefiting from UK Government and regulated sector infrastructure spending commitments and these strong structural drivers will allow us to further generate shareholder returns."


Analyst Adrian Kearsey at Panmure Liberum rates the shares as a Buy, with a Price Objective of 250p a share.


He believes that the group’s shares are trading at a low valuation despite the supportive growth environment.


“Kier’s £10.8bn order book – up 40% in three years – and pipeline underpin our comfort on future delivery.


Meanwhile, the full-year 2024 pre-close points to earnings trading in line with expectations and deleveraging progressing slightly ahead of plan.


Kier has also reinstated its dividend and it is likely to be stronger than we had initially anticipated.


Despite all of this, the shares are trading on seven times price to earnings for full-year 2025.”


For the 2024 year he anticipates £4.02bn (£3.40bn) in revenues, with adjusted pre-tax profits of £118.2m (£101.9m), lifting earnings up to 20.6p (18.0p), while paying out a 4.0p dividend (nil).


For the current year he goes for £4.26bn revenues, £127.3m profits, 21.9p earnings and 5.5p per share in dividends.


The 2026 revenue could be £4.44bn, with £136.1m profits, 23.1p earnings and paying a 5.8p dividend.


The shares are currently trading at 158p and look to me to be an excellent bet on improvements within the construction sector.


My recently set Target Price has yet to be achieved, but I am convinced that it will happen and within months.


The shares offer a very attractive upside.


(Profile 24.06.22 @ 71p set a Target Price of 90p*)

(Profile 20.05.24 @ 146.80p set a Target Price of 177p)


Frasers Group (LON:FRAS) – Sustained Profitable Growth And Upped Guidance


CEO Michael Murray stated that:


"This has been a break-out year for building Frasers' future growth.


As well as delivering a strong trading performance, particularly from Sports Direct, we made significant progress with our Elevation Strategy.


We expanded our retail ecosystem, establishing valuable partnerships with new brands.


Our brand relationships have never been stronger, giving us invaluable support as we continue the international expansion of our business.


We invested in group-wide operational efficiencies in warehouse automation and digital infrastructure, which we expect to yield a tangible impact as early as FY25. 


And we generated new growth opportunities with the rollout of Frasers Plus, including recently signing our first third party partner in THG.


We are building a resilient, profitable growth retail ecosystem that delivers exceptional value for our partners, consumers and shareholders.


We have built a lot of momentum this year and are entering the new financial year with many exciting growth opportunities ahead of us, which we will continue to invest in for the long-term benefit of the Group."  


The group has increased profit expectations for the year as its ‘elevation strategy’ continues to progress.


The company reported full-year revenue growth of 0.6% while underlying pre-tax profit rose 13.1% to £544m, with guidance for 2025 increased.


Analyst Aarin Chiekrie at Hargreaves Lansdown considers that the results proved the so-called elevation strategy is moving along nicely, with more stores upgraded in the period.


He suggested that this improves the overall customer shopping experience by displaying products in a more flattering and digitally integrated environment, which is also helping to strengthen relationships with major global brands.


The group’s shares responded well to the group’s results last Thursday, rising 95p at one stage, touching 916p, before easing back to around the current 887p level.


These shares remain a Strong Hold.


(Profile 28.07.23 @ 798p set a Target Price of 1000p)


Billington Holdings (LON:BILN) – Now A Buy Ahead Of Interims


With its Interims due to be declared in September, I was interested to note the disposal by Gutenga Investments of 1.9m shares, in the structural steel and construction safety specialist, at 460p each, raising about £8.6m.


Billington Non-Executive Director Alexander Ospelt is a director of Gutenga Investments and member of the foundation council of Gutenga Investments parent company, Gutenga Foundation.


Gutenga Investments now owns about 2.59m shares, some 20.00% of the equity.


That disposal, last Tuesday, does not worry me at all, it was well-managed and at only a 6.5% discount to the then market price of 492p.


Pleasingly, I noted on Friday that the Charles Stanley Group had more than doubled its holding in the £62m group, to 1.28m shares, representing 9.93% of the Billington equity.


After that very effective Placing of part of the Gutenga holding, the shares could well be worth buying ahead of good news that is sure to be imparted when the group announces its half-timers in about six weeks or so.


In early May, after touching 600p, I suggested that the shares were not for chasing, but instead to look to buy upon any market dips.


Now at 505p, I feel that they are ready for another run-up, possibly ahead of the Interims, remembering analyst David Buxton at Cavendish Capital Markets has recently upped his Price Objective on the shares to 610p.



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

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

 

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

 

 

 

 

 

 

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