Pendragon (LON:PDG) – Yet Another Bid Offer
On Friday I stated that not all bid approaches win through.
Just such an interesting example is when one looks at the feeding frenzy now surrounding this motor sales business.
Pendragon operates through three segments: UK Motor, Software, and Leasing segments.
Its UK Motor segment includes sale and servicing of vehicles in the UK; the Software segment includes Licencing of Software as a Service to global automotive business users; and the Leasing segment includes provision of fleet and contract hire.
The company sells new and used motor cars, motorbikes, trucks, and vans, as well as offers associated aftersales activities of service, body repair, and parts sales.
It also operates carstore.com, an online marketplace for used cars; and distributes aftermarket parts, accessories, and workshop consumables under the Quickco brand.
In addition, the company provides cloud-based dealer management systems through Pinewood; and Licence Link, an online license checking tool for fleets, as well as hires and leases cars and vans to small, medium, and large fleets under the Pendragon Vehicle Management brand, and retails vehicles under the Evans Halshaw and Stratstone brand names.
Well, it does seem that Anders Hedin, this car sales and software group’s biggest shareholder with 27.6% of the equity, is not looking to give up in his quest of taking control of the business.
Just a week ago the US-based Lithia Motors Group offered to buy out the UK motor sales and leasing operations, while also investing fresh money into the company as well as contracting to use its Pinewood Technologies software systems in the States.
That deal valued the shares at 27.4p each.
However, Hedin, who had unsuccessfully tried to buy the group offering 29p a share last year, came swiftly in with a 28p per share cash conditional bid, which was swiftly rejected by the Pendragon Board, who only talk for 3.0% of the company’s equity.
So, mid-afternoon on Friday saw Hedin step back into the fray again with a 32p a share cash bid, leaving the £420.5m capitalised group’s shares to close at 30.33p, up 64% on the week.
What will happen now to the Pendragon shares is anybody’s guess while the proposals bounce back and forwards again.
I am very happy that this column identified the ‘undervalue’ to the Nottingham-based motor sales and technology business a few months ago.
The situation may well carry on, with very patient investors winning even more of a gain in due course.
However, with such a clear profit within grasp, I would take the market’s money and immediately do some deep homework on other situations and then reinvest as fast as possible.
This market is on the move again.
(Profile 05.05.23 @ 18.2p set a Target Price of 22.5p*)
Accrol Group Holdings (LON:ACRL) – Sorted Out And Now Progressing
Tuesday morning sees this group reporting its finals to end April this year, I do not believe that they will be disappointing.
Gradually this group has been getting itself sorted out and at appears to now be progressing at a pace.
The Blackburn-based company is the UK’s leading independent converter and supplier of toilet tissues, kitchen rolls, facial tissues, and wet wipes to many of the UK’s leading discounters and grocery retailers across the UK.
The £90m capitalised group operates from six manufacturing sites, including four in Lancashire, which now supplies around 21.5% (volume) of the UK tissue market, which at retail sales value is valued at £2.5bn.
Of that total some 46% is Branded Product while 54% is Private Label.
The group’s brands include Softy Facial Tissues, Elegance Toilet Tissue and Wipes, Magnum kitchen roll and Little Heroes.
Softy facial tissue is designed for everyday needs and is available in a variety of sizes and styles, including extra-large, compact, anti-bacterial balm and pocket packs.
Elegance is a complete range of toilet tissue. Its product range includes pillow-soft, feather-soft, cloud soft, and fine-to-flush-approved moist toilet tissue wipes.
Its Magnum kitchen roll range includes Super, Ultra, Mighty and Magnum Force.
Little Heroes is a full range of wipes, which includes gentle, sensitive, biodegradable, anti-viral, plus fine to flush toddler toilet training wipes.
The £97.6m capitalised group supplies private label products to a substantial array of top retail companies, including Aldi, Morrisons, Lidl, Tesco Booker, B&M, Poundland, Spar, Sainsburys, Amazon, Dhamecha Cash & Carry, Home Bargains, Boots, Ocado, Unitas, Savers and Superdrug amongst hundreds of others.
