 WH Ireland are still waiting to produce new forecasts, but make some useful points:
"Croma Security Solutions (CSSG) – Corporate – H1 update: rapid pace of growth;
contract streams underpin; M&A offers good opportunities"
"We are encouraged by the continuing positive pace of growth, which we view as both organic and acquisition based. On the score of organic growth, we note last week’s release by the Home Office of data relating to outcomes following a crime, which shows a further increase in the year to September 2023 in unsuccessful investigations (“completed without suspect”) to over 40% of total crimes, in addition to c.38% described as posing “evidential difficulties”, while criminals charged are under 6% (2014:17%). We anticipate that underlying demand for CSSG’s services will continue to grow."
"We believe that many more consolidation opportunities of this kind are available for CSSG. It is important to note the cash available to the company to generate earnings enhancing growth through market consolidation, given that in addition to the last announced year end net cash of £2.1m, further substantial payments are to be expected in respect of Vigilant (£0.5m cash payment in March ’24 to be followed by a further nine payments of c.£0.4-0.5m each, plus the redemption of £1.3m of Vigilant shares anticipated for July 2024)."
"WHI view: In addition to underlining the consolidation opportunity for CSSG, this
morning’s update provides further evidence of the very reasonable prices that
the company is paying for its acquisitions, with the most recent £0.4m
consideration paying for a profitable two-site business and additionally including
a site valued at £0.35m freehold. With sites typically turning over revenues in
the range of £300-350k (though these can be more sizeable or smaller), we believe that the resources available to CSSG make a meaningful site acquisition programme, further expanding the national geographical footprint and offering operational gearing opportunities, very much within the company’s grasp.
Also in this morning’s update, it is good to see the contract renewal with an NHS trust. Historically, CSSG has announced similar contracts, and combined with contracts with national cinema chains and other major clients, we believe that these renewals indicate a helpful strand of repeat earnings where the company is effectively well embedded with its clients." |
Today's 6-month trading statement looks good:
- revenues up 13.5% year on year
- major NHS contract renewal
- acquisitions trading well and looking like a bargain with the £0.35m freehold property included
- more acquisitions likely |
Nice 25k buy at 70p reported after the close. |
An announcement of acquisitions has been exxpected for some time now.
lack of news on actual/projected turnover and when they expect the acquisitions to be profitable etc. would have been useful for assuring shareholders.
Hopefully this and acquisitions in the pipeline will move the ccompany and share[price forward |
News of the acquisition of two new businesses for just over £0.5m - including a £0.35m freehold property, which surely makes this terrific value - to be converted into full-blown security centres:
And "There are further acquisition opportunities under consideration". |
does anyone know the progress if any for new acquisitions? |
New article noting CSSG has "significant upside potential" - subscription only unfortunately: |
Up 2p on only £10k traded, so perhaps not much stock around.
Good to see you here DrRadcliffe. |
Thanks for posting the link EC. Very interesting. I already have shares, but seeing the investor presentation makes me realise I should buy a few more. Anything up to about 90p seems a good deal given the 21% organic growth, strong cash position and dividend. |
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: |
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