Mears Share Discussion Threads

[rivaldo] 15/3/2010 09:19

Collins Stewart say Buy this morning:



"MEARS GROUP
Collins Stewart recommends investors buy Mears Group after it recorded solid profits growth and excellent cash generation at its preliminary results. Group revenues grew 12 per cent to £470m, with social housing growing organically by 18 per cent. The broker forecasts 9-10 per cent organic sales growth by 2009-12."

[rivaldo] 11/3/2010 08:44

Terrific results out - yet again - whilst I was on holiday.

MER is just much undervalued imo (and ISAble too). Brokers' valuations of around 330p-350p give an easy 30% upside from here with no sleepless nights.

There's an interview with Bob Mears here:



Salient points:

- MER have 90% revenue visibility this year and 70% next year!
- 2009 earnings were higher than forecast
- MER are bidding on £4 billion of contracts
- there remains 40% of social housing and domiciliary care performed in-house still to be outsourced
- MER expect 15% growth in revenues and earnings year on year (prior to acquisitions etc)

Onwards and upwards.

[pbracken] 10/3/2010 12:17

Mkt cap is a function of share price x the number of shares in issue. Supporta is a small acquisition. It'll help (assuming it performs) but there is a bigger issue at stake - namely the perceived earnings risk post the election.

CNT is probably better value just now.

[jimmerandloz] 10/3/2010 11:15

I am still relatively new to the stock market, so please excuse what may be a stupid question.

I would assume that the market cap of Mears will only increase with the acquisition of Supporta – therefore is it more likely to attract the attention of fund managers dealing in larger trades?

I completely agree that the share price undervalues such a strong company with consistent growth, profits and contract wins. I'm certainly holding to see what happens over the next few months.

[rcktmn] 10/3/2010 10:28

bought some more this morning..hoping for a 30% gradual re-rating in the share price from here in the coming months. (imho)

[melody9999] 09/3/2010 22:45

no surprises then. great results and the share price tanks. its a long term hold for me....you have to believe the market will buy in at somepoint

[pbracken] 09/3/2010 17:35

1310 GMT [Dow Jones] Mears's (MER.LN) '09 results are strong, Investec Securities says. Says EPS growth of 14% is backed by strong cash flow and reckons the significant pipeline supports the potential to repeat this performance going forward. Notes the dividend has been raised by 20% to 5.7p. Says Mears is an "outsourcing-led growth story, where the valuation multiples look very attractive." Keeps at buy with 332p price target. Shares +0.1% at 264p. ([e-mail])

[pauliewonder] 09/3/2010 16:14

Just bought in.

Solid results.

Some good broker recommendations recently too.



LONDON (SHARECAST) - Results from social housing maintenance specialist Mears held few surprises, according to KBC Peel Hunt, but 'the outlook statement remains positive across the key operations,' the broker said.

'As a consequence of these strong underlying results we remain comfortable with our earnings projections and believe the market opportunity remains significant and robust across the key areas of operations,' KBC analyst Andrew Nussey said.

'Furthermore, the continuing order book intake and pipeline has mitigated one of the lingering concerns albeit we would like to see increased wins from new relationships. Therefore, with 20% average EPS [earnings per share] growth projected for FY 2010 [fiscal 2010] and FY 2011 [fiscal 2011], upside potential from the acquisition of Supporta and the shares trading on 9.8x FY 2010E [estimates fiscal 2010] earnings, we reiterate our BUY,' Nussey added.

KBC Peel Hunt has a target price of 325p for the stock.

Charles Stanley is also a fan of the stock. 'In our view, Mears is in an excellent position to benefit from further outsourcing opportunities, and a 25% discount to the wider sector is unwarranted,' the broker maintains.

'The group has a strong order book, is exposed to defensive markets with growth opportunities, and has an excellent pipeline of bidding opportunities,' Charles Stanley analyst Matthew Earl notes. The broker has a 358p target price for the stock.

