Cheers EC, glad someone else bothered to watch the presentation :o))
Agreed re the broker note update - I often find WH Ireland are lacking in this respect, which may be a part explanation of their recent news flow.
It's particularly important that investors realise that what were simply "locksmiths" will now become retailers of entire security systems for all premises.
As outlined repeatedly this is not just for the homeowner, but for all forms of industrial premises, company and property owners who may not only need key cutting, but entry systems, alarms etc who previously had to go to a number of different suppliers who didn't have the reputation, status and resources behind them of a quoted company. As per the large housing maintenance client mentioned in the results.
Per today's RNS, the AGM update will be on 1st December, so not long to wait. Glad to see there'll be another Investor Meet webcast. |
Just caught up on the investor presentation, which can be found at the link below for anyone interested.
Very encouraged by what was said. Highlights:
- Continued commitment to the listing
- Commitment to the progressive dividend strategy
- Acquisitive in a sector with lots of bite-sized opportunities and no M&A competition
- Five to six acquisitions a year easily achievable
- Working with broker to get analyst forecasts published.
The last of these is particularly important. In my opinion, this share is absurdly underpriced and I think a big part of that is the lack of analyst forecasts. It has characteristics that should make it attractive to high net worth private investors but has been largely ignored to date. Lack of forecasts must be a big factor in this; many investors rely on analysts, rather than doing the work themselves. Further, CSSG will not feature in commonly used stock screens without published forecasts. |
I was under the impression that being a locksmith was money for old rope and there are also quite a lot of rip off cowboys in the sphere. A listed company with many outlets may be seen as a more trustworthy place to find a locksmith?
Also it's pretty obvious that most people don't go into locksmiths regularly to buy an alarm because not that many people have them and they don't change them often when they do but it still seems like a good complementary service to offer. There are also other potential products such as home strongboxes and the like which they can sell. |
Locksmith outlets.
The most demanded service is ....getting a key copied !
Very few ppl entering such a shop are imo looking to buy an alarm system.
...but yes, there is surely profit in providing locksmith services for unlocking doors or doing services for businesses since the skills are specialist & people need a quick solution & have no time to shop around. If a skilled locksmith is only out working 50% of the time then that would not be so good, profit wise. |
Rivaldo
...your claim that this CFO is probably poor !
If so she would probably be the only poor qualified working accountant/CFO in the UK !!
....imo accountants & CFOs get paid well. They are controlling money & use X years to become qualified.
Her share buy was merely a token gesture imo, of a similar number of shares to the share options she was given. It was probably agreed verbally that she would do it in return for getting the share options.
-----
But, yes, a director buying some shares is definitely a better sign than if they were selling ! |
Yesterday's Investor Meet presentation is well worth a watch. It was interesting that the share price was rising during and after the presentation!
"Several" acquisitions per annum are promised, with apparently "dozens" in the pipeline to be assessed. There is no competition out there for these locksmith outlets.
These outlets can post-acquisition be (1) upskilled and upbranded with a much larger product range including entry alarm systems etc and (2) will enjoy substantial benefits of scale and cost synergies in terms of cheaper buying costs, use of central services and therefore cheaper overheads etc: |
Indeed. And also (1) she was a CFO for ages, and as CFO won't have earned a fortune - they don't normally have a lot of spare cash - so (2) as such I count any share purchases at all by FDs/CFOs as much more meaningful than those of other directors. |
It's hardly a major commitment but then I guess a lack of liquidity may have precluded that. |
Good to see the newly appointed CFO buying her first 15k tranche of shares: |
Thanks Eezy. I'm not sure how you get to 60p using a free cashflow valuation methodology, but I suspect if you look at it and adjust the free cash flow as needed it should end up very similar to my valuation, but I would need to see your workings to comment on that. |
Under 50p it seemed pretty cheap to me, goliard. More sensible around 60p. There's so much history here that un-enthuses me though. And the current strategy looks as dull as dishwater. Very competitive market etc. |
Hi Eezy, the cashflow is the most important measure, but if you look at the numbers you may see why it might be a bit misleading in this case. It would be great if you posted your view on it. |
If you're basing a valuation on a multiple of EBITDA then you're not taking it seriously IMO goliard.
Always look at the cash flow, not the worthless numbers these companies put in the headlines. |
Good to see only around £15k's worth of shares bought this morning having a nice effect on the share price. Perhaps not much stock around. |
Good summary goliard, thanks.
It's reasonable to expect a further series of earnings-enhancing acquisitions as the Vigilant cash steadily arrives next year and onwards.
So I too hope conservatively for 120p+ and perhaps a good deal more as the company's rating improves with bigger size and increased awareness in the markets.
Meanwhile, it's good to see the news this morning that CSSG are being proactive and presenting via Investor Meet on November 13th - not something they've done before as far as I'm aware. Perhaps they're now confident they have a good story to tell: |
I would also add that I think they are now too small a company to stay listed given the costs and complexity of a listing and it would be easy to see a management buyout here of the simplified business or someone else making an offer to take this private. I am not seeing any real benefit to staying listed but maybe the uncertainty of future payments might stop that happening, at least for a while. If you were confident on receiving the 5 million deferred consideration then offering 90 p to100p now seems reasonable. |
 My valuation is as follows, so feel free to pick holes in it and I tend to be conservative in my approach whilst having to make predictions on some issues.
