Sureserve Group

LN: SUR

£46.9m market cap

29.5p last close

Sureserve Group (previously Lakehouse) is engaged in asset and energy support services, focused on customers in the outsourced public and regulated services sectors in the UK. The group comprises two divisions: compliance and energy services.

Investment summary

Sureserve continues to demonstrate it has a de-risked business and the ability to deliver growth and cash generation from its two core divisions. The recent announcements affirming end FY19 net-debt of £7.6m, FY19 earnings guidance to meet expectations and the pay down of the revolving credit facility all provide comfort that the more focused group is performing well. Our previous earnings were marginally below consensus and we are raising FY19 and FY20 PBT estimates from £7.7m and £8.3m to £8.1m and £8.6m, respectively. The valuation at 7.2x current year earnings suggests the market still has to reprice the lower risk to earnings and start to differentiate the attractive gas compliance and energy services operations from the more out of favour construction services sector.

Y/E Sep
Revenue (£m)
EBITDA (£m)
PBT (£m)
EPS (p)
P/E (x)
P/CF (x)
2017A 181.5 9.0 5.4 2.8 10.5 N/A
2018A 190.8 9.2 6.6 3.4 8.7 N/A
2019E 205.2 10.4 8.1 4.2 7.0 N/A
2020E 215.6 10.7 8.6 4.4 6.7 N/A
Industry outlook

Growing corporate and government awareness around safety and energy efficiency create an attractive backdrop to Sureserve’s compliance and energy services business, where strong regulatory drivers have the potential to deliver substantial medium-term EBITA growth. The management team appointed in July 2016 to reverse the decline in performance is taking bold decisions.

Last updated on 13/11/2019
Sector
Industrials
Share price graph
Balance sheet
Forecast net debt (£m) 7.6
Forecast gearing ratio (%) 18
Price performance
%
1m
3m
12m
Actual 5.4 3.5 (4.8)
Relative* 3.9 1.3 (9.0)
52-week high/low 33.2p/20.0p
*% relative to local index
Key management
Peter Smith CFO
Robert Holt Executive Chairman