Sectorguard is a rapidly expanding company (huge increases in turnover, profits and net assets) and despite this the share price has stayed around the 2.75p level. The shares are bound to rise (in my opinion) but when? Does anyone have any opinions?

Pretty encouraging note from Seymour Pierce:

Seymour Morning Note - 1st October...
• SectorGuard, the manned guarding security services company, has provided a trading update relating to its September year end. We see this business as one of the more interesting young support services companies. It is entrepreneurially driven and has the opportunity through a combination of organic and acquisitive growth to develop a meaningful support services business in the same way that the likes of Mitie and Mears have done in the past, delivering significant shareholder value on the way.
• We are initiating coverage and introducing numbers on the back of an upbeat statement. Whilst comments on the wider security market from the likes of Securicor have indicated a mixed performance, SectorGuard is benefiting from a pure focus on manned guarding, keyholding and mobile patrols. It has positioned itself at the premium service, quality end of the market, not necessarily offering the lowest prices. The company is at a point where it has reached initial critical mass and can drive growth by adding contracts without needing to significantly add to the management and central overhead structure; in other words economies of scale are, at present, very favourable.
• Whilst SectorGuard has been acquisitive - over the last year buying four operations - it normally buys the contract book of its target rather than the company itself. To this extent the acquisition growth path is relatively low risk. Integration still has to occur, but the customer and the guarding staff are secured. By using deferred payments based upon work retention, the risk of overpaying is further minimised. SectorGuard typically pays 1 x gross profit for what are normally 1 year rolling contracts. On the assumption that small additional overhead is required as new regions are developed - regional/area management for example - we estimate this means the group is paying a PER of between 2 and 3 for the acquired business. In a fragmented market this strategy provides good opportunity for growth and is an effective value driver.
• The strategy then requires central management to ensure that contracts are renewed and incremental business is won. In this regard SectorGuard is building out geographically from its London and Home Counties origin, and sectorally. The statement indicates particular success in the education sector, adding the likes of Birkbeck College, Brunel University, UCL and Henley College to its client list this year. With around 700 staff, industry surveys suggest that SectorGuard is in the Top 25 by turnover in UK manned guarding - which indicates how fragmented the sector is.
• For the September 2003 year we are expecting approximately a 50% increase in revenues and profits, however, there is a small (5%) dip in EPS. This arises because the group floated half way through the previous year, therefore this is the first full year of new equity. Secondly, most of the acquisitions benefited only the second six months of the year.
• Going forward, we are being conservative in our assumptions in that our 2004 figures reflect a 1% decrease in operating margins as the business takes on board additional costs common across the sector - including for example additional National Insurance and professional indemnity costs. In addition, we have not yet built in any acquisitions, although the statement indicates that three sets of negotiations are currently in progress.
• However, the contracts currently in place should produce in excess of 10% EPS growth, and positive operating cash flow. We expect net debt at the end of September 2003 to be around 600,000 with interest cover for the year of over 10x.
• Although still a small business in stock market terms, we suggest that the current valuation for SectorGuard is not at all demanding. We have over time seen many developing support service businesses which have commanded significant premiums to the wider sector, principally justified by the value drivers relating to economies of scale. We note that a private manned guarding business, Trident, with profits similar to Sectorguard's, was bought by Mitie earlier this year for an exit PER of 15x. With Sectorguard on a forward PER to September 2004 of 8.1 and EV/EBITDA multiple of 5.6, we suggest that there is scope for the price to increase by at least 75% on a one year view. BUY.

Any other views?

Looks a hold for now. Expecting 10p in next few months.

Started moving again but I can not find any new information

Anyone have any ideas please

As in the Daily Mail today. 26/11/2003

Judging by the fancy price Mitie paid for security business Trident Safeguards and Executive Holdings,dealers say Aim quoted manned guarding security services firm SectorGaurd (SGN)
should be changing hands at double the current price of 3.5p.
Seymour Pierce agrees and states that the current valuation is not demanding and there is scope for a re-rating.
On a 12 month view it sees a 75% upside.

Thank you tobyjug.

Having just made a boat load on Victoria plc (still more upside to go) i thought i could afford to have a bit of play, this one looks very interesting, i've never really dabbled on the aim list . are the spreads always so big ??

regards
ramraid

Spreads are big, but the gains can be phenomenal.

SGD is a soundly growing company and Seymour Pearce know it. They reckon the company is ripe to be bought out but would put the price now at 7p (double the current price).

