In line with my thoughts of recent, stay well away from momentum stocks at the moment. Go into boring but stocks that can be seen to generate an increase in earnings. Ive been with this a few weeks and think a few may have picked up on that. Now breaking out and looking for further earnings enhancing Acquisitions.

Its a top notch architect company and not over exposed to the housing market. Has top management and is derd cheap on fundies, more to come on that . Any views appreciated, good or bad but I feel we could be onto a winner here.

Just look at this report from a tip sheet, all things checked out and OK........

Lifted this from another board..........

SMC stacks up - STRONG BUY
Companies: SMC
27/09/2005

Architecture and design group SMC, which works on major office, retail and residential projects in the UK, Eire and Europe, joined AIM via a 4.6 million placing in June with ambitions to consolidate this fragmented industry. Founder and chief executive Stewart McColl hopes that by creating a larger outfit, his company will be able to win bigger projects producing higher margins.

McColl founded SMC in 1996 and has delivered appetising organic growth in recent years by offering national coverage. This has allowed the group access to substantial and more profitable construction projects across a range of sectors and locations. Clients now include British Land, Canary Wharf Group, Morgan Stanley and Wm Morrison, amongst others.

We have already got the 100 million projects, explains McColl, but there is another step-change in scale to come that will allow us access to projects worth 200 million, 300 million, 400 million and even 500 million. Increased scale pays off because larger projects are higher margin, with higher fee levels and longer timescales, helping SMC plan staff requirements more accurately.

Last November, ahead of the AIM float, SMC appointed ex-Wembley stalwart Sir Rodney Walker, who has brought recent AIM success stories like Goals Soccer Centres and Spice Holdings to market, as non-executive chairman. His presence and contacts have boosted the groups cachet and, following the AIM listing, McColl is also keen to boost scale through acquisitions.

Shortly after the float, SMC completed the two acquisitions mooted in the prospectus Corstorphine & Wright Hills Erwin, a Manchester
and Lancaster-based commercial architecture specialist, and Philip Lees & Associates, an outfit based in Leeds city centre, with a bumper proportion of revenues wrought from repeat business.

We are one of the few consolidators that I know of in this market, adds McColl, and now that we are on AIM, we are after acquisitions that are far more significant in size.

SMC recently cheered followers with an update on new deals. Among a plethora of 100 million-plus projects was work on new headquarters for Deeley Properties in Coventry, Sports Centres for Warwick County Council as well as developments for Pillar Properties and Canary Wharf.

Overseas work included manufacturing and office units in Slovenia, as well as a 290-bed InterContinental Hotel in Pakistan. There was also news of planning consent for a 50 million British Land office campus at Coventry.

2004 was exceedingly strong for SMC, with turnover lifted by 43 per cent to 8.1 million and pre-tax profits sparking up from 100,000 to 1.1 million. Gross margins were a healthy 50 per cent.

More recently, SMC unveiled extremely strong maiden interims to June, sending the shares sharply higher to 70.5p. These revealed a 255 per cent profits jump to 1.1 million on a 47 per cent leap in sales to 5.4 million. McColl was particularly pleased with the 260 per cent vault in earnings per share and a 140 per cent surge at the EBITDA level to 1.45 million, especially since we only had 20 days worth of revenues from the two acquisitions completed at float in the numbers.

He says subsidiaries are already enjoying larger scale project wins as part of the larger AIM group. 'We are looking at a few businesses that we might acquire, and as the business grows bigger, we'll be more equipped to handle PPP and PFI projects'.

Analysts envisage further profits improvement this year to 2.9 million, with sales climbing to 12.8 million. On those numbers, earnings of 7.1p leave the stock trading on an undemanding multiple of 9.9. We believe SMC offers high earnings visibility as well as tasty levels of repeat business, and we are strong buyers.ENDS.

Worth doing your own research if you are interested.


DYOR

cheers GF.

What figures are you expecting goldfinger ?

Much much further to go here. Trades on a lowly prospective P/E of only 12.5 (2006) dropping to 11.7 the following year to end of december. PEG of only 0.2 to 31st december 2006.

THIS IS A STEAL.

Excelent news this morning............

SMC wins 5 mln stg 'Building Schools for Future' contract
AFX


LONDON (AFX) - SMC Group PLC, the architects, said it has been appointed to The Miller Consortium, which has been selected by Leicester City Council as the preferred bidder for the city's 235 mln stg 'Building Schools for the Future' scheme.

