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Sureserve makes strong start to new year; Peel Hunt ups target price


Sureserve Group Plc (LON:SUR) saw its shares rise on Tuesday as the compliance and energy services group said its performance in the year to the end of September 2020 was ahead of expectations.

In its preliminary results statement, the group added that it has started the current year strongly. The board has proposed a doubling of the dividend to 1p.

Profit before tax from continuing operations in the 12 months to September 30, 2020, leapt 45.9% to £7.8mln from £5.3mln a year earlier, while stripping out exceptional items and the amortisation of acquisition intangibles saw it rise to £9.4mln from £8.3mln the previous year. 

Revenue from continuing operations was down 7.7% to £195.7mln from £212.1mln the year before reflecting the significant impact of the coronavirus (COVID-19) pandemic.

The order book ended the fiscal year with a value of £355.8mln, up from £333.2mln a year earlier.

“We have a solid platform for further growth, underpinned by our continued focus on regulatory-driven sustainable revenues and targeting growth both organically and through acquisition. We have started FY21 strongly and, with 77% of revenues covered by our £355.8m order book, we look forward to the business continuing on this growth trajectory,” said Bob Holt, the chairman of Sureserve in the statement.

“During 2021 we are focusing on making further gains across both Energy Services and Compliance, particularly given our crucial work in helping the UK reach its commitment to create a net-zero carbon economy by 2050. In this vein, it was pleasing that the group reported carbon-neutral operations during FY20. We also remain committed to helping tackling fuel poverty across the UK over the years ahead,” Holt added.

Peel Hunt ups estimates, target price, repeats ‘buy’

In a note to clients, City broker Peel Hunt raised its estimates and target price reiterated a ‘buy’ rating on Sureserve.

Analyst Andrew Nussey said: “Momentum in Compliance remains impressive with EBITA +40% to £11.8m and margins 8.6% vs 6.4% (benefiting from its exposure to essential services and engineer productivity). As expected, Energy Services were impacted by project deferral (lockdown restrictions) with revenues reducing 27% and profits falling to £0.8m (vs £4.3m).

“The outlook is upbeat with an attractive order book of £356m (+7%) – providing 77% FY21E revenue visibility. We increase our September 2021E PBT from £10.4m to £11.7m to give EPS of 6.0p from 5.3p. Trading on 10.3x revised September 2021E, the shares continue to offer value and we increase our target price from 60p to 70p.”

In early morning trade, Sureserve shares were 4.8% higher at 65p.

 — Adds analyst comment, share price —

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