If they are not snapped up then we are looking at some gradual, though sizeable upside.

thanks for the info overgrowth, i see they've been tipped in the mail today. fyi lots of the big winners in victoria tell me they have been buying into vanco aswell, take a look if you get chance.

Will do - cheers ramraid.

Now rising steadily but surely (the best way) - plenty more to come folks.

Prelims on 12th Jan - not long to go.

We should see a very healthy rise from SGD in the next week, given the previous SP buy note.

Posted by Cockneyron on ADVFN from watshot.

SectorGuard - a little 'penny stock' with big potential

Next Tuesday David Marks, boss of SectorGuard (SGD) *, the AIM listed specialist manned security providers, will be announcing his group's final results for the year to end September 2003. We already know that they will be good because Marks informed his shareholders just that in a Trading Update issued on 1st October last year.

Since then his Group's shares have risen in price from 30% to 4.125p. On the face of it you might think that we have missed the boat - however I say think again. Operating as it does in the highly rated support services sector this group's shares should be trading on between 15 to 18 times historic earnings, giving it a 5.5p to 6.5p price range. Ahead of next week's results and accompanying statement I reckon that the shares look undervalued and are worth buying.

David Marks founded SectorGuard in 1998 to satisfy the growing market demand for a security service provider that placed equal emphasis on security and service. As a Chartered Accountant with a successful track record in the facilities management sector, David sought to bring a high level of professionalism to all aspects of the business in this highly fragmented area.

Since 1998 the business has expanded steadily through organic growth and by following a careful acquisition programme. Today it employs in excess of 700 security officers at a number of sites throughout the UK. The Group works on long term contracts for some of the largest companies in the country, as well as many local authorities and educational establishments, often at multiple sites. It prides itself on building long-term relationships mainly through a stable, highly trained and reliable workforce and a very pro-active approach to client liaison.

In March 2002 the Group's shares were floated on AIM, raising 570,000 and valuing the business at 2.7 million. Subsequently it has completed a number of acquisitions which are listed below in chronological order;

June 2002 - the acquisition of the manned guarding, mobile patrol and keyholding contracts of Olympic Security Services

January 2003 - the acquisition of the manned guarding contracts of Gainsborough Events Security Services
March 2003 - the acquisition of the manned guarding contracts of the Southern Division of UK Guarding Services
April 2003 - the acquisition of the manned guarding, mobile patrol and keyholding contracts of London Alliance Contract Services , and in
June 2003 - the acquisition of the manned guarding contracts of First Response Security
SectorGuard has become one of the fastest growing business in its sector, developing strongly through a combination of organic growth complemented by strategic acquisitions. It supplies manned guarding, mobile patrols, key holding, alarm response and electronic security services. Contracts include top names such as Shell International, Canary Wharf Development, Oxford Brookes University, the London Borough of Brent, CGNU and Sun Life.

At the beginning of last October David Marks' group issued a Trading Update relating to the Company's 30th September year-end and highlighting its recent successes and growth strategy.

" The Company has continued its successful strategy of combining organic growth with expansion by acquisition and is enjoying strong trading. The increase in the critical mass of the business as well as the benefits we have derived from economies of scale will be reflected in our year end results, which are expected to be published in January.

SectorGuard has developed particular expertise in the education sector and during the course of the year has added Birkbeck College, Brunel University, Henley College, Henley Management College, The School of Oriental and African Studies and University College London to its client list. Longer-term clients include East Berkshire College, Guildford College and Regents College.

The growth in the education sector is in addition to steady growth, particularly through acquisition, in other industry sectors.

SectorGuard has an extensive client base with a strong presence in London and the Home Counties and has extended its geographical coverage to the Midlands and the South Coast of England. The Company will be looking to build on these operations in the coming year.

Since the beginning of the calendar year, SectorGuard has completed and integrated four acquisitions: the manned guarding contracts of Gainsborough Events & Security Services Limited in January; the London division of UK Guarding Services Ltd in March; the manned guarding business of London Alliance Contract Services Ltd in April; and First Response Security Services Limited in June. It is currently in negotiations with a further three potential acquisition targets.

SectorGuard has extensive cash resources available for both working capital and potentially to finance acquisitions.

In an analysis of the top 50 UK manned guarding businesses, financial analyst Plimsoll Publishing Ltd placed SectorGuard 24th in size and 8th in profitability.

