Somero Enterprise Share Discussion Threads

[fredfishcake] 19/7/2021 16:08

Babies and bathwater leap to mind - if only I had some available cash! This co is mainly dependent on the US construction industry, so is one of the least likely to be affected by perceived problems in the UK.......

[its the oxman] 15/7/2021 15:56

Couple of up days and we could be through 500p. Pressure building.

[fredfishcake] 09/7/2021 10:28

You may well be correct, in which case it's a yield just in excess of 5%. I wouldn't be at all surprised if they exceed their current estimates either.

[gdjs100] 09/7/2021 09:50

I think the forecasts include the supplemental dividend (although I calculate the total should be a touch higher).Generally they pay out 50% of net income as an ordinary, and as you say 50% of net cash balance above $20m as a special.Net income is forecast to be 25.9m, so ordinary dividend should be 23c and based off year end cash of $33m, supplemental dividend should be 11.6c so I would be looking for something approaching 35c, or 25p.

[fredfishcake] 09/7/2021 09:15

From final results Mar 21:

The supplemental dividend declared is in accordance with the Company's supplementary dividend policy adopted on March 14, 2019, that stated the Company intends to distribute 50% of the excess of net cash over the year-end target of US$ 15.0m.

The Board has reviewed the supplemental dividend policy with Management and concluded that the year-end targeted net cash figure to be used for the policy for the year-ended December 31, 2021 will be raised to US$ 20.0m.

Latest trading update said "year end net cash is expected to exceed US$ 33.0m"

So, I'd expect them to distribute 50% of $13 mill across 57 mill shares, so in the order of 11.5c/8.5p per share. However, I'm assuming that's the supplemental dividend, paid in addition to the normal dividend, forecast to be 29p this year (from Stockopedia). Call it 37p p/s divi on a price of 466p, that's an 8% yield on a growing company. I can't help feeling we're still underpriced.

[benbay001] 07/7/2021 21:23

Anyone able to work out what the divi is likely to be based on forecast cash?

[its the oxman] 07/7/2021 16:22

Can easily see another 5% on here tomorrow.

[wildshot] 07/7/2021 16:18

shearluc thanks for sharing. If you are a regularly reader of SCVR you may recall that in recent days Paul Scott has asked for his full write ups on stocks not to be shared on ADVFN or other bulletin boards. This is a subscription report and I think he'll be very peeved off with you sharing it here.

Note: same goes for Robbie Burns' e-mail newsletter exclusive content.

[shearluc] 07/7/2021 15:30

From Stockopaedia today:

Somero Enterprises Inc (LON:SOM)
(I hold)

435p - £250m mkt cap

Trading Update

Somero® is pleased to provide an update on trading for the current financial year, ending 31 December 2021 ("FY 2021") following the end of its first half ended 30 June 2021 ("H1 2021").
Raising guidance due to stronger than anticipated trading in the US to end H1… and with this momentum carrying over to begin H2 2021, it now expects to exceed previous guidance for FY 2021 established in the 6 May 2021
Old guidance -

The Company's previous FY 2021 guidance indicated revenues were expected to approximate US$ 100.0m, adjusted EBITDA would approximate US$ 31.0m and net cash would improve consequentially from the original US$ 27.4m target established in our 10 March 2021 final FY 2020 results statement.
New guidance -

The Board now expects FY 2021 annual revenues will approximate US$ 110.0m, adjusted EBITDA will approximate US$ 35.0m, and year end net cash is expected to exceed US$ 33.0m.
That’s a 10% upgrade to full year revenues, and 13% increase in EBITDA guidance.

Or, $10m additional revenues, and $4.0m additional EBITDA. That makes sense, given that the gross margin was 55% last year, so today’s upward guidance allows for $1.5m higher overheads (i.e. $5.5m additional gross profit, resulting in $4.0m additional EBITDA).

