Billington, Zotefoams and Johnson Service
Billington Holdings (LON:BILN) – Fabulous Price Uplift To 600p
What a wonderful price performance that this steel structure products group’s shares have put on in the last two months.
At The 2024 Master Investor Show on 9th March I gave this £73m capitalised group’s equity yet another personal recommendation.
The shares were 390p on 11th March, the first day for dealing after the Show.
In the middle of last month, the company declared a cracking set of results for the year to end December 2023 showing a 53% leap in sales to £132.5m and a 131% jump in pre-tax profits to £13.4m, with its earnings increasing 116% to 84.4p per share and a 113% boost to its dividend to 33p a share.
Those excellent figures saw the shares move up from the then 470p to 565p by the end of last week.
For the current year analyst David Buxton at Cavendish Capital Markets estimates revenues of £124m, profits of £8.5m, earnings at 52.1p and a dividend of 20p per share.
Buxton upped his Price Objective on the shares by 13% from 541p to 610p.
Yesterday they broke upwards to the 600p level, almost hitting his price aim.
As regular readers already know, I continue to be a big fan of this group and its potential, while still considering that its shares are undervalued.
However, after such a fairly rapid price response I would not recommend that investors chase the shares at around the current levels, but instead play a watching hand, looking for typical market dips to buy into much cheaper stock.
They closed last night at 590p.
(Profile 02.04.19 @ 266p set a Target Price of 314.5p*)
(Profile 13.06.22 @ 217.5p set a Target Price of 295p*)
Zotefoams (LON:ZTF) – Heading To 500p
On 21st March I noted in this column that, after its recent results, this cellular materials group is ready for a major uplift over the next year or so.
Less than a month ago the Croydon-based company announced an Exclusivity Agreement with personal protection experts Design Blue Limited, for the joint development of a foam material for high-performance impact protection solutions for the defence and law enforcement sectors.
Yesterday the £209m capitalised group declared a Global Alliance Agreement with Suzhou Shincell New Materials Co., of Suzhou, China.
The two companies, Zotefoams and Shincell, are industry-leading foaming companies with complementary technology and market interests.
CEO David Stirling stated that:
“I am very impressed by Dr Jiang and the technology developed by his Shincell company.
Their goal of environmentally friendly foaming using physical blowing agents aligns perfectly with Zotefoams’ vision and markets.
This alliance is an exciting opportunity to enhance the growth potential of our specialist foams business with sustainable solutions.”
Analyst Caroline de La Soujeole at Singer Capital Markets rates Zotefoam’s shares as a Buy, having set a 500p Price Objective.
For the current year to end December she estimates £141.0m (£126.9m) in sales to lift adjusted pre-tax profits to £14.7m (£13.1m), with earnings of 22.3p (19.1p) and paying out a 7.54p (7.18p) dividend per share.
For 2025 the analyst estimates £149.8m revenues, £20.4m profits, 30.8p earnings and 7.99p per share in dividend.
By the 2026 year she sees £160.3m sales, £22.8m profits, 34.5p earnings and a dividend of 8.47p per share.
The group will be holding its AGM on Wednesday 22nd May, ahead of which we should be seeing the latest Trading Update.
This group’s shares, at just 430p include a minimal valuation for its immense technological lead within its sector, making them look very under-rated and capable of a significant hike.
On 21st March I noted that the shares, then at 351p, should be held on tightly for the inevitable uplift in share price – well they are now on their way higher with that 500p level being an easy task.
(Profile 26.06.19 @ 600p set a Target Price of 750p)
(Profile 06.03.24 @ 330p set a Target Price of 395p*)
Johnson Service Group (LON:JSG) – Looking For Organic And Acquired Growth
This group provides textile rental and related services across the UK and the Republic of Ireland.
The company’s Workwear business is a supplier of workwear and protective wear in the UK, while its HORECA business provides linen services to its hotel, restaurant and catering customers.
At the leading textile services provider’s AGM, at the start of this month, the group commented upon its first quarter’s trading stating that revenue amounted to some £114m (£98m), while organic growth in the same period was 8.9%.
Elsewhere, Celtic Linen – which was acquired in August last year – is said to be performing as expected.
Looking forward, Johnson Service remained encouraged by its medium-term prospects, both in terms of organic growth, and its expansion through a targeted acquisition strategy.
Furthermore, the company stated it was confident that its divisional margins will continue to return to pre-pandemic levels, with an aim of an overall group adjusted operating margin of at least 14.0% being achieved in 2026.
“We are continuing to focus on expanding the Group through targeted investment in our existing sites together with identifying earnings enhancing acquisition opportunities.
We have a strong balance sheet to support these plans.”
The £617m capitalised group saw broker Peel Hunt raise its Price Objective from 154p to 168p for its shares, switching from Add to Buy.
There are some seven analysts who follow the group and they have an average target price of 172.3p on the shares, compared to the 155p at which they were trading last night.
(Profile 24.12.19 @ 196p set a Target Price of 250p)
(Asterisks * denote that Target Prices have been achieved since Profile publication)
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