EBITDA on continuing business is basically £1 million.
A conservative PE of 6 gives a £6m valuation, but they are seeing strong growth and margin improvement so it is easy to make an argument for a higher PE but let's stick to 6. That gives a valuation of £6 million.
Cash is about £2 million, so that increases the valuation to £8m on a conservative basis and that is the current market cap according to ADVFN (£8.19m).
So it is conservatively valued right now but that is fine and this excludes assets such as the freeholds, and I am happy with that as they improve profit by being freehold (no rent to pay) so you can't count that twice, but the recent freehold purchases should lead to higher profits next year.
However, they are due over £5 million in deferred consideration from the Vigilant sale this year and should receive that over 3 years. It is not ideal to be dependent on another company for your future profits, but that company is well known and was bought by management. If you assume they get 100% paid then that means the current market cap should be about £13 million, ie about 40% increase from the current price 3 years from now (or even now if you assume 100% certainty of payment)and markets look ahead.
It seems reasonable to assume growth in profits in that time too, so my estimate assuming all goes well with repayment is that the company would be worth circa £16 million at least in 3 years or 100% higher than it is now and I think that is fairly conseervative as long as there are not horrible business events in the interim.
Also paying a dividend of 4% on the current price which is nice to see.
Just one ot hold for me and my hope is for 120p plus over the next 24 months or so as I tend to underestimate the top (and bottom) of most moves. |
Good to see a mere £800 moving the share price up. Hopefully indicates not much stock around. |
Anyone willing to put a valuation on the shares ?
P/e excluding cash for these results = ?
...me to do it ?
apologies but I'm busy today so I can't until this evening. |
WH Ireland have their own woes to contend with. |
WH Ireland aren't yet publishing full forecasts following the Vigilant disposal, but anticipate doing so, and note that a rating "on an EV/EBITDA basis below 5x
does not seem overly demanding".
They summarise:
"Croma Security Solutions (CSSG) – Corporate – FY results reflect continuing
strong momentum
Market Cap: £5.8m
FY results from CSSG this morning reflect very healthy growth from the continuing
business following the disposal of Vigilant. The company is a leading provider of
specialist security products, notably locks and related devices; and beyond this,
of electronic security products and monitoring services, with 14 security centres
in the UK.
Continuing revenues for the year to June ’23, at £8.03m 38% ahead
YoY, included significant underlying growth of 21%, while the overall underlying
(ex-Vigilant) gross margin has also moved ahead YoY at 46.7% (was: 43.9%).
Overall EBITDA at £0.954k was 78% ahead YoY, and continuing PBT / EPS also well
ahead – £0.4m continuing PBT plays £0.1m in the prior year.
Net cash is very healthy at £2.1m, notwithstanding substantial investments – and further substantial payments are to be expected in respect of Vigilant, with a £0.5m cash payment in March ’24 to be followed by a further nine payments of c.£0.4-0.5m each, and the redemption of £1.3m of Vigilant shares anticipated for July 2024.
Overall, the results suggest that the group is making excellent progress in its new shape, while encouragingly, current trading is said to be good."
Also:
"The company is a beneficiary of underlying drivers, notably concerns over
rising crime, increasing corporate risk aversion and regulation, and CSSG’s ability
to meet changing demands from its customer base."
"Moreover, CSSG’s core market offers fertile opportunities for consolidation, and
with a meaningful funding stream deriving from the disposal, we view the
company as extremely well-placed to pursue further accretive acquisitions in line
with its stated strategy." |
A rather encouraging tone to this morning's prelims.
CSSG achieved £950k continuing EBITDA against the £7m m/cap (and £427k PBT), with a £2.14m cash pile plus a further £5.43m receivable from the sale of Vigilant in the form of Loan Notes and redeemables.
CSSG generated almost £1.3m cash from continuing operations in the year.
Plus:
- there's also a 2.2p final dividend
- more acquisitions are in the pipeline
- ILOQ sales are already at £0.32m with further orders secured
Most importantly, the outlook statement is nicely positive:
"Outlook
The year has started well with a number of new commercial orders and the continued success of ILOQ. We believe that we will be able to drive sales growth organically through new sales and marketing initiatives, expanding our network of sales people, and focusing on the development of our online presence. We will also expand the network via acquisition - the pipeline is promising. The Croma balance sheet is strong, we are cash generative, and we are well-placed to take advantage of the opportunities ahead." |
Worth roughly two and a half times as much? |
Excellent - CSSG have a new major shareholder.
Russell Long has bought 872,054 shares and now owns 6.4% of CSSG:
Mythril LLP, of which he's a member, holds 400,000 of these shares. They appear to have almost £10m of net assets, so reasonably substantial: |
Register for real-time alerts, custom portfolio, and market movers
Hot Features
Premium