Also in the Mears fan club is Panmure Gordon, though its price target is lower than Charles Stanley's at 330p, based on a sum of the parts valuation.

[brownie69] 09/3/2010 13:59

Good results. Not sure why the dip. Buying opportunity?

[turborock] 09/3/2010 11:32

not good enough for the market apparently.

[volvo] 09/3/2010 09:10

Great results. These companies ie Mears, Connaught etc are going to be the great gainers in all this yet trade on low pe.

[nellie1973] 09/3/2010 07:39

Very impressive, I am no longer a holder but will be buying back in!!!

[turborock] 09/3/2010 07:26

Decent set of results today

[volvo] 01/3/2010 18:23

Surely the larger Connaught offers better prospects at 300p with 3 brokers saying 440p or above. Both have about 90pc of 2010 fees and 80pc of 2011 in bank already.

Either way both will benefit as councils, even the reluctant ones, will otsource everything possible.

The savings for the councils are clear.

At the smaller end of the scale, a strategic bidder is said to be running the "slide rule" over Connaught, the social housing group. Bankers noted gossip that Enterprise, which is owned by 3i, has approached Connaught. Another potential bidder could be Mitie as it has held merger talks with the company in the past. Connaught, though, lost 1.1 to 300p and Mitie perked up 2.4 to 228¾p.

[cwa1] 26/2/2010 07:29

Brewin Dolphin resumed its coverage of Mears (MER), the support services firm, in the wake of its acquisition of Supporta, which the broker expects to be "modestly earnings enhancing" in FY 2010. Mears' focus on social housing will benefit the firm, as the British population ages, increasing the demand for such accommodation; the government is also committed to investing in new build social housing, giving good visibility. Around 85% of the firm's revenue comes from repair and maintenance, and this is a particularly stable area as funding comes either from tenants or from the government (where tenants are on benefit). Earnings growth of 14% is forecast for FY 2010 and the broker says that good growth is achievable after this point as well. It reiterated its 'buy' stance and 368p target. Me ars share price fell by 0.5p to 262.75p.

[rivaldo] 25/2/2010 11:52

Interesting test-bed project for MER:



"87 social housing projects to test innovative low carbon technologies
Peta Hodge
25th February 2010

The effectiveness of a range innovative new low carbon technologies, many of which have been developed by SMEs, are to be tested in 87 social housing projects across the UK, with the aim of making them carbon neutral.

The 'Retrofit for the Future' project – which is backed by £17 million of Government funding – is being delivered through the Technology Strategy Board's Small Business Research Initiative (SBRI), a procurement scheme to encourage all businesses, but particularly SMEs, to engage with government departments and be prepared for future government procurement policy....

....The retrofit of 14 Prince Rupert Road, Eltham is the project of social landlord The Hyde Group, whose award winning Retrofit and Replicate project in Mottingham achieved an 80 per cent reduction in CO2 emissions. ECD Architects have planned what technology will be used in the property and Mears Group will be responsible for installing it."

[rivaldo] 16/2/2010 10:03

Nice - 1.7m shares traded already and an excellent bounce back. Perhaps a SOR overhang has been cleared.

The 340p broker valuation will have caught some people's attention too.

[rivaldo] 16/2/2010 07:23

Thx CWA1 - reads well.

Given the bargain acquisition of Supporta it'll be interesting to see how soon other brokers start upgrading their forecasts for this and future years.

340p would still only be a P/E of 13 or thereabouts, which given MER's certainty of revenues and prospects would still be decent value imo.

[cwa1] 15/2/2010 23:06

Arbuthnot Securities said that recent weakness in outsourcer Mears' (MER) share price offers a "buying opportunity", as it reiterated its 'buy' stance and 340p target. The broker expects a continuation of positive trading, with demand for the group's services continuing to increase, making 2009 a record year in terms of new contract awards and order book. Mears is also forecast to deliver improved cash generation, with a 15% increase in pre-tax profit to 23.2 million pounds. Additional acquisitions will, Arbuthnot says, bring earnings accretion of around 3-4%, with negotiations reported to be at "advanced stages" for a number of deals. A strong balance sheet, good prospects, robust end-markets and high contracted order book are all positives, argued Arbuthnot. The shares added 6.5p to 254.75p.

