Morning Note – 30 November 2023

TClarke - £1.1bn order book and delivery protection measures

TClarke has confirmed it is on track to deliver its three-year growth-plan target of £500m of revenues in 2023E (up from £426m in 2022). It detailed a 99% increase in the order book to £1.1bn alongside a further £1bn in opportunities. Reflecting the current challenges in the construction sector, management has made a number of strategic decisions to preserve the business’s strong market and financial position. These include changing some supply-chain partners mid-contract to protect project comp

Cenkos: TClarke Plc -- Momentum into H2 and beyond

Following the successful placing, todays interims are in-line with expectations, with revenues at a similar level last year (with significant growth forecast for H2) and an improvement in the margin to 2.8%. The group has excellent revenue visibility and is taking strong growth momentum into H2 and beyond, particularly with contract opportunities in the London region. On a FY24E PE of 5.5x, EV/EBITDA of 2.6x and an attractive 5% yield, we believe the valuation significantly underestimates the on

Cenkos: TClarke Plc -- London calling

TClarke has announced an oversubscribed placing to raise £10.7m (gross) at an issue price of 122p. The funds will be deployed to capture and deliver identified contract opportunities in the London region, alongside strengthening the balance sheet. These new contract opportunities are expected to materially enhance profitability, with higher operating margins reflecting the benefits from enhanced economies of scale. On our revised forecasts, the group is trading on a FY24E PE of 6x and an EV/EBIT

Cenkos: TClarke Plc -- A positive update

Today's AGM statement confirms that trading in the early months of 2023 has continued to be strong. TClarke remains highly confident that it will successfully deliver against its growth strategy, with revenues expected to exceed £500m for the first time in the current year. The order book has been strengthened significantly and now stands at £720m (2022: £585m). On current forecasts, the stock trades in a FY23E PE of c7x and an EV/EBITDA of c4x and in our view, this significantly undervalues the

Cenkos: TClarke Plc -- A record year

TClarke announce a record set of results, with revenues up 30%, operating profit and EPS up 31%. Underlining its confidence in the outlook, the total dividend was increased by 10%. The order book increased by 4% to £555m and reflects a number of high-quality projects across a wide range of sectors, providing it with excellent visibility for FY23E. On unchanged forecasts, the stock trades on a FY23E PE of c8x and EV/EBITDA of sub 5x and continue to look undervalued in our view. With strong market

Cenkos: TClarke Plc -- In good order

TClarke released a positive year-end trading statement, with trading in H2 remaining strong and the groups' financial performance in-line with expectations. Putting this growth into perspective, FY22E revenue will have increased by almost £100m (+30%) and EPS by c30% YoY, underlining the continued positive momentum in the business. It is encouraging to note the step-up in the order book to £555m (2021: £534m) and this provides it with excellent visibility going into FY23E. On a FY23E PE of 6.8x

Cenkos: TClarke Plc - Remains well positioned

Today's trading update reveals the ongoing strength in its end markets, underlined by the forward visibility provided by its order book (£545m). The balance sheet remains strong, and this is a key competitive advantage against what remains an uncertain macro backdrop. Despite inflationary pressures, FY22E margins have been maintained at 2.8%, although we take a more cautionary view in FY23E. Whilst headline earnings move down, this should not detract from the continued progress of the business a

Cenkos: TClarke Plc -- Still Sparking and Sparkling

Investors should not underestimate the transformation in this business over the past three years, not one driven by acquisition or new equity or even particularly favourable markets, but by dedication to a strategy that is now delivering benefits across the group. This is now a very investable proposition in the sub-sector; it is a better focussed and managed business, with an improved balance sheet and cash performance and a very sustainable model for continued growth. The stock has outperforme

Cenkos: TClarke Plc -- “Confidently” on track

It would be trite to say that TClarke is simply doing what it says on the strategy tin; these are challenging times across the whole industry and management needs to be on its toes to win work at appropriate rates and to execute maintaining net margins. But once again that is exactly what TClarke is achieving as it progresses inexorably towards its target £500m revenues and 3% operating margin by FY23E. The positive AGM statement certainly confirms our FY22E forecasts and shows further growth in

Cenkos: TClarke Plc - Growth on track

TClarke's 2021 results indicate that it is delivering towards its two key financial targets (£500m revenue and sustainable 3% margin) and on its strategy to improve selected sector penetration and mix whilst expanding its core resources and client offering. The latter goes beyond the simple evidence of a record £534m order book to the core of its in-house engineering skills, fully integrated capabilities and competences at scale such that TClarke is becoming the ‘go to' provider of multi-industr

Cenkos: TClarke Plc - Pre-close FY21 update – Rising Confidence

This morning's trading update box ticks the FY21 outturn but more importantly delivers a confident and powerful message around its target revenue growth to £500m by 2023 (50% plus growth). Critically management is reassuringly positive on its ability to achieve this without prejudice to the quality of physical execution or financial performance, from margins to cash flow. There could yet be positive earnings and cash surprise out to 2023 whilst projected 4.5-5x dividend cover going forwards hold

Cenkos: TClarke Plc - Delivering to target

The trading update confirms that TClarke is on track to meet FY21 expectations signalling a strong recovery from the pandemic-hit 2020 with revenues +47%, H2 margins back at 3%, underlying EPS +50% and net cash of c£5m in the year-end balance sheet. The highlight, in support of its target £500m turnover by 2023, is continued improvement in the order book, currently at £525m (end June £503m) including a record £320m (+25%) secured for a year out. This is not ‘being bought' but comes with a real s

Cenkos: TClarke Plc -- Top line driver

It is important that investors understand the nuances of TClarke's strategic shift, as well as the justifications and consequences that one is beginning to see in the latest results. The internal ‘investment' has been to resource the group operationally and commercially to diversify the sector band-width capability and thus exploit growth markets. This has meant a switch in focus from margin rebuild (to the targeted 3%) towards top-line growth but without jeopardising the desired sustained impro