Somero is an American engineering company specialising in laser guided equipment for the accurate laying of concrete floors - an important issue in modern warehouses where very tall forklifts are used, and in many precision engineering buildings, as well as shopping malls, airport concourses, racetracks, runways, etc.. The company has no listing on US stockmarkets but is listed on the Alternative Investment Market (AIM) in London.

Manufacturing facilities are located in Michigan and Executive offices are in Fort Myers, Florida. Products are marketed in Europe, Middle East and Africa, Latin America and Asia through direct sales force, sales representatives and dealers.


Share price already more than trebled in 2012, and again in 2013. But PEG factor still very low.

Shares are eligible for inclusion in SIPPs and ISAs and are spreadbettable.

COMPANY WEBSITE www.somero.com
(select 'Investors' page for company structure)

See also MAJOR SHAREHOLDERS LIST


VIDEO of a Somero machine in use. Tractor unit can traverse a quagmire of wet concrete while leaving a laser controlled dead flat finish - either horizontal or to a precise drainage tilt: video (skip the intro advert)

Stock analysts at Canaccord Genuity lifted their target price on shares of Somero Enterprises (LON:SOM) from GBX 142 ($2.12) to GBX 162 ($2.42) in a report issued on Wednesday. The firm currently has a “buy” rating on the stock. Canaccord Genuity’s price objective indicates a potential upside of 21.35% from the company’s current price.

source

Posted on another bulletin board today by 'penpont'

.. Just picked up on the ST tip from the IC - a bit long but a good overall summary of SOM's potential:

It was hard not to be impressed by the fiscal 2014 results from Aim-traded Somero Enterprises (SOM: 140p), a Florida-headquartered company with a market value of £79m that specialises in the design, assembly, and sale of patented, laser-guided equipment that automates the process of spreading and levelling concrete on commercial floors.
Having set its stall out last year to double turnover to $90m (£60.8m) by 2018, the company increased revenues by nearly a third to $59.3m in 2014, all of which was organic growth, and with gross margins ticking up a couple of percentage points to 54 per cent, and operating costs rising by only 13 per cent, this resulted in a 91 per cent surge in pre-tax profits to $12.4m and a 123 per cent rise in adjusted EPS to 29¢, or 19.5p at current exchange rates. Moreover, with the benefit of a capital-light business model, a high proportion of cash profits of $15m, up two-thirds in the 12-month period, was converted into operating cash flow, so much so that net funds almost doubled to $6.6m, or the equivalent of 8p a share. In turn, this enabled the board to reward shareholders with a 150 per cent hike in the dividend per share to 5.5¢, or 3.7p. The final dividend of 4¢ (2.7p) went ex-dividend this morning. On this basis, the shares offer a 2.7 per cent historic yield, and are rated on a lowly seven times 2014 post-tax earnings.
A solid growth story

Furthermore, it's only reasonable to expect this progress to continue in the years ahead. That's because the company has a strong presence in the all-important North American market - sales in the region increased by almost half last year to account for 63 per cent of the total on the back of robust growth in the construction industry. In fact, non-residential cement consumption exceeded the industry's original forecast of 22 per cent growth in 2014 to end up 30 per cent ahead of 2013. This positive industry backdrop, the introduction of new products - the company spends 2 per cent of its annual revenues on product development with the aim of launching one new product a year - Somero's pricing power, and a shortage of skilled labour for its customers all contributed to the jump in North American sales.

The company has also been benefiting from an increasing presence in China, where sales rose by 44 per cent to $9.5m to account for 16 per cent of Somero's revenues in 2014. This performance was driven by a greater penetration rate in all regions and the broader awareness of US floor flatness standards being issued by the China Flooring Association. The evolution of the Chinese economy towards more logistics, big box retailing, and e-commerce is playing its part too as these trends are boosting demand for the speed and flatness provided by Somero equipment in laying concrete. In addition, higher wage rates are leading to greater automation in this process which increases the value of Somero's equipment. Expect these themes to continue to help Somero raise its market penetration in a country that clearly offers huge growth potential: cement consumption is around 30 times greater in China than in North America. Chinese customers also now have access to finance options when they purchase Somero's equipment which can only help sales.

