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  • Writer's pictureMark Watson-Mitchell

Van Elle, Zotefoams, and Marlowe

Van Elle Holdings (LON:VANL) – Ready For Another Run Up In Price


Wednesday morning saw the UK’s largest ground engineering contractor issue a Trading Update for the year to end April 2024, ahead of announcing the full results in late July.


It noted that its order book as at 31st March was £36.8m (30th April 2023: £30.8m).


The group continued its focus on operational performance, whilst controlling its cost base, and as a result it expects to report pre-tax profits in line with market expectations.


With reference to its current year outlook the company stated that both the housing and infrastructure sectors are widely expected to recover in the near term, and whilst timing remains uncertain, the group will benefit from increased volumes. 


The company provides a wide range of ground engineering techniques and services including ground investigation, general and specialist piling, rail geotechnical engineering, modular foundations, and ground improvement and stabilisation services.


Van Elle also declared that it is developing a strong position in the water and energy sectors, which are both expected to contribute materially to activity levels from FY26 and beyond. 


Analysts Andy Hanson and Carl Smith at Zeus Capital have a 64.4p valuation on this group’s shares.


They estimate that the current year to end April 2025 will show revenues of £146.1m (£140.0m), with adjusted pre-tax profits of £6.0m (£5.0m est), generating earnings of 4.2p (3.5p est) and lifting the dividend to 4.2p (3.5p est) per share.


They see an even better year after that, looking for £155.9m sales in 2026, with £7.4m profits, 5.2p earnings and a 1.7p per share dividend.


They consider that the current share price of 38p does not appropriately capture the group’s strong cash generation, its asset backing, and its growth prospects.


I agree with the analysts and consider that the £41m valued group’s shares are more than capable of another run up to my previously-beaten 47p TP.


(Profile 29.03.21 @ 37.5p set a Target Price of 47p*)


Zotefoams (LON:ZTF) – Much More Than Frothing


The AGM Trading Update issued by this world leader in cellular materials technology gave a positive reading of the first four months of this year.


Dr Lynn Drummond, Chair of Zotefoams, stated that:


“Trading in the period has been strong, with the Group sustaining the positive momentum seen in FY23 to deliver overall sales growth of 14% and record revenue.”


Caroline de La Soujeole rates the shares of this £252m capitalised group as a Buy, looking for them to rise from the current 520p to 605p in due course.


The Singer Capital Markets analyst is estimating the group will see its revenues to end December 2024 increase to £141.0m (£126.9m), with adjusted pre-tax profits rising to £14.7m (£13.1m), creating earnings of 22.3p (19.1p) and almost quadruple-covering a 7.54p (7.15p) dividend per share.


On 21st March I noted that the shares, then at 351p, should be held on tightly for the inevitable uplift in share price and that they were on their way higher with the 500p level being an easy task. 


They touched 540p on Monday of this week, so even though it is still some way off, but you never know – my 2019 750p Target Price is not so outlandish.


(Profile 26.06.19 @ 600p set a Target Price of 750p) 

(Profile 06.03.24 @ 330p set a Target Price of 395p*) 


Marlowe (LON:MRL) – A Disciplined Allocation Of Capital Is Ahead


This £552m capitalised group has announced that it has now received all necessary regulatory approvals for its £430m disposal of certain Governance, Risk and Compliance assets to Inflexion Private Equity, with the transaction expected to complete on 31 May 2024.


Thereafter Marlowe plans to return up to £225m to shareholders via a £150m special dividend and a share buyback of up to £75m.


The group has stated that its primary focus in the near term remains on driving margin enhancement and organic growth within its highly attractive and defensive compliance service markets, where the group will continue to display highly attractive cash flow characteristics which will be redeployed either through additional returns of capital or through bolt-on acquisitions.


At Cavendish Capital Markets analyst Peter Renton has a 775p tag on this group’s shares, against the current 570p.


His latest estimates suggest that the group could see its reorganised revenues to end March 2025 come out at around £416.0m (£403.0m est), with adjusted pre-tax profits more than doubling to £29.0m (£13.5m est), lifting its reshaped earnings to 23.6p (10.3p est) per share.


Now way above my TP this group still offers good upside, but not for chasing until after the Special Dividend pay-out.



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

 

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

 

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