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.

http://www.armshare.com/assets/contributordocs/SMC_February_2007.pdf

A couple of AFN posts, to be taken with a pinch of salt, or maybe not........ DYOR !


BIGBOBJOYLOVE - 6 Mar'07 - 15:01 - 4563 of 4573
after a very informative and pleasant phone call i have just purchased another 5 grands worth, from the vibes of the conversation i rather suspect the directors would love to buy 'down here'.


tonystringy - 6 Mar'07 - 18:52 - 4567 of 4573
Not today!
Just doing a spot of bottom fishing exploration for when the markets finally settle down and I have to say that so far SMC are looking pretty good!
Directors adding more than just a piddly few shares at a higher sp than here, and an institution increasing exposure at a slightly higher level. No institutional off-loading so far.
-A favourable PE....
Will have to watch closely.


BIGBOBJOYLOVE - 7 Mar'07 - 09:06 - 4572 of 4573
compared to the likes of ROK u see what a bargain you're getting, from the conversation i had, expect some serious director buying on results day.

Nice to see it moving.

L2 is all blue and 3 v 1 @ 100/102 (only NUMIS on the offer)


On Line Limits :

BUY 10K @ 101.49p

SELL 10K @ 100.6p

The main thing for me is that Numis was off of the offer from around midday today. They have been on the offer for a long time on the drop and afterwards, so them moving to the bid was a very positive signal.

This should mean the seller is clear, and the price will now respond to buys. The seller has twice caused an attempted bounce to fail, now we see Numis off of the offer, this bounce hopefully should prove the one that moves us back to nearer where the directors purchased on the way down, which is around 135p levels.

If, as has been said, the directors are very disappointed at the market response and thing the price is way oversold, then hopefully we will have some action on their behalf once they have released results, nothing they can do until then as its closed period.

Chart Breakouts looking for 130p short term.

http://www.chart-breakouts.co.uk/latest%20trades.htm

Going above 110p would be a breakout, so a key thing to watch for imo, could be a surge point.

Excellent news, and Laing are doing the Olympic work as well I do believe :)


http://www.investegate.co.uk/Article.aspx?id=200703080701155594S


SMC Group Plc
08 March 2007

SMC Group Plc
('SMC' or the 'group')

Architectural framework agreement

SMC Group Plc, the architects and design business, is pleased to announce that
it has signed a framework agreement with construction giant, Laing O'Rourke
(LOR), under which SMC will provide architectural services for LOR projects
within the terms of their highly respected 'Building Constructive Relationships'
(BCR) programme. The SMC Group of companies' national reach, range of skill base
and resource were key factors in their selection to the framework.

Laing O'Rourke devised the BCR framework as part of their drive to challenge and
change the construction industry to achieve a dramatic improvement in
performance. The company spends circa 75m annually on consultant's fees within
the framework, some 60% of which is allocated for architecture services. While
the precise financial benefits to SMC cannot yet be quantified, there is a
commitment from both LOR and SMC to the collaborative process which should lead
to work on a number of substantial projects.

The appointment of SMC as a strategic design partner to LOR is for a 5 year
period extending through to 2012.

SMC Executive Deputy Chairman Stewart McColl commented, 'We are delighted with
this decision by Laing O'Rourke which will put in place a solid platform for us
to work on future projects together. Laing O'Rourke has worked successfully with
several of the SMC companies in the past and this is a reflection of how we can
collaborate further.'

More info on Laing :

http://www.laingorourke.com/communities.htm

L2 now 2 v 1 @ 110/113 (KBC and WINS bidding and only Shore offering)

Get Shore off of the offer, and a real breakout might happen...you never know.

I'm continuing to nibble at SMC, mine was the 8K buy @ 113.8 this morning. Looking very promising, though I'll be happier if this breaks thro' the 65 & 130 dma's as that would indicate to me that the gloom has lifted and if so I may pile in.
PpP: Good to see you on this thread, I look forward to your high quality research.
sd.

Hi squidd, things are looking good chartwise for some good moves up here.

The director buys at 135p make sense now, it would have been roughly the last time to buy before not only closed period, but also confirmation of this Laing deal. Can see them buying again on results day....todays news is very good.

L2 sat at 2 v 2 @ 112/115 with WINS/SCAP on the bid and JEFF/NUMS on the offer.

http://www.chart-breakouts.co.uk/latest%20trades.htm

Updated commentary on SMC today.

"News of what looks to be a very significant deal with construction giant Laing O'Rourke has certainly sparked interest in one of our recent trades SMC. Although financial details have not been released it can be assumed this is quite a deal given Laings involvement in the construction of the Olympic venues. This certainly has got the shares going back in the right direction although they are only slightly above the price they were before the market plunge last week so there may well be alot more upside to come. Some large buys have gone in today including a buy of 45000 @ 115p"

For what it's worth, think I'll wait til management proves its trustworthiness before I dive in. At the moment, the jury's still out.