It's also worth noting that the company sells to concrete contractors for non-residential construction projects in over 92 countries and across every time zone around the globe. Last year, Somero reported growth in seven of the 10 geographic regions it services and that even included Europe where sales rose by a fifth to $3.6m, or 6 per cent of the total. Its Laser Screed® equipment is primarily used in the construction of warehouses, assembly plants, shopping centres, and other commercial construction projects that require extremely flat concrete-slab floors. The client base includes multinational companies such as Costco, Home Depot, B&Q, DaimlerChrysler, the United States Postal Service, and Toys 'R' Us.

The company's assembly operations are based in Michigan, US, and sales and services offices are located in Chesterfield, England; Shanghai, China; and New Delhi, India. Cement consumption in India is three times greater than in North America, so to raise awareness within the industry, Somero has stepped up marketing efforts as well as attending trade shows and giving seminars for engineers and architects. Revenue from the Indian market was $600,000 last year, or 1 per cent of the company's total turnover, but this is from a standing start and the market clearly has huge potential.

Patented technology

It may seem hard to believe, but as the leading manufacturer of laser guided machinery used in horizontal concrete surfaces Somero's patented technology has a near 100 per cent market share. Protected by 56 patents, the company's products achieve a high level of precision in concrete surface flatness at a higher rate of efficiency than conventional methods. It's cost effective too as it results in the highest level of flat-floor precision attainable at less cost to the flooring contractor. The company's vision is for its technology and processes to be used wherever a ready-mix vehicle is discharging concrete for a concrete slab.

Maintaining customer services at the highest level, and offering 24/7 aftersales support, are key to protecting this dominant market position, which explains why Somero's workforce increased from 128 to 165 last year to support the anticipated ramp up in sales. Moreover, this solid infrastructure creates an obvious barrier to entry for new competitors. That's because it would be difficult for a new entrant to replicate Somero's product offering and break into its market by using a lower product price to grab market share as it would also need to invest considerable sums in creating a similar service operation.

In addition, the company's continual investment in capital spend on new products creates another barrier for new entrants as these new products are specifically designed and built to provide maximum productivity and operational efficiency for clients, so in effect Somero already has first-mover advantage with its patented products.



Potential for sustainable growth

Clearly, the construction industry is cyclical, but Somero offers the attractive combination of exposure to pent-up demand in the US for residential construction post the recession - the Portland Cement Association predict that it will take another seven years at least before output peaks there - and non-residential cement consumption which has scope to surpass its 2007 peak over the next decade.

Interestingly, average selling prices of Somero's products have risen as the US economy recovers in previous cycles. Indeed, in the last economic cycle they increased by 25 per cent on average for smaller line products, and by 42 per cent for larger line products. Sales in North America rose by 46 per cent from $25.5m to $37.2m last year, but there remains substantial upside for further growth in product prices based on previous cycles and for cement consumption based on the above industry forecasts. In fact, analyst Mark Hughes at research firm Broker Profile predicts that Somero's sales from North America could hit $58m by 2018. To put this into some perspective, the company's US sales were $40m at the previous peak in 2007.

Mr Hughes is also forecasting that sales in China will double over the next four years to $20m. That's hardly an unrealistic forecast given that the potential market is worth $1.2bn in annual sales, of which Somero has penetration of less than 1 per cent at present. In other words, growth rates will be determined by Somero's ability to penetrate this market rather than the market growing itself. The same is true in India where the company's market penetration rate is only 0.5 per cent, according to Mr Hughes.

A fairer valuation

Not only are the shares attractively priced based on last year's historic numbers, but there is a realistic chance of decent profit growth coming through in the next few years as Somero's sales pick up on the back of the key drivers I have outlined above.

Broker Profile predicts that for fiscal 2015, the company's revenues and pre-tax profits will both rise by around 7 per cent to $63.8m and $13.2m, respectively. Mr Hughes is pencilling in a further 10 per cent rise in revenues to $70m in 2016. These estimates look well underpinned and so do expectations of a further hike in the dividend to 6¢ a share this year, or 4.1p at current exchange rates, implying a near 3 per cent prospective dividend yield. It could be more because analysts predict Somero's net funds will double to $14m by the end of this year, a sum equivalent to 17p a share.

Admittedly, a tax credit inflated last year's net earnings and this will revert to a tax charge in 2015. However, using Mr Hughes' adjusted EPS estimate of 19.7¢ for fiscal 2015, or 13.3p at current exchange rates, based on a 30 per cent corporation tax rate, still means that the shares are being priced on only 10 times cash-adjusted earnings estimates. That's far too low for a company that offers potential to beat these conservative looking forecasts if market penetration rates can be expanded in China and India, and the US economy remains in fine fettle.

