Mears Share Discussion Threads

[pbracken] 18/8/2009 10:31

From Charles Stanley today:


Mears (Buy, 270p: PT 340p)

Interims ahead of expectations

Interims are ahead of our expectations. Revenue rose by 14% during H1 2009 compared to our forecast for a 7% rise, driven by a stronger than expected performance in the Social Housing segment where revenues rose by 30% (23% organic) and a better than expected outturn in M&E where revenue fell by 25% compared to our forecast for a 30% decline. Domiciliary Care revenue was broadly in line with our forecast, rising by 11% (10% organic).

Margins were in line with expectations in the Social Housing and Domiciliary Care business, while there was some modest improvement in M&E. Pre-tax profit (excluding the restructuring and losses of the 3C acquisition) rose to £8.5m (forecast £8m).

The group's order book has strengthened from £1.6bn in December, to £1.8bn, supporting excellent visibility of revenue with 98% and 70% of consensus forecast revenue for 2009 and 2010.

Mears trades at a PER of 12.8x 2009E and 11.2x 2010E and offers a prospective CAGR in earnings of 11% for the period 2009-11. This compares to the wider support services sector which trades on 11.2x 2009 and 11x 2010 consensus earnings and offers a median CAGR in earnings of c2% during the same period. In our view, Mears should trade at a stronger premium when considering its strong growth potential and defensive qualities.

[rivaldo] 18/8/2009 09:41

Altium go for 24p EPS, but as they say, with any new contracts as hinted at the certainty of future revenues should mean upgrades. Not ridiculously cheap, but then that certainty means a premium rating against other companies. I can see upside to 300p-330p in stable markets.

[lucky_lady] 18/8/2009 09:37

I agree with you hosede, I think the good news is already in the price, hence not much movement today. I am out today, but will be back.

[hosede] 18/8/2009 09:33

Looks like EPS for the year should approach 20p. Fine but a PE of 10-12 looks about right to me - think these will drift back to the 230-240 range - I'm out but back in at that sort of price.

[wjccghcc] 18/8/2009 08:54

Cash generation is the only bugbear with these. Earnings up 16% but operating cash flow only up 8% so conversion stays near 70%.

[rivaldo] 18/8/2009 08:54

Altium go for 300p - I assume Collins Stewart will at least retain their 335p target:



"INSTANT ANALYSIS Mears remains buy at Altium after interims
18 August, 2009 08:35:03 AM

Broker remains buyers of Mears, with a target price of 300p after its interim results came in broadly in line with broker\'s expectations.

\"The strong results underpin our buy recommendation and we continue to believe that Mear represents an attractively valued defensive growth story. Our top of the range forecasts are likely to moderate slightly, although small consensus upgrades are possible, given the better M&E performance.\""

[nellie1973] 18/8/2009 08:06

Nice results!! Obviously more bids in the pipeline so more income for the future.

[5dally] 18/8/2009 08:05

Great results :-)

[rivaldo] 18/8/2009 07:20

Excellent interim results - and "exciting" news on the way....

Almost 10p EPS for H1, and the divi up 19%. In particular, the 3C acquisition which made a £0.95m loss in H1 is expected to be profitable in H2 - this should have an interesting effect on profits:



"Bob Holt, Chief Executive of Mears Group, said:

'These results demonstrate our commitment to continued growth as well as underlining the defensive qualities of the business. Our order book stands at £1.8 billion and the demand for our services continues to be strong. Importantly, our two growth markets Social Housing and Domiciliary Care, which account for approaching 90% of Group revenues, reflect quality partnership relationships with first class public sector customers. These are defensive markets where spend is largely non-discretionary.

We have close to full visibility as to consensus forecast revenue for the current year. In addition, we have already secured in excess of 70% of our forecast revenue for 2010. With a number of particularly exciting opportunities within the bid pipeline, I have significant confidence for the future. This confidence is underpinned by our high revenue visibility and our ability to lead both of our core markets by a quality of service delivery and by innovating to ensure that we exceed our customers' expectations.'"

[nellie1973] 17/8/2009 16:19

Looks good for tommorrow, I hope something rides above this tide of red I'm seeing today!!

[rivaldo] 17/8/2009 07:35

A preview of tomorrow's results in today's Independent:



"TOMORROW: Arbuthnot expects news of strong trading when Mears, the social housing repairs and maintenance provider, posts interim results, with its social housing and domiciliary care divisions likely to be boosted by recent contract wins. Moreover, the management is expected to reiterate that the pipeline remains strong, with further contract wins expected in the months ahead. "Mears remains well placed in the current environment," Arbuthnot said. "The group has a strong balance sheet and operates in robust end-markets, providing recurrent services that are near non-discretionary in nature."

