Croma Security Solutions Share Discussion Threads

[truffle] 12/12/2024 13:07

I agree with all the positive comments which have been made about Croma recently.

The one small concern I have is that Vigilant still owes Croma £2.9 million over the next 7 quarters (effectively 2 years).

Remembering that Sebastian Morley, the previous Croma chairman who in my opinion achieved nothing while running Croma for many years, bought Vigilant, we have to hope that he makes a sufficient success of Vigilant to repay the outstanding amounts still due.

Other than that it all seems generally good news.

[rivaldo] 11/12/2024 14:37

Cheers penpont. It's worked out rather well so far - hopefully it won't be long until we hear about more acquisitions from the cash pile.

[penpont] 09/12/2024 11:28

Hi rivaldo - maybe not so good as it was a top-up from me!

I still think it's well undervalued at that price, and btw thanks to you and others
for the thread info that helped lead me to this one.

[rivaldo] 09/12/2024 10:02

Good to see a 9,533 share buy at 91p just now - a full 1p above the 90p published offer price.

[smithie6] 04/12/2024 14:59

well, recently it has risen 20p/share

beats the 2.3p/share divi, 'hands down'!

[goliard] 04/12/2024 13:04

Given it is a small AIM stock I am already holding too many of these for it to be a good idea to buy more, but 130p seems like a perfectly reasonable target for 2025. If they can carefully use the cash to buy assets yielding 20% plus then that likely increases. I just hope they don't go crazy with capex as that needs to be factored in to any purchase price on new locksmiths.

[rivaldo] 04/12/2024 08:33

A very confident AGM statement, particularly bearing in mind there was no trading statement at all from last year's AGM. Given today's positivity it would seem there's something to shout about....

Current trading is good:

"From the outset of the current financial year, trading has been positive and in line with market expectations with good levels of organic growth across our core markets in the education, utilities, health and leisure sectors. Customers are seeking both traditional security services and more complex, integrated solutions reflecting a general demand for greater security in today's risk-conscious environment."

Against an £11.4m m/cap, CSSG has "has a strong balance sheet with no debt and cash of £4.1 million as at 30 November 2024 with a further £2.9 million due from the disposal of Vigilant."

And an acceleration in growth is on the cards given (a) the introduction of Martyn's Law and (b) the "good pipeline of opportunities to acquire profitable locksmith stores some of which are close to completion. These stores will be transformed into modern security centres, boosting the Group's revenue and customer base, and adding to the overall network of centres".

[battlebus2] 04/12/2024 07:21

Happy with that AGM statement. Dividend of 2.3p too.

[mtioc] 02/12/2024 16:36

Sorry, wrong thread!

[mtioc] 02/12/2024 16:08

[Post from wrong thread]

[battlebus2] 02/12/2024 10:11

Yes good to see. AGM on Wednesday.

[rivaldo] 02/12/2024 10:07

Nice bit of Monday morning buying having a decent effect on the share price.

[rivaldo] 18/11/2024 09:33

Zeus forecast 5p EPS this year, up 28% from last year.

That's a PEG of only 0.59, which is bargain territory in itself.

The P/E of 16.6 might be considered ambitious if taken on its own - until you take into account the current £4m+ cash pile, which is forecast to rise to £5.1m, i.e 45% of the current £11.2m m/cap.

Of course (and hopefully) a decent proportion of that cash will likely be spent on earnings-enhancing acquisitions to convert into fully fledged security centres.

So imo there's still good upside from here. Zeus have a current fair value of 92p with upside to 119p, and as CSSG crystallise their promised pipeline of potential acquisitions that current fair value should increase.

[effortless cool] 17/11/2024 21:04

I've caught up on the investor presentation and updated my valuation model now. I reckon it's fairly valued around the current price (I get 79.4p) based on the existing business and the accumulating cash.

The key to unlocking further value is obviously converting that cash into locksmith/security centre assets purchased on low EBITDA multiples. It's disappointing that there has been no tangible progress here since the very start of 2024. They talked a good game on this at the investor presentation but really do have to start delivering.

[mtioc] 12/11/2024 17:01

I echo Rivaldo and would add:

- some confusion re ROI on new sites whether including or excluding real estate. Without c. 40% and with 15% min. The site is an important part of local goodwill - if moved, sales reduce
- interesting discussion on Croma value add re increased sales, reduced direct and indirect costs
- bullish about M&A in next 12 months and beyond (current year bedding in, building pipeline and making sure have cash)
- positive about long term future (100 units?), v. clear not on AIM to be a lifestyle business
- also bullish about Ajax (Europe No 1 alarm)

Very small and niche, but I am more positive about growth prospects.

