Good morning, it's Paul & Jack here with the SCVR for Tuesday.

Jack has kindly agreed to take the lead in the morning, to give me a rest. Then I (Paul) will be passed the baton probably around mid-morning, to do the afternoon shift.

Today's report is now finished.


Jack’s section

Bilby (LON:BILB)

Share price: 26.45p (+10.2%)

Shares in issue: 58,721,845

Market cap: £15.5m

Bilby (LON:BILB) provides gas heating and building services in London and the South East. It does a lot of work for housing associations and local authorities - areas driven by government standards and legislation that tend to lead to long-term customer relationships.

Since its IPO in 2015, Bilby has acquired P&R Installation, Purdy Contracts, Spokemead Maintenance and DCB.

For all that though, it’s clearly been a rough ride for shareholders so far if you compare the 2015 IPO share price of 58p to today’s share price of 24p. Shares were closer to 150p at one point before falling dramatically in 2018/19.

It’s a volatile performance and the stock is rightly classified as Highly Speculative, but you can see there has been buying at these levels from value hunters:

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This buying activity has come from private investors, but directors have also been buying in 2020.

Much of the share price drop appears to be a result of getting into ‘severely loss-making’ contracts. Checking out the Financial Summary, we can see that the group made a pretty chunky £8.6m loss in FY19:

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It looks like lumpy, volatile earnings from that EPS Growth line. Couple that with persistently low operating margins (on average just 1.7% over the past six years), then the group’s cheap valuation appears to be justified.

But the StockRanks look promising, jumping by 40 or so points in August and currently suggesting improving Momentum and good Value:

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So a mixed trading record in a lumpy, low margin, contract-driven market but with potentially good upside if management can execute on the turnaround strategy established in 2019.

Half year results for the six months to 30 September

This period obviously includes the first lockdown and so year-on-year comparability is reduced.

Financial highlights include:

  • Revenue -21% to £23m,
  • Gross profit -23% to £6m,
  • Underlying operating profit -27% to…

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