Sureserve Share Discussion Threads

[knowhow77] 28/1/2022 12:30

Sure fire & electrical win a 3 year contract with Dartford borough council
value £960k
Every little helps

[marktime1231] 28/1/2022 12:28

My SUR entry point was 75p last year but newly arrived Winks hoovered all those and some good news forced it up out of reach of my upgraded 79p limit. We might not see those prices again but I will bide my time.

There have been some extraordinary moves in popular stocks which so many tipsters rated they became band-wagons, I'm thinking ITM and CWR specifically as everyone's favourite bets for future energy. These sub £50M turnover companies were valued at £1b, £2B even £3B at peak. I was feeling pretty stupid for not having dived in. Not feeling so stupid anymore, the share price of those almost back to where I thought I might have punted.

SUR has to justify the current sp, not only to expand by the easy bit of winning new framework opportunities it also has to execute profitably in a low margin competitive environment and will be facing the same inflation, people and supply chain problems as everyone else. The lack of a dividend means there is no reward or cushion for having to wait for actual trading to catch up and justfiy the share price It is a worry rather than a comfort almost everyone seems to be tipping this in public as the stock for 2022, usually with no more real idea than we do. The share price has been boosted by the demand which this chatter creates.

Fully understand the excitement here when the share price was in the 70's and evidence started coming through that SUR was turning around and heading to a good place. It may well have sorted out the fundamentals and being doing all the right things to justify optimism. Thoroughly agree that the new leadership, their approach, the contract winning and deal execution all point to good prospects. But the professional analyst forecasts of future eps are modest improvements from here, and without the defence of a dividend nor an explanation why not (if you want to make a profitable acquisition you borrow or issue capital, rather than spend the dividend cash on it) there is not enough compelling reason to invest at this share price in the 90s.

Watching closely and will happily be proved wrong if this turns out to be another missed boat.

[harrywilliam] 28/1/2022 08:35

Bought quite a few yesterday and today. Read latest results in detail last night and like the report very much. Good growth, good strategy and good prospects

[angersharkz] 28/1/2022 08:03

Rivaldo - Agreed. It’s also worth noting that Robbie never ‘tips’ any shares. He just blogs about shares he’s bought or sold and why, he implicitly says you should never blindly copy his trades.

We have already established the solid fundamentals of SUR and it’s growth potential. The fact that Robbie agrees as well as other analysts is just something to take on board.

[rivaldo] 28/1/2022 07:50

Great to see the Naked Trader buying more - and that SUR is now his largest holding.

Overall the NT has a very good record. Everyone with a large portfolio will sometimes have losses, and some of those will be sizeable, but not many have as consistently good a record as he does.

[angersharkz] 28/1/2022 06:59

Davidro77 - Robbie is a millionaire investor. Go on his website his list of trades are visible for all to see. The majority of his trades are winners but as with anyone that invests takes the occasional loss - but when he does he’s out quick.

‘His tables will say he magically escaped unscathed’ so what are you saying, does he magically have millions in the bank?

[davidro77] 27/1/2022 23:03

This is the guy that tipped Gattaca and Avon before 35% falls.....what did he have to say about those? No wonder SUR is his largest holding I bet he took a bit hit on those even though his tables will say he magically escaped unscathed...

[thelongandtheshortandthetall] 27/1/2022 19:19

Definitely a company on the up.
Solid, predictable earnings AND a plan to make the most of the energy transitions happening left and right.

[angersharkz] 27/1/2022 18:35

Anyone that follows Robbie Burns aka The Naked Trader has this to say in his latest blog, SUR now his largest holding!

‘I was amazed to see one of my biggest holdings Sureserve head down on results. I hadn't intended getting any more but the price was just too tempting.

This social housing energy services group is on a roll from results this week.

Operating profit is up 40% and net cash has grown to over £16m.

I think this is a great hold over the next 2-5 years. It is going to benefit from the current
energy transition agenda.

It looks like it will continue to use cash to acquire others and also has a high debt facility.

The downside is the lack of dividend. But seems to me this is fine and I would prefer it
to use its cash to buy others. Given my new topup this is now my biggest holding.

For those of you who use researchtree, there is an in depth broker report on SUR today which
reckons the shares are well undervalued and something I hadn't thought of which is a switch to hydrogen or other power sources could bring many new opportunities.’;

[knowhow77] 27/1/2022 18:31

Not worried I’m in for the long haul and yes so much to be positive about been in for 5 years so seen the bad times and now for good ones hopefully

[angersharkz] 27/1/2022 18:06

Gswredland - Very much agree. This is definitely one of the better boards. Knowledgable, helpful contributors. Long May it continue.

[angersharkz] 27/1/2022 18:03

Knowhow77 - This often happens, I think the old saying is applicable here;

‘Buy on the rumour, sell on the news’

I think it was running a bit hot just before results. There would have been people jumping in and out to make a quick 10% on the expectation.

I think the most important thing for us - the long term holders, is that the results were very very positive and there’s plenty to be optimistic about. It will be very interesting to see what acquisitions they have lined up for the next 12 months.

Don’t worry too much about the share price in the short term, I think the fundamentals here are excellent in my opinion and I’ll add here on any further share price weakness.

[gswredland] 27/1/2022 18:01

Thanks for that.
Great bulletin board here guys. No arguing and just informative

[thelongandtheshortandthetall] 27/1/2022 16:05

Sureserve Group says it is positioned for organic growth in 2022 as strong momentum continues

^^Enjoy

[knowhow77] 27/1/2022 15:39

Despite all these great numbers and recent figures the share price is still 14p down from pre results announcement
Seems to struggle to hold on or push on decisively!!