As a matter of interest, the group’s retail sales value is broken down about 72.9% in Toilet Tissue, 5.5% Facial Tissue, Wipes 1.3%, Other (Waste) some 0.3% and then Kitchen Towels making up the 20.1% balance.
Around 94% of sales are to the UK, while Europe takes 6.0%.
With some 319m shares in issue, the equity has good professional support.
The larger holders include Lombard Odier Asset Management (Europe) (17.27%), Schroder Investment Management (14.57%), NorthEdge Capital (8.62%), Premier Fund Managers (7.59%), Tellworth Investments (6.60%), Canaccord Genuity Wealth (4.65%), Daniel Wright, Chmn (3.95%), Killik & Co (3.39%), Momentum Global Investment Management (3.32%) and Hargreaves Lansdown Asset Management (3.23%).
The forecast for the year to end April 2023, sees the company jacking up its turnover by 51.6% to £241.8m (£159.5m) with its adjusted pre-tax profits multiplying more than six-fold to £7.0m (£1.1m). That should boost earnings from 0.3p to 1.8p per share.
In a Trading Update in late Spring CEO Gareth Jenkins commented:
“Accrol is significantly well invested and fully automated.
With our enviable customer base, broadening revenue streams, spare capacity and excellent levels of customer service, the Group is very well placed to take further advantage of the changing dynamics in consumer spending, which is particularly evident in the tissue market.
We are pleased with the outcome for FY23 and look forward to the year ahead and beyond with increasing confidence.”
Analysts Rachel Birkett and Mike Allen at Zeus Capital have estimates for the current year to end April 2024 for £230.3m sales, £11.0m profits and 2.6p earnings per share.
Over at Shore Capital analysts Tom Fraine and Clive Black are looking for current year sales to top out at £230.0m, with £11.0m of adjusted pre-tax profits, generating 3.5p in earnings and paying a 0.5p dividend per share.
For the year to end April 2025 they cautiously see £236.9m revenues, £12.8m profits, 3.0p earnings and 0.6p dividend per share.
The consensus Price Objective is 55p a share.
Hopefully tomorrows results and statement will nudge the share price higher again.
It will take a while for it to return to its April 2021 peak of 66p, but at just 30.6p I consider that its shares offer good upside.
(Profile 12.03.19 @ 22p set no Target Price)
Journeo (LON:JNEO) – Interims On Thursday, Still Looking To Double My Target Price!
The news that the Ashby-de-la-Zouch based technology group has won yet another order was well received on Friday, with the group’s shares closing up 7p at 207p, after touching 209.82p.
The company provides solutions to the transport community that captures, processes, and displays essential information to enhance journeys in the UK and mainland Europe.
The company operates in two segments, Fleet Systems and Passenger Systems.
It offers passenger transport infrastructure systems, such as bay, stretched in-shelter, summary, full-colour LED, low-power E-ink, and solar-powered TFT displays, as well as interactive wayfinding totems, air quality sensors, in-shelter closed circuit television (CCTV), and bus station Wi-Fi.
The company also provides fleet operator systems, including automatic passenger counting, CCTV, driver displays, next stop announcement displays, on-board Wi-Fi, camera monitor systems, and telematics and driver behaviour for buses, coaches, and specialist vehicles; and forward facing and saloon CCTV, automatic passenger counting, station information security systems, and train Wi-Fi for rails.
In addition, it offers various passenger systems, including real time information, advertising, and bus station management, as well as real time information displays, stations and interchanges, digital wayfinding, low-power solutions, shelter integration, and accessibility solutions.
In the middle of last week, the group paid £2.5m cash for the Danish-based MultiQ systems company, to be used as an excellent springboard for its Nordic expansion.
On Friday morning it revealed a £2m purchase order from a Northern Transport Partnership for its display technologies to be rolled out into an expanding network of transport corridors.
The group will be declaring its Interim Results to end June on Thursday of this week (28th), which should be accompanied by another encouraging trading statement.
I confidently see the shares, at 207p, now edging further ahead to at least double my Target Price.
(Profile 07.04.21 @ 95.5p set a Target Price of 120p*)
(Asterisks * denote that Target Prices have been achieved since Profile publication)