Croma Security Solutions Group - now a buy? From HotStockRockets...

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Shares in Croma Security Solutions Group (CSSG) rose to above a 70p offer price following last month-announced results for its year ended 30th June 2023. The shares have now though settled down to a £9.6 million market capitalisation and there looks significant upside potential ahead. The group has been listed since 2004 but on 30th June this year sold its Vigilant, manned guarding and reception services, business.

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The significance of this is reflected in the results noting “revenue for the period including Vigilant of £42.83 million… revenues on continuing operations for the period up 38% at £8.03 million”, with the group emphasising its “decision to divest Vigilant and focus on scaling up Croma Locksmiths and Croma Fire & Security was based on our belief that the real growth opportunity lies within these higher margin businesses”. Respectively, those continuing businesses provide such security solutions to commercial and retail customers and electronic security solutions and services and the potential of the strategy was suggested by “like-for-like sales growth on continuing businesses of 21%… EBITDA on continuing businesses of £0.95 million… core businesses are delivering strong organic growth and acquisitions are performing ahead of expectations”.

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The latter is particularly interesting as there is stated further “a number of acquisition opportunities in the pipeline” with considered scope to build out a nationwide presence from a current network of 14 “security centres”. There is then also a balance sheet which showed cash of £2.1 million and inventories of £1.1 million more than covering total liabilities of £2.6 million before considering receivables. These totalled £3.6 million “current” and £3.1 million “non-current” – particularly with the Vigilant sale having also included loan notes and redeemable shares totalling £5.4 million to be settled over the next 3 years.

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There is obvious risk here and with the now expansion strategy, but the valuation looks undemanding and the growth performance last year is noted to have been delivered “in spite of the time and energy devoted by management to secure the disposal of Vigilant”. As such now, at up to 75p, targeting above 100p as trading and the new strategy further progress, Buy.

This article first appeared on HotStockRockets – for a new hot share tip from the HotStockRockets team JUST OUT THIS AFTERNOON for just £6.06 click HERE

Filed under: Croma Security Solutions, Artisanal Spirits, Landore Resources, Westminster Group, HotStockRockets

2023-12-08 13:45:44

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