[rivaldo] 15/2/2010 23:02

Eh? Bob Holt still owns 500,000 MER shares, the same amount he's held since 2005 (his last sale).

Perhaps you mean another Bob Holt...or perhaps another of his companies. Or perhaps you're just causing mischief :o))

[dnfa1975] 15/2/2010 19:59

hasnt bob holt lumped all his stock out and banked £18m?

[rivaldo] 15/2/2010 19:17

A better performance today. And this reads well re the 10 year £200m contract in Brighton:



"Perfect ten
11th February 2010 Southern Brighton & Hove City Council Mears Group

Brighton & Hove City Council's 10-year housing contract with the Mears Group is shaking up housing provision in the area.

Not only is it one of the largest contracts of its kind it is set to bring benefits including faster repairs, improved security and a focus on green issues

The £200 million contract, which covers 12,500 homes, builds on Mears' existing contract with Brighton & Hove. The company already provides responsive and void repairs together with gas servicing to the council's extensive portfolio of homes. And this latest contract win will see it add programmed, cyclical and further maintenance works to the list.

Commenting, Bob Holt, chief executive of Mears Group, said: "Working together with Brighton & Hove we can deliver the tangible improvements into the community which are so important to the people that live there. I believe this to be one of the largest contracts of its kind awarded in the UK ever and represents a significant move to a long-term partnership for Brighton & Hove.

"Mears has gained significant contract wins of £400 million since April 2009 and has a strong pipeline of contract bids. Our partnership strategy continues to gain momentum with existing and new customers and we are committed to delivering a value for money quality of service offering which provides very high tenant satisfaction. This is reflected in our ratings with customers who are progressively focusing on value and delivery of service rather than price alone. I look forward to bringing you news of further contract awards soon."

While Mears and Brighton & Hove obviously enjoy a strong working relationship the council will be keeping its eye firmly on the ball where the contract is concerned, setting challenging performance targets that will be rigorously monitored and subject to financial penalties. In fact if Mears were to fail to perform to the standards, which have been set through close consultation with tenants the contract could be terminated.

And it is not just run of the mill improvements and repairs that will be covered, tenants will see faster repairs and improved security with council and contractor staff housed in four 'our neighbourhood' hubs across the city with close links to local police officers.

Green issues are very important at Brighton & Hove and the council has signed up to the national 10:10 Campaign to cut its carbon emissions by 10 per cent in 2010/11 – a bold step up from the previous target of 20 per cent over five years.

It is asking residents and businesses to do the same and has set Mears the challenge of becoming carbon neutral by 2012.

Council leader Mary Mears said: "This is a big challenge but one we think is achievable. A low carbon Brighton & Hove is our top sustainability priority and this is a real opportunity to re-energise our staff, be bold, and inspire others across the city to do the same."

Keeping with the green theme a new 'supercentre' depot run on alternative energy is being set up to service the contract and Mears is committed to a series of eco-friendly measures, including furniture recycling and reducing the waste sent to landfill.

Training is also an important issue at Brighton & Hove and it has made sure that there will be plenty of training provision for local people.

Mears is committed to taking on at least 200 apprentices throughout the lifetime of the contract, setting up a kitchen manufacturing workshop and encouraging more women to take up a career in the construction industry. There will also be opportunities for local small businesses and contractors.

Councillor Maria Caulfield, cabinet member for housing, said: "This is the first time a local authority has been able to stipulate such a wide range of initiatives that not only improve the repairs service, but help the local economy and protect the environment."

"Tenants will see 'first visit' repairs in most cases and they can be reassured of their security with local police officers closely linked to council and contractor staff."

The contract between the two organisations breaks the norm not only in terms of size and longevity but also in terms of what it will offer to the wider community over the next decade."