13.01.2025
Last Thursday morning, 9th January, this UK housing solutions provider issued a Business Update covering the year to end-December 2024.
Its Trading Update on Friday 1st November highlighted that trading had remained strong in the period since its Interim Results.
Operating margins in the core housing activities continued to strengthen, and volumes in management-led activities had reduced at a slower rate than previously anticipated.
The company reported that since that time, those trends have continued, and the Board now expects results to be marginally ahead of current market expectations for FY24 and is increasingly confident of delivering against market expectations for FY25.
Mears focusses upon long-term outcomes for people rather than short-term solutions and it invests in innovations that have a positive impact on people’s quality of life and on their communities’ social, economic, and environmental wellbeing.
Currently employing over 5,000 people and providing services in every region of the UK, the group is a leading provider of services to the Housing sector, providing a range of services to individuals within their homes.
The group manages and maintains around 450,000 homes across the UK and works predominantly with Central Government and Local Government, typically through long-term contracts.
Importantly it equally considers the residents of the homes that it manages and maintains to be our customers, taking pride in achieving high levels of customer satisfaction.
In partnership with its Housing clients, it provides property management and maintenance services.
CEO Lucas Critchley stated that:
"The Group continues to deliver against its clearly defined strategy, and it is particularly pleasing to see how our enhanced operational and commercial focus is driving improvements to the underlying business, as evidenced in service quality, compliance, and stronger operating margins.
The robust period of contract retention evidences the strength of our market position. The progress made across all parts of the Group through 2024, as reflected throughout this statement, is expected to continue into 2025.
The Group remains well-positioned to benefit from continued opportunities in its core markets."
The current consensus of analyst forecasts for FY24, prior to that announcement, were for revenues of £1,126m and adjusted pre-tax profits of £60.9m.
Market expectations for the current year to end-December 2025 are for revenues and adjusted profit before tax of £982m and £44.7m respectively.
Analyst Adrian Kearsey at Panmure Liberum has a Buy note out on the company, with a Target Price of 499p.
I have followed this company, almost from its earliest days on the market in 1996, when its shares were just 10p.
In March 2014 they hit 525p, they dipped to 375p later that year, before three years later touching 533p, then easing way back in price to 101p in October 2020.
Since that Covid year bottom, they have shown strong recovery, hitting 398p in May last year, before falling back to 322p in late October.
Last Thursday, on the back of the Update they peaked at 379p, before closing the week at 368.50p, valuing the whole group at almost £330m.
I now consider that the group’s shares are ready to break back above last year’s 398p High and leave the 400p level way behind, while not ruling out the possibility of a major Private Equity bidder showing up in the equity.
The group’s Final Results for 2024 are due to be announced in early April.
(Profile 21.06.23 @ 285p set a target Price of 320p*)
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