• Mark Watson-Mitchell

Sureserve, Braemar, McBride, Forterra, Keller, SigmaRoc, McColl’s, Pittards, Safestyle, Hargreaves

21st May 2021


Sureserve Group (LON:SUR) – the improvement continues


“Well positioned for growth” is how the compliance and energy services group described its prospects when it declared its interims to end March earlier this week.


Revenues were up 4.6% at £114.6m while pre-tax profits were 30.6% better at £4,4m. Earnings came in at 2.2p per share at the halfway stage.


Impressively the group’s order book at that stage was £371.6m, compared to the same period last year of £323.7m.


Net cash was a strong £9.7m (£3.5m).


Analyst Alastair Stewart, at the group’s brokers Shore Capital, estimates that sales for this year to end September will be around £243.1m (£195.7m), then rising to £263.9m next year, increasing to £284.7m in 2023.


In that same time span he is going for adjusted pre-tax profits of £12.9m this year (£9.4m), £15.4m next year and £17.0m in 2023. With earnings improving from 6.6p this year (4.9p), next 7.8p and then 8.4p per share.


On those estimates I see the group’s shares rising from the current 80p to well over 100p within months.


Professional as always, former boss Bob Holt left the group in very good shape when he stepped back from his Chairman’s position and from the Board in mid-March this year. He had done his job and reshaped the group since joining it in July 2016.


(Profile 14.01.20 @ 36p set a Target Price of 50p*)


Braemar Shipping Services – significantly undervalued


I am looking forward to finding out how trading has been progressing at this integrated maritime services group over the last few months.


Braemar is a leading international Shipbroker and provider of expert advice in shipping investment, chartering and risk management.


It will be declaring its results for the year to 28 February this year on Thursday 3 June.


It recently sold off its Engineering division as part of its corporate strategy to concentrate on the further development of its important shipbroking business, while reducing the group’s overall debt.


Yesterday it announced that it has disposed of the balance of its AqualisBraemar shares, taking a £3.9m profit in the process and reducing debt still further from £10m at the end of February to just £2.7m.


Broker finnCap has a 281p price objective on the group’s shares, stating “We continue to highlight good upside to the shares in both the short and long term.”


They are estimating that the current year to end February 2022 could see £117m of revenue and £10.2m of adjusted pre-tax profits, worth 22.3p per share in earnings.


The shares, which have been up to 254p recently, are currently back to trade at around the 217.5p level. Those estimates put the shares out on a mere 9.75 times earnings. Its sector peer Clarkson trades on over 22 times.


They are destined to go a lot higher as the strategy gets underway and proves it is working. I consider the shares to be significantly undervalued.


(Profile 05.12.19 @ 185p set a Target Price of 250p*)

(Profile 20.05.20 @ 99p set a Target Price of 150p*)


McBride (LON:MCB) – still buying its own shares despite cost pressures


A couple of weeks ago this Private Label and Contract Manufactured products group informed the market that it had noted increasing input costs, particularly in its core chemicals and plastics requirements.


That knocked the shares from 94p down to a recent low of 67p, before ending that day on the back of ‘cheap buying’ at 78p.


Two days later suggested that existing holders should follow the company, who were big buyers for their Treasury position, in topping up their holdings.


The group has been continuing to buy in more of its stock daily since then, paying up to 88.3p a share – almost as though nothing had happened.


However, the group did exactly the right thing in reporting immediately about its cost pressures – that it enabled it to take advantage in so doing was impressive.


These shares, now 89p, are well worth holding on to as they inevitably improve in price.


(Profile10.03.21 @ 79.5p set a Target Price of 99.5p)


Hargreaves Services (LON:HSP) – very big profit upgrades


Taking advantage of higher commodity prices this group is now expected to do a lot better than previously stated.


James Tetley, analyst at brokers N+1 Singer, has upped his profit estimates for the year to end May, now going for £17.6m adjusted pre-tax profits (£4.9m).


He sees earnings rising from 19.5p to 50.7p per share, enabling the company to pay out a cracking 20p per share dividend (4.5p).


He will probably upgrade his estimates for the coming year over the next few months, is my guess. But first of all we should be seeing what the company says when its reports its full year trading update on Thursday 3 June.


The shares, now 378.5p, are doing very well indeed and look even sexier with that lumpy dividend.


I see them rising a lot higher yet.


(Profile 29.12.20 @ 263p set a Target Price of 325p*)


Keller Group (LON:KLR) – ahead of expectations in four months


The world’s largest geotechnical specialist contractor has updated investors on trading in the first four months of this year. Slightly ahead of what the Management was going for, there should be a second half bias. Weather difficulties have impeded progress, but the group’s order book has expanded to over £1bn.


We should get a better first half picture when the end June interims are announced on 3 August.


In the meantime, the group’s shares, which peaked at 875p, are now 819p, looking to be a good hold.


(Profile 10.08.20 @ 64.5p set a Target Price of 750p*)


Safestyle UK (LON:SFE) – in the frame for higher trading


This group, which is the leading retailer and manufacturer of PVCu replacement windows and doors to the UK homeowner market, issued a good AGM Statement mid-week.


