11th August 2021
With its products being sold in over 90 countries across the globe, it will undoubtedly be a big beneficiary in the building sector.
The interim results from the AIM-quoted Florida-based concrete placing and levelling products group Somero Enterprises (LON:SOM) will be announced on Wednesday 8 September.
They should be showing a good advance for the first six months of the group’s current year to end December.
Raised full-year guidance
Just over a month ago the company issued a positive Trading Update helping to raise guidance in the market for the full year’s performance.
The H1 to end June saw such a good set of revenues being generated that the group beat its own and the market’s expectations – furthermore it appears that momentum has carried on into this half -year.
Previously thoughts were such that $100m in turnover was anticipated for the full year, but now the group’s Management is confident enough to indicate some $110m as being more likely.
More than levelling
Together with its subsidiaries the group is involved in the design, assembly, remanufacturing, and the selling and distribution of concrete levelling, contouring, and placing equipment worldwide.
It also offers related parts and accessories, as well as providing training services.
Somero’s vision is for its innovative, cutting-edge technology and processes to be in use wherever a ready-mix truck is discharging concrete for a horizontal concrete slab.
The company's equipment is used to place and screed the concrete slab in various building types, including floors in multi-storey buildings; and used in the construction of warehouses, assembly plants, exterior paving and parking structures, retail centres, and other commercial construction projects.
A global market
It markets and sells its products primarily to small, medium, and large concrete contractors, as well as to self-performing general contractors.
The group’s strategy is to provide innovative products and solutions to concrete flooring contractors that enable them to attain the highest level of flat-floor precision at the lowest cost, and to develop and penetrate the global market for its products and services.
Faster, flatter with fewer
It provides industry-leading concrete-levelling equipment, training, education and support to customers in over 90 countries. By using Somero technology, its customers can install high-quality horizontal concrete floors faster, flatter and with fewer people.
Somero’s global headquarters, training facility, and the Somero Concrete Institute are located in Fort Myers, Florida.
The company’s operations and support centres are located in Houghton, Michigan. It also maintains a sales, service and training facility that is home to the Somero Concrete College in Shanghai, China. Other sales and service offices are located in Chesterfield and in New Delhi, India.
Specified by the professionals
Its equipment has been specified for use in projects that require extremely flat concrete-slab floors, such as in the construction of warehouses, manufacturing assembly plants, schools and hospitals, exterior paving and parking structures, retail centres, and other commercial locations.
The group’s equipment has been used for facilities for a variety of the world’s largest organisations including B&Q, Carrefour, Coca-Cola, Costco, FedEx, Home Depot, IKEA, Lowe’s, Mercedes-Benz, ProLogis, Tesla, Toys ‘R’ Us, the US Postal Service, and Wal-Mart.
Good institutional following
There are some 56.4m shares in issue.
Significant shareholders include Unicorn Asset Management (9.72%), Canaccord Genuity Wealth Management (9.58%), Close Brothers Asset Management (7.86%), Artemis Investment Management (6.44%), Hargreaves Lansdown Stockbrokers (5.38%), River & Mercantile Asset Management (4.84%), Janus Henderson Investors (3.81%), Chelverton Asset Management (3.73%), Lazard Freres Banque (3.62%), and Aberdeen Standard Investment (3.44%).
Latest revenue and profit projections
Following the group’s early July Trading Update analyst David Buxton, at its brokers finnCap, upped his estimates to $110m revenue for the year, with adjusted pre-tax profits of $33.6m, worth 45.4c per share in earnings and easily covering a 29.8c dividend per share.
Over at Arden Partners their analysts Andrew Gibb and Manjot Heer are estimating $110.2m revenue with $34.7m profit, earnings of 46.9c and a more modest 23.3c dividend. For next year they see $121.1m sales, $39.1m profits, earnings of 52.7c and 26.3c of dividend.
Having raised his price objective Buxton is now going for 590p, against 520p previously. While the Arden team are going for 600p.
My View
Those share price aims compare with the current 480p, showing that there is some strong upside left in the valuations.
Valued at £270m Somero Enterprises does look to me to have some real short-term attractions. The interim results on 8 September could well see positivity in both the statement and the share price.
I now set a Target Price of 560p.