Furthermore, the company has no financial concerns to warrant such a low rating. In fact, its balance sheet is robust with cash balances covering almost all liabilities, so Somero is not reliant on outside creditors to funds its inventories of $8.4m; neither is the business being constrained in extending credit to clients - accounts receivables were $6.6m at the end of 2014.

In fact, I feel a cash-adjusted PE ratio of 12.5 for fiscal 2015 is a fairer valuation, implying a year-end price target of 185p. That's 30 per cent above the current share price which for good measure is on the cusp of signalling a major share price break-out if it takes out the 140p all-time high from June last year. A blue-sky rally to my target price of 185p would then be on the cards, and one supported by strong fundamentals. Trading on a bid-offer spread of 137p to 140p, I rate Somero's shares a strong buy.

Somero Enterprises announces stunning interim results. The clear worry is if/when activity in the North America starts to slow!

More at http://tinyurl.com/ovg6szm

An epic fortnight for results and updates from AIM, in which Somero is also featured. See more at http://tinyurl.com/ovjm7se

BEST AIM COMPANY AWARDS 2015


Shortlisted for
INTERNATIONAL COMPANY OF THE YEAR


• Fusionex International (FXI)

• Hutchison China Meditech (HCM)

• OPG Power Ventures (OPG)

• Somero Enterprises (SOM)

US-based concrete levelling machinery supplier Somero Enterprises Inc and Indian power producer OPG Power Ventures were on the shortlist last year and both have made further progress since then. Somero continues to grow its profit and revenues internationally and this looks set to continue. OPG's revenues were flat last year, but additional capacity means that generation output has grown by one-third in the three months to June 2015 compared with one year earlier but the tariff price has fallen by around 5%.

BEST GUESS: Somero

Click for a very thorough analysis of the company from Damian Cannon:

Great article in the Mail yesterday


MIDAS SHARE TIPS: The high-tech machine maker that’s doing its level best for the construction industry
By JOANNE HART FOR THE MAIL ON SUNDAY
PUBLISHED: 21:55, 16 January 2016 | UPDATED: 21:55, 16 January 2016

Virtually every modern building in the developed world has a concrete floor, from individual homes to offices, warehouses and futuristic architectural creations.
Somero Enterprises makes machines that ensure these concrete surfaces are absolutely flat.
The shares are 135½p and should gain ground over the next three years as the company benefits from a recovering construction sector and delivers on its promises to double revenues by 2018.

The need for a level floor may sound obvious. However, there are degrees of flatness. Traditionally, concrete is raked flat and manually smoothed with pieces of timber. However, the work is arduous and the results are inconsistent. This is not too important in residential properties, but there is far less room for error in commercial buildings.
Warehouses that are used to distribute goods bought online can include racks that stretch up more than 60 ft, for example. Each rack can hold hundreds of goods and everything needs to be absolutely perpendicular to ensure products are stable and can be removed safely at height.
Industrial sites, shopping malls and office blocks also require absolutely flat bases, especially those that are covered by tiles or wooden flooring.