SectorGuard believes its continued success is largely due to the efforts of its staff, which now number in excess of 700, and has continued its investment in staff development and training. The Company believes in the value of all employees being stakeholders in the future of the business, and in March this year made a second distribution of share options to all employees.

The Board looks forward to reporting on its progress in greater detail in this year's financial report."

It is that financial report that I look forward to next week. In an eight- page research note on the Company issued two months ago analyst Alan Matthews at brokers Seymour Pierce initiated his coverage. He concluded that the shares were on an undemanding rating.

"SectorGuard, the manned guarding security services company, has provided a positive trading update regarding its year to 30th September 2003. We see this business as one of the more interesting young support services companies, with an opportunity through a combination of organic and acquisitive growth to develop a meaningful support services business. Economies of scale for the business are very favourable."

Matthews also stated that SectorGuard's market is fragmented with plenty of opportunity to buy businesses, whilst reckoning that the recent acquisitions have provided critical mass and added to the growth profile. His profit estimates, which I table below, help to identify the shares as undervalued and very capable of being swiftly re- rated.

Year to end
September Turnover m Pre-Tax Profit m Earnings Per
Share Estimated PE Ratio
2002 A 7.4 0.6 0.38p 10.85
2003 E 11.5 0.9 0.36p 11.45
2004 E 17.0 1.1 0.40p 10.31

As I stated earlier at 4.125p SectorGuard's shares are undervalued and capable of a significant re-assessment upwards, perhaps next Tuesday's results announcement will attract fresh investor interest and get that process underway. Considering it is still early days in the development of this group it shares really should be valued a lot higher than they are currently.

Taking a one-year view I am confident that SectorGuard shares will outperform the market. Buying today is a cheap way into what should prove to be a real growth story.

Target Price by end 2004 of 7p, Stop Loss at 3p

(FT AIM - market capitalisation 8.5 million - 4 market makers in up to 50,000 shares)

We now seem to have two threads on this one both with the same info!! Lets hope the share price doubles up in the same way.

Sorry janus just went to the first thread in the list.Results out on Monday.

Only had a quick scan but these results look pretty good http://www.uk-wire.com/cgi-bin/articles/200401120700060815U.html

15 Jan'04

SectorGuard (AIM:SGD) 4.5p BUY

Manned guarding is a buzz phrase at the moment, thanks to President Bushs desire to put sky marshals on transatlantic flights, but for SectorGuard, it is business as usual.

Chief executive David Marks remains committed to keeping out of aeroplanes and airports, seeing more sustainable and higher returns elsewhere.

Marks is instead focusing on a three-pronged approach; targeting education, local authorities and residential guarding. In the education sector, his company already lists a string of successes, including contracts with Oxford Brookes University, Birkbeck College, the School of Oriental and African Studies and Henley Management College.

Following three years of negotiation, SectorGuard recently won preferred supplier status to the London Universities Procurement Service, which acts as a buyer for all the colleges within the capital.

SectorGuard now has a standard contract in place for all London colleges, ensuring that the negotiation phase is quicker, and that the company can be in there earning money faster.

Residential guarding, although very much a new idea in this country, has worked well in the US and has transferred to certain parts of the UK with relative ease.

The companys flagship scheme is in Hadley Wood in north London, where residents banded together following a spate of serious attacks. Marks explains that his guards act as on-site protection, working together with local police to ensure residents are safe.

More residents groups are starting to see the benefits of having security guards in the vicinity, and SectorGuard is well-placed to take advantage. Similarly, moves by local authorities to put street wardens on the beat and back up local police are working well in a number of London boroughs, where SectorGuard has existing relationships for building and estate protection.

The company recently released full-year profit figures showing pre-tax profits of 741,621 against half a million last year, together with healthy earnings. Marks made four acquisitions in the year to September, and the companys share capital is now twice the size it was at float. But the market capitalisation has grown from 5 million to 9.5 million.

Further acquisitions are in the pipeline and Marks has mooted the suggestion of a tie-up between SectorGuard and his privately-held SectorAlarm company, of which he and his family own 42%.

SectorAlarm would provide a good fit by providing electronic and CCTV security systems to manned guarding clients and vice versa. Marks has said he will abstain from any such decision, however, given his obvious interest in both companies. Watch this space.

Statistics

BUSINESS: Manned security.

Vital stats:
Market capitalisation: 9.5 million
Historic PE: 13.2
Prospective PE for 2004: 11.88
Prospective PE for 2005: 10.80
No dividend

from share mag

plenty of buyers around check them out and look good value at this level

And the warrants are moving.