Latest Broker Forecasts are :

Edison 06-02-07
2006 PTP 5.10m
2006 EPS 7.90p
2006 DIV 1.20p

2007 PTP 8.00m
2007 EPS 10.90p
2007 DIV 1.40p


Numis 12-02-07
2006 PTP 5.12m
2006 EPS 8.10p
2006 DIV 1.20p

2007 PTP 8.05m
2007 EPS 10.70p
2007 DIV 1.50p


Hardman & Co 12-02-07
2006 PTP 5.1m
2006 EPS 7.90p
2006 DIV 1.20p

2007 PTP 8.00m
2007 EPS 10.90p
2007 DIV 1.40p

I see Investors' Chronicle is backing a wait-and-see approach to SMC - with good reason. After their voracious acquisition spree ("too fast, too soon"), management simply lost control, with departments playing fast 'n' loose with figures in a bid to achieve targets. To dismiss SMC's subsequent dire profit warning as a mere accounting exercise is being charitable, to say the least. Admittedly, since the sp crash there has been a shake-up and, no doubt, a few raps over knuckles in the tastefully appointed boardroom. But I think to invest now, without any official figures or results to go on, would be a little foolhardy.

It was only reference to WIP (Work In Progress) and how that was accounted for, and it was a conscious decisiion by the management to make everything more robust.

The new forecasts are now there, and these do not take into account the latest LOR news of yesterday.

I would say take a speculative punt now, and on results day if things look good, buy a load more, as I am sure the directors will have their funds ready to snap up the bargain price on offer now. Thats what I am doing.

All IMO.

Added a few this morning :)

http://www.bdonline.co.uk/story.asp?sectioncode=426&storycode=3083242&c=1

"Laing ORourke agrees five years

16 March 2007

The SMC Group has hailed a new five-year new framework agreement with contractor Laing ORourke.

The deal, which relates to Laings Building Constructive Relationships programme, cannot yet be measured in financial terms, but should lead to work on a number of large projects.

Laing spends 75 million a year on consultants fees within the framework, 60% of which is spent on architectural services.

SMC deputy chairman Stewart McColl said: We are delighted with this decision by Laing ORourke which will put in place a solid platform for us to work on future projects together."

My thoughts:

If LOR are spending 75m and 60% are architects fees that is 45m

Lets assume only 25% go to SMC, which is 11.25m revenue

Assume 10% margin, which should be conservative given not all operating costs would be incremental with the revenue. That is 1.125m additional profit in 2007, which does not appear to be factored into the recent brokers forecasts.

Assume 3 quarters of the 1.125m hits the books in 2007 as we are 1 quarter through the year, which is 844k, or 0.018 eps (45800000 shares in issue)

Forecast eps for 2007 is currently 0.11, and with the 0.018 added is 0.13 eps


At 110p, and 2006 forecast eps of 0.08 the business is on a PE of 14


Apply the PE of 14 to the new eps of 0.13 and you have 182p

UPSIDE OF 72P OR 65%

If the work allocation increases from 25% to 35% projected price is 190p

At 45% is 200p

At 55% is 211p

Looks good to me.

Weakness to be expected up to today, must be a lot of spread bets set up earlier at higher levels that are now due to close out or rollover.

Roll on next week :) and results.........fingers crossed all is well :)

Results next Thursday (29th of March). Worth watching for a fast move (hopefully upwards with no bad news).

A good post on AFN :



NJP - 22 Mar'07 - 12:19 - 4842 of 4842


Their 'accounting problems' haven't come about through the usual route of shoring up years of underperformance by cooking the books. There aren't any fictitious assets or 'black holes' here. It's actually very easy to see what's happened. They did a load of acquisitions last year before their new FD had built his team and established his controls.

Not a lot to go wrong here. Team has been established and taking central control over the financial ops of a group of architectural practices is straightforward stuff. There is, however, one big number (WIP) which involves a lot of subjectivity and, if you get it wrong (or, as in this case, have a load of different firms with differing approaches and a variable calibre of accountants) you're faced with potentially a large 'one-off' adjustment to get everything into line. That's exactly what's happened here.

In addition, we've had E&Y poring over the books to mastermind this exercise. Now, with their reputation on the line, they're going to make sure that there aren't any other large skeletons in the cupboards. We've also had an additional statement from them that they endorse SMC's strategy of growth by acquisition.

And, furthermore, we've had significant director buying post the announcement some 30% higher than here. Plus, of course, the recent tie-up with Laing.

I'm really not sure what extra assurance investors need.