Trading much to the market’s expectations it has shown a 50.9% increase in revenue for the first four month of this year, while margins have improved, despite materials price rises.


Order levels are not yet back up to the pre-Covid rate, but that should see recovery in due course.


The group’s NOMAD and joint broker, Zeus Capital, see profits of £6m (£4.8mloss) this year, £8m next year and £10m pre-tax in 2023. In the same period earnings should go 3.7p, 4.8p then 6.1p per share.


Its other broker, Liberum Capital, sees £6m profits, then £7.7m and up to £9.7m and rates the shares, now 59p, as a ‘buy’ looking for 80p as its price objective.


Hold tight.


(Profile 06.01.21 @ 36.5p set a Target Price of 48p*)


Forterra (LON:FORT) – higher sales needed


Cost pressures are not helping this brickmaker and concrete building products group.


However, the group’s Management is now looking for it to perform better than previous hopes, materially so.


The AGM Statement reported stronger than expected trading in the first four months of the year.


The interims are due to be published on 29 July.


Analyst Alastair Stewart at Progressive Equity Research is looking for the group to push sales up from £292m to £346m in 2021, with adjusted pre-tax profits accelerating away from £17.4m last year to some £41.4m this year, with earnings rising from 6.6p to 14.7p per share.


Although I like the business and its obvious potential, I would like to see greater sales shining through – current construction sector trends are spiking very much higher.


The shares at 282.5p are back to around the price level at which I profiled the group two years ago.


(Profile 30.05.19 @ 286p set a Target Price of 350p*)


SigmaRoc (LON:SRC) – aggregating a good solid business


This week the AGM Trading Update for this construction materials ‘buy to build’ group was very positive.


Like so many others within the construction supplies sector it has seen good demand this year to date. Not just in the UK but very much so in the Benelux countries in which it operates.


Charlie Campbell at Liberum Capital estimates that the current year to end December should see sales rise from £124m to £158m, with pre-tax profits increasing from£12.2m to £15.8m, worth 4.6p per share in earnings (4.1p).


He rates the shares as a ‘buy’ with a price objective of 92p.


Now at 82.5p I continue to feel bullish about this group. It is expanding well through ‘canny’ acquisitions which power its growth.


(Profile 04.09.20 @ 49p set a Target Price of 65p*)


McColl’s Retail Group (LON:MCLS) – new institutional buyer emerges


The dealing volumes for this ‘neighbourhood’ retailer have been extremely large over the last couple of weeks.


Last Monday BGF Investment Management announced that they had acquired 5.88m shares in the group (5.1%), which I would guess was transacted at around the 34p level.


The shares, which are now 37.85p, have a very good feel about them. On the charts they look to me to be ready to break well above the 40p level and soon.


(Profile 26.04.21 @ 32.5p set a Target Price of 41p)


Coral Products (LON:CRU) – still buying its own shares


Yesterday this plastic products group announced that on Wednesday of this week it had purchased 1,000,000 of its own shares @ 14p each.


That takes its holding in Treasury up to 2,695,000 shares.


“The Board believes buying back shares at the current price represents an outstanding opportunity to buy back into treasury shares which can then be issued to fulfil the anticipated exercise of existing share options or in part payment for any future acquisition.”


Well, I agree with the Board and still suggest that the group’s shares are undervalued at the current 14p.


(Profile 28.04.21 @ 14p set a Target Price of 18p)


Flowtech Fluidpower (LON:FLO) – Downing adding to its stake


Last Monday the Downing Strategic Micro-Cap Investment Trust took out another chunk of the technical fluid power products group’s equity.


It now holds 4,317,525 shares, representing 7.02% of the issued capital.


The group’s shares went up to 127p after my profile, before easing back to 112p by the start of the week.


However, bargains do not wait around for too long. The shares close the week at the 128p level – just 2p away from my price aim.


They are destined to go a great deal higher, possibly before their AGM on 3 June.


(Profile 23.04.21 @ 105p set a Target Price of 130p)


Pittards (LON:PTD) – the gloves are fitting well


I am glad for Simon Cawkwell (Evil Knievel) who stated that he had bought a line of this leather goods maker’s shares after my profile.


Last week’s AGM obviously went off well, with no hitches, since when the shares have held steady at around the 57.5p level, after hitting 59p.


Much more to go for, so patient holders should do well.


(Profile 31.03.21 @ 46.5p set a Target Price of 58p*)


National World (LON:NWOR) – Gresham House emerge as big holder


After the conversion of a loan note, Gresham House Strategic has emerged as the holder of 4.73% of this budding media owner’s equity.


The conversion happened on 7 May, but the notice of the holding was not given to the market until Monday of this week.


Even so that holding of 12,263,013 shares is a very good position, in my view it will really increase in value.


The shares close the week at around the 18.5p level.


(Profile 17.05.21 @ 18.5p set a Target Price of 25p)


(Asterisk* denotes that Target Prices have been achieved since profile publication)

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