SMC said the contract involves work on 15 schools over a period of six years and is worth around 5 mln stg in stage fees for the company.

Work is due to start in 2007 at the four schools in phase one of the programme, while the remaining 11 schools will be delivered in a further three phases over the following six years.



newsdesk@afxnews.com

ak

Latest broker update..........http://www.equitygrowth.co.uk/reports/EGRSMCGroup-07Sept06.pdf

Another apparantly well thought out acquisition(s) swoop by SMC establishing SMC Scotland - This really does appear to be a well run and structured business that is on the way to achieving its mid / long term goals. Broker target price of 1.79 seems in sight again.

Yup excelent news. I said this one was a steal a few weeks back. Those Broker figures look very conservative to me.

Agree with you there GF...........one only has to go on the website to be impressed by the quality and depth of this organisation......also just had the latest financial communication as a shareholder........written in a very open style IMHO. Interesting to look back at your post of nearly exactly a year ago and SMc's vision for future growth...12 months on seems to be progressing nicely. What is your view on shareprice growth potential / timescales????

Regards

AUGUSTMAN

Hi AM,

I think the Brokers target will be beaten in the short term and Im now awaiting the inevitable upgrade from the house broker and tip sheets.

Lets see what they have to say.

Cheers GF.

Hardmans are very quick out of the blocks AM......

Update from Hardman & Co :

2006E Sales 34.7m Adj eps 11.0p
2007E Sales 55.4m Adj eps 17.8p

Their thoughts on the gearing / equity fundraising issue :

Initially the five acquisitions are to be funded through SMCs current bankers, the Bank of Scotland. In our note of 31 August we highlighted that at the half year SMCs gearing level was 77% and that this appeared on the high side. Under our then forecasts we assumed a full year 2006 gearing ratio of 64% - the company itself has stated that it has a target gearing ratio of 50%.

Following this latest spending spree SMCs gearing level will be close to 85%. Interest cover at the end of the 2006 financial year, is however, estimated to be a healthy 9.0x. We suggest, however, that given SMCs stated gearing target of 50% and the likelihood that the company will pursue further acquisitions in the future, there is a high chance that SMC will seek to raise further equity capital in order to fund its continued expansion.

We estimate that in order for SMC to return its gearing ratio to a level at which both itself and its bankers will be comfortable, and to allow some flexibility for further growth, that SMC will need to raise in the order of 6.0m to 7.0m via en equity issue.

At SMCs current share price of 152p the company would need to issue a maximum
additional 4.8m shares and we have assumed that this is the case in our financial forecasts.

And to conclude :

Whether these acquisitions are ultimately debt or equity funded our valuation range for SMC is considerably greater than the current share price of 152p per share. We believe that a value of 230p per share is fair.
NICE.

excellent post GF thanks

AM

And the rise continues.

Yes - onwards and upwards - interesting reading your original post - exactly why I got in in the first place - had made some serious wonga with DFD / COH / HVX and just fancied a bit more of a steady eddie in the portfolio - merry christmas - i hope!!!

I'm still holding these, cannot see that they can get away without a placing but earnings enhancing acquisitions and pretty cheap at that.

I like Hardmans fair value price.

capa

Nice to hear from you again Capa.

Great to see you in here.

I hope your going to be around a lot more going up to xmas.

cheers GF.

Cheers goldfinger,

Over the last couple of months I have done a bit of tidying up of my portfolio and have basically 8 long term holds which I add to on any weakness. SMC is obviously one of them, RNWH another, which I believe you also hold, so may see you on that thread in the next few weeks or so.

capa

Looks like someones picked a few up early on - a nice 5p tick up

Cheers capa yes indeed I still hold Rnwh.

SMC motoring away again as you say AM.

smc on the rise again - after that broker note this boy detects some more institutional interest / or a substantial purchase order - the MM's are reacting quickly to purchases and clicking up and down on small orders. A nice rise early today, and I detect some strucutred buying going on - a 50,000 sale just gone through - follow the buys!!!!! IMHO of course

AM

Going great guns.

Hi all, is there a target price for SMC? Looks like it is not too late to join in... any commend is greatly appreciated!!! swseun