[chrisfoster] 14/8/2009 16:49

Shame we couldn't hold the day's gains. Results next week though should see us well up.

[rivaldo] 14/8/2009 13:45

Still a long way to go to the 335p broker target price, with those results next Tuesday.

[nellie1973] 14/8/2009 09:31

Are we going to hit the magic 300p??

[rivaldo] 14/8/2009 09:29

Climbing before next Tuesday's results.

[rivaldo] 12/8/2009 19:29

Nice close tonight.

[rivaldo] 12/8/2009 12:05

Ta CWA1 - will have a look at those. I already hold DGO, but hoping for some further bidders to flush out the value!

I've also sneakily bought a few IRV on the dip following the results. Might buy some more if the price looks solid, which it does at present.

[essentialinvestor] 12/8/2009 10:02

SUS hard to get hold of, that is the understatement of the year.

[cwa1] 12/8/2009 09:20

Many thanks r, I shall have a little look at the ones you mentioned. Any goodies myself? Wellllll, to be honest, if you had asked me about a month ago I would have said yes there are a few but most of them have shot off into what I call fair value territority now- so not much point in passing those on to you. Just a few examples, IRV, BPI, DLTA, BBY, CEL(bid) etc, I still think there may be some mileage in them but they are not as cheap as they were.

I'm still holding VPC(Venture) tho I feel as if CNA will get them for a song soon. If CNA get them for 845p I would be interested in investing in CNA, so look out for that one.

DGO(Dragon) are currently under bid attention from ENOC at the moment and I reckon they may have to raise their bid price suggestions from a "modest premium" to a reasonable premium to get them.

One I quite like the look of is OFF-but even it has perked up a few pence in the past few days with results coming into view soon.

I also like the look of SUS, yesterday's Trading Statement was very upbeat by their standards but it is rather illiquid and hard to get hold of stock!

GBP is valued at less than cash with reasonable prospects I reckon.

I even bought some UU. near its recent nadir after the draft determination being a bit negative. Not my normal sort of share but IF they can get a decent review of the determination by November then it should be a sound long termer.

In the same vein NG. should be a steady performer I reckon.

Overall, I have to say that I feel that the market might be a little ahead of itself-so will wait for a pullback before splashing most of it-and am probably as cashy as I have been for a little while so not as many suggestions as I might normally have!

Apologies to all for the OT

Oh, and I should mention, I like the look of one called Mears and have a decent sized holding there ;-)

[rivaldo] 11/8/2009 19:05

OT : Hi CWA1. we do seem to share a taste in stocks! Of my ISAble stocks, those I believe will do or continue to do well include ALN in particular, plus MER of course and CAR. UGY as a gold play is ISAble as dual-listed and could be about to zoom following news as a bit of a punt. SMDR are a quality oil play with further news flow imminent.

On AIM I still love the Chinese stocks GNG and CHNS. RCG could surprise us all. C21 are about to announce excellent results, and have great asset backing. And there's VLE, RHEP and KBC which haven't moved that much despite positive news flow.

Any goodies yourself?

[cwa1] 11/8/2009 13:05

Good stuff riv, thanks. As I see you regularly on the threads I look at or frequent, I hope you don't mind if I ask what are your current favourites in case I've missed out on them?! Apologies to all for a very brief off topic request which I will not extend on here beyond any answer riv may care to give.

[rivaldo] 11/8/2009 11:16

Excellent stuff from today's Mail - 335p here we come.

Knowing MER the RSL's are definitely an opportunity:



"Social housing and home help group Mears raced 12½p ahead to 268¼p on a
Collins Stewart recommendation and target price of 335p ahead of next Tuesday's interim results.

Analyst Julian Cater points out that the £20million offer for home help group Claimar Care, ½p off at 31½p, by Housing 21, one of the largest registered social landlords (RSLs), provides further evidence of the development of a joined-up approach to the position of housing and care services, particularly for the elderly. The expansion of RSLs into care makes them both a potential customer and competitor for Mears."

[rivaldo] 10/8/2009 19:49

Looking good chart-wise too - next stop that last 282p or so peak.

Still 5 trading days for further advances prior to the results.

[essentialinvestor] 10/8/2009 17:25

This was long overdue a re-rating.
You only needed to compare the rating with CNT to see the value here
and Mears have cash on the balance sheet.