[effortless cool] 12/11/2024 14:46

Appreciate it, thanks.

[rivaldo] 12/11/2024 14:00

No probs EC. It was noted that the new strategy started relatively carefully last year with just a couple of transactions, but that this will ramp up to 3-5 acquisitions this year and (from memory) potentially more given the strong pipeline and CSSG's position as likely the only buyer around.

[effortless cool] 12/11/2024 12:29

Thanks, rivaldo. I couldn't make today's presentation but will catch up with the recording later in the week.

That all sounds very positive but I have found the lack of any transactions disappointing. Was there any discussion about that?

[rivaldo] 12/11/2024 11:49

Brief notes from this morning's presentation:

- revenues could be £20m-£25m within 3 years, but could exceed that too
- expansion will be in Fire & Security as well as Locksmiths
- NAV is 112p per share
- the cash pile is now £4.4m, up from the "over £4m" quoted at 1st November
- the 15% ROI target from new stores is a minimum, whereas actual is more like 40%
- typically acquired store revenues will be from £0.2m-£1m
- iLoq is now in 1,200 student accommodations, with discussions under way for more
- Fire & Security should be boosted by Martyn's Law, now in its final stages and introduced after the Mancheter bombing, which aims to keep the public safe in any venues with more than 100 people, including schools
- CSSG get at least 5% better prices via discounts etc than their smaller competitors

[rivaldo] 11/11/2024 08:22

Hybridan's analyst reviewed CSSG in his Friday night Small Cap summary as follows:

"8th November 2024

Croma Security Solutions 79p £10.7m (CSSG.L)

In June 2023, Croma sold Vigilant, its lower margin man guarding business for £6.5m to be paid in stages.

At the June year-end net cash was £2.14m and since then a further £2.2m has been received so net cash is around £4.3m with no borrowings.

This is being invested in growing the Croma Locksmiths and Croma Fire & Security division with a buy and build strategy to create the UK’s first nationwide network of branded Security Centres.

Croma designs, installs, and maintains a wide range of security systems, from Intruder Alarms, CCTV, and Access Control systems, to Biometrics, Door Entry, and Automatic Door systems, and offers 24/7 Remote Monitoring. The strategy is to acquire traditional locksmith stores at moderate valuations and transform them into modern Security Centres. These will have a wide in-store product range and a broader range of services with much greater profit potential. The target is to acquire 3-5 shops per year with a target ROI of at least 15% as they become Security Centres.

Finals to June 2024 reported an 8.9% increase in revenue to £8.74m, with EBITDA on continuing operations up 13% to £1.06m, giving an EBITDA/EV 6x. FY25 trading, is reported to have started well with good demand from its commercial and retail customers increasing security, perhaps scared by summer’s civil unrest. A £0.4m contract was won in April for the installation of a hospital’s security systems as part of a growing relationship with this NHS Trust where there is potential for further projects.

Comment: The valuation seems to ignore the likely profit potential for a branded national network of security centres with a wide range of products and services."

[rivaldo] 08/11/2024 07:31

New audio summary yesterday from Zeus Capital of the results - 119p target with new acquisitions:

[rivaldo] 05/11/2024 13:27

RNS just out - the CFO has bought another 10k shares at 80p and now has 25k.

For most directors this would be a pretty small amount. But for someone who's had 15 years at CSSG and worked her way up from Financial Controller I'm guessing she like most CFOs (and unlike other directors) doesn't necessarily have much personal wealth, so any share buying is much more meaningful:

[rivaldo] 05/11/2024 09:20

Good to see management doing an Investor Meet - 10.30 am on Tuesday 12th November:

[rivaldo] 04/11/2024 13:27

Nice 10k buy at the full 80p offer just reported.

Zeus's update today forecasts 5p EPS and £0.92m PTP this year, plus a 2.4p dividend, with a closing £5.1m cash pile at 30th June (against a £10.6m m/cap at 77.5p).

That's assuming no earnings-enhancing acquisitions, which is unlikely, though even so, with £4m cash as of today and further Vigilant sale instalments due I suspect this figure may be conservative as Zeus say their other forecasts are.

Nicely put Truffle. I can see lots of potential growth ahead as CSSG mop up and improve a fragmented market, using their in-place platform and proprietory software to enable synergies and cross-selling.