Other points -

Strong trading in May & June 2021 in its main market of the US.
Higher momentum is carrying over into the start of H2
Customer workloads at high levels, extending into 2022 (backlogs from covid) & healthy construction market (non-residential sector)
eCommerce requirement for new warehousing is mentioned as a driver for growth
Other regions trading in line with expectations
New products contributing meaningfully to growth as expected
Pipeline of new products to expand addressable market
Dairy date 8 Sept 2021 for interim results to 30 June
Valuation - Finncap has issued an update. Price target going up to 590p.

Profit forecasts go up 13.6% this year and next year:

FY 12/2021: 45.4c = 32.9p (at £1 = $1.38), a PER of 14.3 (based on 470p current share price)

FY 12/2022: 48.7c = 35.3p, a PER of 13.3

My opinion - Somero looks good value to me, for such a high quality, cash generative business. It pays out cash in divis, and retains a strong balance sheet. This share seems woefully under-appreciated by the market, and always has been. I think it could sensibly re-rate to a PER of 20+ in the current market, so there’s good upside if I’m right about that.

Obviously we have to take into account that it’s a cyclical business, so how you view it depends on where you think we are in the economic cycle? My view FWIW is that it’s looking increasingly as if we’re in the early stages of an economic boom - which tend to last several years before things overheat & crash.

Personally I’m sitting tight with no plans to sell, or trim my existing holding in SOM. Obviously it’s up to you what you decide to do with your own money, e.g. some people like to bank profits when things rise a lot, or top slice some of them. For me though, the compelling value means I’m sitting tight for the foreseeable future. A takeover bid wouldn’t surprise me, as a bidder could pay the customary c.30% bid premium, and still buy it at a reasonable price, load it up with debt, and pay off the debt from the cashflows. Looks an obvious candidate for private equity in my view.

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[eggbaconandbubble] 07/7/2021 15:17

A write up in a national daily tomorrow would be sweet!

[pugugly] 07/7/2021 12:40

A lack of communication can lead to frustration - HBPW announcement is (IMO) ambiguous at best.

[eggbaconandbubble] 07/7/2021 12:37

HBPW do call it 'crackLESS' concrete. Not 'CrackPROOF'! A bit like I was once told Stainless steel sinks are not stainproof!!!

[grabster] 07/7/2021 12:20

egg - I agree. Hence my occasional "if" when reporting it ;-)
The author ought to know better than to use ambiguous terminolgy - but I am unsure if they are mixing two thermal factors - one being the ongoing expansion/contraction that you refer to as normally being essential to allow for when temperatures fluctuate, and one perhaps referring to the cracking that might follow the heating/cooling chemistry during the initial set.

[mfhmfh] 07/7/2021 11:55

positive write-up today on stockopedia.

[eggbaconandbubble] 07/7/2021 10:43

I don't quite get that. They have developed a graphene concrete that does away with "thermal shrinkage stresses" as they term it!

Does that mean that the slab has zero coefficient of thermal expansion?? i.e. It will not expand or contract with a change in temperature, for example say between zero and forty degrees centigrade, thus negating the need for expansion joints???

I doubt that very much, but if so that would be absolutely revolutionary!!!

[grabster] 07/7/2021 10:16

The concrete industry worldwide will be watching the ongoing test results of samples taken during an unusual pour carried out near Amesbury last month (most industry journals worldwide have already reported it).

It didn't require any unconventional equipment. Early days yet. But if things pan out well for 'concretene' it does offer scope for new machinery possibilities which Somero might enjoy offering.

[deadly] 07/7/2021 09:37

was a great buying opprtunity yesterday so glad I did, now wish I'd bought more.
Still cheap though especially after:
"it now expects to exceed previous guidance for FY 2021 established in the 6 May 2021 trading update."

[its the oxman] 07/7/2021 08:13

500p will be tested this week or next.

[mammyoko] 07/7/2021 07:47

FinnCap TP raised to 590p

[rcturner2] 07/7/2021 07:36

If we are looking at full year eps at say 45p, then this has a forward PE of less then 10, which shows how much potential there is here.

[pugugly] 07/7/2021 07:29

Very nice update - If Mr Market reacts to the upside might well make a new year high. A very happy bunny.

[arregius] 07/7/2021 07:14

Great update today. Expected that as previous twitts