This is where Somero comes into its own. The company designs, makes and sells machines that use lasers to ensure concrete flooring is flat to within a fraction of a millimetre. The number one provider of these machines worldwide, Somero’s customers read like a roster of blue-chip businesses, including Amazon, Coca-Cola, DHL, Land Rover, B&Q, Sainsbury’s, Costco and Wal-Mart.
Headquartered in Florida, more than 60 per cent of revenues come from the US. However, the group operates in 93 countries, its first machine was sold in Wales in 1986 and it chose to list in London in 2006.
Since then, Somero has consistently upgraded its technology, developing new and better kit and expanding the range. Today, small machines used for individual shops or compact offices cost about £20,000, while the largest – used for buildings such as one million sq ft distribution centres – can weigh nine tons and cost more than £250,000.
Somero listed at 125p and sank to 12p in 2009 as the construction industry was savaged by recession. Since then, the business has recovered steadily and earlier this month said that figures for 2015 would be ahead of market expectations, following a particularly strong performance in America, Europe and the Middle East.
Back in 2013, chief executive Jack Cooney said he wanted to take sales from $45 million (£31 million) to more than $90 million by 2018 – doubling sales in North America, expanding revenues by 200 per cent in Europe and China and delivering a 40 per cent sales increase in the rest of the world.
The plan is going well so far. Analysts expect a 16 per cent sales increase for 2015 to $69 million, rising to at least $73 million this year and nearly $80 million in 2017. Strong profits growth, rising 32 per cent to $18.6 million, is also forecast for 2015, and further gains are pencilled in for this year and next.
Concerns about China have dominated the stock market this year, but Cooney remains optimistic about Somero’s growth there.
About 4,000 of its machines are operational worldwide, but there are only 100 in China. Yet the country uses 30 times as much concrete as the US, Somero’s biggest market. Even if consumption halves in China, that still represents huge growth potential.
The biggest issue for Somero is persuading Chinese contractors that they would benefit from laser-guided concrete flattening equipment. However, the company has set up dedicated training programmes to highlight the merits of its machines, while multinational businesses, such as Ikea and even B&Q, insist that Somero’s kit is used as they expand into China and other emerging markets.
Productivity also increases when automated laser machines are used to level floors – a growing benefit as labour costs increase in the developing world.
Somero’s customers are concrete floor specialists, who tend to develop long relationships with the company.
The group prides itself on providing training and guidance, as well as just selling equipment, so it offers advice by phone in 65 languages, all day, every day. Qualified engineers ring customers back within ten minutes of a call being placed, which is particularly useful as concrete begins to set an hour after it has been laid.
Customers tend to buy new machines to make sure they have the most up-to-date equipment and to cope with increasing workloads. Older kit is recycled and sold at half price, normally to contractors in developing markets.
Today, the group is selling up to 450 units a year but this should rise to about 600 by 2018.
Midas verdict: Somero’s fortunes are linked to those of the wider construction sector, but it has certain specific advantages too.
The benefits of totally flat, quality floors are increasingly recognised and Somero is the dominant player in the field. The group also pays a dividend, expected at 4.5p for 2015, rising to 4.8p for the current year. The shares are a buy

Paul Scott has conducted a radio interview with the company's key directors a few days ago:

Link to radio interview

Lovely results this morning.

Click for Private Punter view of Somero

Share price rose strongly after yesterday's published news of share disposals. So presumably these were snapped up by someone in a pre-arranged deal? Who?

With thanks to 'Rivaldo' on another bb this morning:


Galvan Research have just tipped their top 3 AIM stocks for Q2'16 in an email, and SOM was one of them:

"Somero Enterprises (SOM)

Our third and final stock pick for Q2 is Somero Enterprises, a company which has developed a revolutionary way to lay concrete floors much quicker and flatter than ever before.

Somero designs, makes and sells laser-guided flooring machines which save customers both time and money. It’s listed here in the UK on AIM, but headquartered in the States where most of its revenue is currently generated.

Both sales and profits are growing quickly as Somero’s patented technology is being snapped up by floor laying companies across the world. Its machines can already be found in 93 different countries but there’s still massive growth potential, particularly in Asia - where Somero has only just begun to dip its toe in the water.

Last month full-year figures for 2015 revealed forecast beating sales and the current year has got off to a solid start too. At the current price, we think the shares offer great value and should rise considerably over the next few years...

Disruptive new technology

These days, almost every new building in the developed world will have a concrete floor and obviously this needs to be flat. Traditionally this is achieved by raking the wet concrete and then manually smoothing it with planks of wood. It can be a very labour intensive, time consuming process and with wage costs rising quickly Somero’s technology has become very attractive indeed.

It’s developed a range of different sized machines which vary in price from around £20,000 to £250,000. These can flatten the concrete between 4 and 5 times quicker than the manual method, often requiring just one person to operate the equipment. What’s more, the laser-guided machines can guarantee the new concrete flooring is flat to within a fraction of a millimetre.

First mover advantage

Somero was the first company to develop this kind of machine, which has helped it to become the dominant market player.

In fact, CEO Jack Cooney estimates that Somero has an incredible 99% of the global market share. He says that even though a few small companies have tried to copy its technology by reverse engineering, they’ve really struggled to compete because of the high barriers to entry.
Somero has developed very good relationships with many of its customers by offering a whole range of after-sale services, which smaller rivals simply can’t do. It provides education, training and ongoing technical support that customers really appreciate, helping to keep them loyal.

