Marlowe, Team Internet and Volution

Marlowe (LON:MRL) – ‘Hawling’ Ashcroft On Board

Protecting his holding could well be the reason why Lord Michael Ashcroft has taken up the position of Non-Executive Director of this reshaped group.

The company has recently announced the £405m net disposal of certain of its Governance, Risk and Compliance software and services assets, which will leave it with a net cash balance of £220m.

That will enable the group to have sufficient working capital going forward, as well as returning some £150m to its shareholders.

Ashcroft, 78, holds 11,877,361 shares in Marlowe, some 12.3% of its equity, representing the largest individual holding in the company’s 96,778,767 share equity.

Analyst Peter Renton at Cavendish Capital Markets has stated that the disposal crystalises significant value for Marlowe’s shareholders, it simplifies the business and resets the capital structure to support the next stage of growth.

The group’s shares were 20p up on the Ashcroft announcement, closing nearly 4% better at 540p – which is a fair 125p advance since the ‘pivotal moment’ deal was declared on 22^nd February.

Hold very tightly to positions.

(Profile 30.01.20 @ 468p set a Target Price of 550p*)

Team Internet Group (LON:TIG) – Back On The M&A Trail

Just under 500,000 shares still left to be bought back, is my back of the envelope computation – which would take only another week or so before completion.

On Monday morning the global internet company declared its results for its year to end December 2023.

They showed revenues up at $836.9m ($728.2m), adjusted EBITDA was 12% better at $96.4m ($86.0m), generating a 32% improvement in earnings at 23.22c (17.56c) and enabling the ‘hefty’ doubling of the final dividend to 2.0c (1.0c) per share.

Disappointingly, the group’s net debt was 31% higher at $74.1m ($56.6m), which was after several different payments including the $39.7m cash spent by the end of 2023 on share buybacks.

Analysts Bob Liao and Carl Smith are obviously impressed by these record results, stating that in their view –

“The company’s strong track record, cash generation and growth opportunities, both organic and inorganic, are not reflected in its 4.8 times 2024 EV/EBITDA multiple.”

They look for $868.9m revenues this year and $98.3m adjusted EBITDA, taking earnings up to 25.4c per share.

For the 2025 year they see $921.2m revenues, adjusted EBITDA of $104.5m, lifting earnings to 27.3c per share.

Max Hayes a Edison Investment Research is looking for $103.0m adjusted EBITDA this year and $106.1m next year, lifting earnings up to 25.8c then 27.1c respectively.

Following the latest acquisition Hayes, reckons that its benefits combined with continued operationally geared organic growth, could help to drive the stock’s upside.

Apparently, the market was none too impressed with the group’s performance, after hitting a high for the day at 138.71p before knocking the shares down 11.40p to 125.20p, they closed that day at 134.80p, off only 1.60p on the day.

However, yesterday the group came out with the bolt-on acquisition of the Shinez I.O. online marketing business for an initial $42m consideration, being paid for out of cash reserves and revolving credit.

Last night, perhaps hardly reflecting the market’s view of the latest acquisition, the shares closed at 135.40p.

Hold tight, hoping for market stock and share price appreciation.

(Profile 12.07.21 @ 89p set a Target Price of 110p*)

(Profile 17.04.23 @ 123p set a Target Price of 150p)

(Profile 18.01.24 @ 124.60p set a Target Price of 156p)

SigmaRoc (LON:SRC) – Resilient In Challenging Times

Now with a very much heavier market capitalisation of £740m, this group is becoming something of a Construction Materials sector giant.

The lime and limestone group’s results for 2023 reported an 8% growth in revenues to £580.3m (£538.0m) but with a 42% drop in pre-tax profits, bringing about a 60% easing earnings per share to 1.95p (4.89p).

On an underlying results basis the group made a 14% increase in profits to £71.2m (£62.7m), with earnings up 1% to 8.12p (8.0p) per share.

CEO Max Vermorken stated that:

“The strategic initiatives we launched in the year are all now contributing, with the transformational acquisition of European lime assets that creates Europe’s leading lime business completed immediately post year end with the integration of these assets progressing in line with our expectations.

We continue to innovate in our business and are well set up with our enlarged footprint and focus on lime to benefit from long term drivers across the industrial, construction and environmental markets.

The transition to a green economy will drive investment in critical infrastructure, with lime an essential component of every aspect of this investment.

2024 has started well and I look forward to updating the market on what I expect to be another year of progress as Northern Europe’s leading lime operator.”

Analysts Edward Prest and Joe Brent at Liberum Capital have a Buy note out on the shares, looking for 120p in due course.

For the current year to end December they anticipate sales 85% higher at £1.08bn, with profits of £124.8m and earnings of 7.6p per share.

In the last year the group’s shares have been as low as 42.61p and as high as 70.60p, last night they closed at 63.80p.

I am still confident of my latest Target Price, so hold tight.

(Profile 04.09.20 @ 49p set a Target Price of 65p*)

(Profile 26.07.23 @ 62.20p set a Target Price of 80p)

And Finally ….

Volution Group (LON:FAN) – Nordic Buyers Up Stake

I was interested to note that, following last week’s encouraging half-timers from this energy efficient indoor air quality solutions group, that one of Norway’s leading fund management group, ODIN, has stepped up its holding in Volution.

Adding another 10% to its holding on Monday of this week increased its share stake to 8.77m shares, some 4.44% of the FAN equity.

Last Friday analyst Edward Prest at Liberum Capital, was pleased with the interims and upped his Price Objective for the group’s shares from 470p to 510p, looking for the current year to end July to show a 7.3% increase in sales to £352m, with a similar rise in pre-tax profits to £69.9m, lifting earnings to 27.0p (25.8p) per share.

The shares closed last night at 429.20p, off 4.60p on the day.

I see them going a lot higher, possibly before the July Trading Update.

(Profile 23.05.19 @ 174p set a Target Price of 250p*)

(Profile 03.03.23 @ 348p set a Target Price of 400p*)

(Profile 19.07.23 @ 361.20p set a Target Price of 450p*)

(Asterisks * denote that Target Prices have been achieved since Profile publication)