[rivaldo] 27/1/2022 15:05

Cheers igoe104.

They state consensus forecasts of 8.13p EPS to this September and 8.7p EPS next year. That's cheap enough, but there will almost certainly be more acquisitions from their £16.5m cash pile:

"Sureserve trades on an unchallenging 11.3x FY22(cons) PE, and 8.3x EV/EBITDA, which means we still think the shares are undervalued"

"Outlook

The outlook is underpinned by a large proportion of long-term contracts and frameworks in the mix, “blue chip” local authority clients, and growing trends towards use of regulatory services. Management is “confident for the year ahead”, and is “well positioned for further organic growth in a fragmented market”. Whilst
not quantified here, the opportunity to make acquisitions was once again re-iterated.

Sureserve is participating in 81 frameworks totalling £346.5m, and encouragingly, FY22 trading has had a strong start. 73% of expected FY22 revenue is covered by the order book, which is currently worth £527.1m, up from £335.8m at the start of FY21 and £333.2m at the start of FY20"

[igoe104] 27/1/2022 11:59

New note from capital access group.

[knowhow77] 27/1/2022 10:11

I agree disappointed with the no dividend statement could have soften the blow with news of an acquisition in the pipeline!! Let’s hope it’s not too far off and a decent one when they do

[igoe104] 27/1/2022 09:49

I personally don't mind missing a one off dividend payment, as long as the money is needed for a exceptional great value acquisition / s, that will take the company forward. Medium term there is no reason why they can't do both, like RNWH do...

[angersharkz] 27/1/2022 09:25

Marktime1231 - I understand your viewpoint.

Initially I was disappointed to read that the dividend had been revoked this year, especially given the improved performance and a dividend paying company is always more attractive to an investor than a non paying one. However, given were the company is at in terms of strategy and growth I understand why they have done so…..but like you say it would be prudent to know exactly where and how this cash will be used as a shareholder.

I think SUR is a very solid business and lots of growth potential but my only complaint really is the poor investor relations. I’ve mentioned this in the past, they can sometimes go 6-7 months without updating investors on progress, which makes people nervous, myself included.

They often win big contracts that I often only find when someone within this chat presents it, they could print these contract wins as RNS but often they go under the radar.

[marktime1231] 26/1/2022 16:40

Expansion of the business, even organically, will be capital intensive. I can imagine the board were looking at average net cash / debt, where it could swing to as business booms, rising interest rates, and as you suggest there may be acquisition targets in view. Why we are having to fill in the blanks with guesswork is another matter.

With the reported improvement in eps we should have been rewarded with a dividend improvement, not a vanishing trick. Inexperience or poorly advised not to have addressed this head-on in the prelims. It will have put off investors interested in steady revenues and profit distribution. Nevetheless this is a remarkable turnaround from the depths of Lakehouse dirty dealings.

[stemis] 26/1/2022 12:08

That's quite a war chest that Surserve will be building if Shore's forecast of £32m cash by 2023 (in the absence, presumably, of acquisitions) is correct

[angersharkz] 26/1/2022 09:18

I think an established, well performing mid or large cap company would be expected to pay shareholders a dividend but I think exceptions can be made for a small cap growing company like SUR.

Having had a bit of time to digest the results I think it’s a shrewd decision by SUR not to pay a dividend this year and focus on growth and M&A. With a healthy net cash position and 73% of FY22 already covered (visible earnings) they are very well positioned to strategise and expand.

Markets do like dividends. But markets also like healthy cash flow and visible future earnings and future earnings potential. Definitely a solid hold for me this one and I’m hoping to add on any dips.

[vfast] 26/1/2022 08:32

Thanks, rivaldo.

Prelim results are excellent and the company is totally focused on a growth strategy now rather than pay dividends.

Although I was looking forward to the dividend I firmly believe that the growth strategy is the way to go and that will compensate many times over for the missed dividends.

I would think that they have already identified companies which will fit in well with their expansion plans.

SUR will be a multi bagger at this share price level over the next 5 years and still pencil in 125p to 150p for 2022 which I believe is not asking too much!

I would expect SUR will attract institutional growth fund managers.

[rivaldo] 26/1/2022 08:31

Good to see Investors Champion are very keen in their AIM market update this morning:



"Sureserve: impressive results

Sureserve (AIM:SUR), which now calls itself a social housing energy services Group, having previously been a compliance energy services group, announced excellent results for the year ending 30 September 2021.

Revenue rose c25% to £244.0m, pre-tax profit was 77% higher at £13.8m and basic earnings per share up similarly to 7.1p.

Operating cash inflow was an impressive £14.1m and the free cash inflow £12m, equating to a free cash flow yield of 8.1% at the current 90p share price and £148m market capitalisation, leaving year-end net cash a highly supportive £16.5m (2020: £9.8m).

Having experienced a near death experience three years ago, Sureserve’s swift recovery in the middle of a pandemic has been nigh on miraculous.

Despite the strong cash flow, we also like the company’s decision not to pay a dividend and conserve cash to invest in growth and acquisitions – if only other AIM companies would do this.

73% of 2022 revenue is covered by the order book, worth £527.1m at the start of the financial year, providing excellent visibility.

Broker forecasts for the financial year ending September 2022 were lifted to pre-tax profits of £16.4m and earnings per share of 8.2p (growth c14%). The 11x current year PE multiple therefore looks very modest (and there don’t appear to be any adjustments in forecasts), although prospective investors would probably like to know more about the make-up and risk in the current order book.

Look out for more 'bolt-on' acquisitions and disposal of non-core operations."