It’s built up a well staffed global support centre with a hotline covering 65 languages. This comes with the promise that a certified engineer will be on the other end within ten minutes - any time day or night. That’s got to be reassuring if you need help or advice when you’re working with concrete that sets in a few hours!

An ongoing commitment to product development also helps to keep Somero well ahead of the competition; its customers know they’re always getting the latest flooring technology available.

Top-notch client list

It’s very important that concrete floors are flat in large commercial building projects, which is where many of Somero’s machines end up being used. That’s because in these buildings the floors are often directly covered with tiles or wood, unlike residential properties where a built up floor is normally used.

Having a perfectly flat floor is particularly crucial in warehouses and superstores, where products are often stored on racks which can be anything up to 60 feet high. These racks need to be horizontal to ensure the goods are held securely and can be removed safely at height.

Somero has amassed a long list of large, multinational customers which include several of the world’s biggest names in concrete flooring. Its machines have been used on buildings for Amazon, Walmart, Home Depot, B&Q, Sainsbury’s, Costco and DHL to name but a few...

Business is booming in the US

As I’ve already said, Somero’s headquarters are in the US – Fort Myers, Florida to be exact. This is because at the moment around 60% of annual turnover comes from North America, so it’s a key market. You may be wondering (as I was) why they didn’t list in the US. Well, according to Jack Cooney, the directors felt that AIM suited their needs much better than NASDAQ and they prefer the quality of investors it attracts – which all seems perfectly reasonable to me.

Given the uncertainty surround the US economy at the moment you may also be wondering whether having so much exposure there poses a risk. Obviously the construction industry is cyclical, but current statistics are still looking very bullish for the US commercial building sector, thanks to pent-up demand left over from the last recession.

Huge growth potential in China

Although Somero plans to continue rolling out its products right across the globe, it’s going to be focussing heavily on China over the next few years. This represents a huge potential market for its flooring machines, which could be worth around $1.2 billion in annual sales.

In fact it’s such a big market the recent economic dip there shouldn’t be cause for concern. China uses around 30 times as much cement as the US each year, so even if the market halves that’s still an incredible amount of room to grow.

The plan of attack is centred on market penetration (estimated to be less than 1% at present) and doesn’t rely on market growth. Somero has been busy running training programmes for Chinese architects, engineers and building owners to explain the advantages of its technology and so far the results have been very positive.

The shares look like great value

Back in 2013 Somero unveiled a strategy to grow total annual sales from $45 million to more than $90 million by 2018. Things are going well so far and 2015’s full-year figures showed a forecast beating 18% rise in revenue to $70.2 million, with sales hitting an all-time high in December.

There was also an impressive 40% jump in pre-tax profit to $17.4 million and 25% increase in dividend payments to 6.9 US cents (around a 3% yield). The current year has got off to a good start too, with a healthy-looking order book and some exciting new products being rolled out.

At the current price Somero shares look like great value, especially considering there’s around $12 million net cash on the balance sheet to underpin future growth. We rate them a buy."

This one just grows and grows.

I just added ahead of Results. Expecting them to be accompanied by a nice statement ;-)

this stock has certainly been a cracker for a while now and the chart is seriously strong

though recommended on advfn by both mel and 3E (goldfinger to you guys), i confess i didn't dabble
never mind

Elsewhere this morning, FredFish posted this:


I emailed Somero in Fort Myers and got the following out-of-office:

"Due to the impending Hurricane, the office is closed until Tuesday. All employees will be working remotely as they are able and responses will be answered as quickly as possible. Please note that the storm may create widespread power outages which could further delay communications. "

Good that they planned ahead and hoping all are safe and well.

perhaps a buy at 260 if it drops that low

New highs this week, nice update this morning.

Great company. Great mid-year results today. Onward and upwards.

"Somero’s Global Headquarters and Training Facility, and the home of the Somero Concrete Institute, is located in Fort Myers, Florida while the Company’s Operations and Support Center is located in Houghton, Michigan. Somero also maintains a Sales, Service and Training Facility that is home to the Somero Concrete College in Shanghai, China as well as sales and service offices located in Chesterfield, England and New Delhi, India."

I wonder if they will relocate with Brexit looming (out of Chesterfield). Also interesting that they are listed on LSE rather than NYSE, which might also change if they relocate.
Looks an interesting company in a niche market.