http://www.northmid.co.uk/

New thread as I'm the only PI invested and I wanted some charts.

Ever had a trade that retrospectively you realise you've screwed up? I have no regrets.

I have a decent quantity purchased at an average of 115 including all costs between May 15 and March 16. I should have bought more of course but it was pretty scary catching the falling knife. I was the only one buying down there for weeks/months and Winterfloods were so desperate to shift stock that on occasions when I bought, they would immediately drop the offer. I would then buy more and they would drop the offer again. They weren't playing games either as they kept filling me in sizes way over NMS. My best buy was at 102 and I stupidly turned down a quote at 98.

I then started watching it rising with insiders buying and didn't add. I should have but I already had enough considering it is such a small cap stock and I was just delighted to watch it rise

I've done one thing right, I had a high level of conviction and haven't sold any.


So, to the present. Why a fiver by Xmas? Easy really. Get a list of all the recent RNS and look at the director buys in the last 6 months. The Chief Exec buys, the FD buys, the HR director buys, the Commercial Director buys, the Engineering Director buys, the IT Director buys. Some of then are 6 figure amounts, some of the actions of directors buying what they can out of their salaries. Some of them buy multiple times.

And then there's the mysterious Mr. Charlton, who used to a MD at Merrill Lynch who's managed to acquire over 9% of the shares and keeps going.

65% of the shares are in the hands of insiders and they keep buying and buying. What's most astonishing is not that the insiders keep buying but more that the market keeps giving them shares to buy.

Warning: their income is very exposed to one customer and the contract is up for renewal in September. Additionally you may wish to consider whether the make-up of the share register with so many of the shares held by the family puts the company at risk at being taken private with a derisory offer.
There is also a story as to why the share price was so bashed about, some of which still drags on. I may have got myself a great trade now but it didn't always look so easy.



Oh and I nearly forgot. £35m market cap, with net assets of £13m, £17m net cash, no intangibles and no pension fund deficit.

Last year underlying profit was £8.3m although huge write-offs. Dividend is pants at less than 2% although they are working on that.

This years profits- my guess somewhere between £5-10m net.


Fiver by Xmas - I'm not really bothered. I'm not selling at a fiver regardless of whether it takes 6 months or 2 years to get there.

o Revenue increased by 19.0% compared with H1 2017.
o Profit before tax increased by 103.6% to £2.51 million (H1 FY17 restated: £1.23 million).
o Cash of £18.89 million, an increase of 138.4% (H1 FY17: £7.93 million)
o Current order book for completion in 2018 of £320m (H1 FY17: £270 million)
o Increased proposed dividend to 6.0p (H1 FY17: 3.0p)

John Homer - Chief Executive - Commented:

"These results demonstrate the continued progress made in the business against our strategic objectives. Our focus on margin enhancement (104% ahead of last year) and cash generation (138% ahead of last year) is beginning to show returns and is anticipated to continue going forward.
We continue to invest significantly in the development of our people and the evolution of our employer brand. It is our firm belief that our people are the overarching differentiator in the service that we provide and the primary driver for our continued success.
The outlook for future trading remains positive and provides the opportunity to maximise earnings from our operations. The board is anticipating further revenue growth coupled with an enhanced margin percentage."

Up 23% today as I write and if you believe in the wiggly lines bashing against the recent high from last year. Not so far to a fiver now, although with only five pageviews I may the only one on this train.

Oh in the interims they've adopted IFRS15. They've been forced to declare an extra £8.1m profits for last year. When did you ever see that in the construction sector?

Getting closer to a fiver now. 450-470 and has started moving up again, after a non-unreasonable pull-back of 10% after interims came out.

Possibly moving up due to:
1. General sector profitabililty
2. Good results from BOOT today
3 http://www.northmid.co.uk/media-centre/news/%C2%A337m-joint-venture-housing-deal-signed-for-sutton-in-ashfield but this news is a week old. It's the second housing project they've undertaken. Described as a toe in the water by the chief exec. Huge amounts of cash available to move forward with this and margins will be better than construction.

Thread created on 25th June and 500p now hit (if I cheat and include the dividend received). Sells going thorough at 496p.

That's my fiver, for a 50% rise in a couple of months.

Now, what next. Well a fiver only takes this out of the realms of a crazy unbelievably low valuation to something I'd describe as "you might find the valuation vaguely acceptable given how bashed up everything is at the moment if you hadn't researched the order book, the type of work coming up and how they differentiate themselves from the rest of the construction sector"

I'm sitting tight. Next target a tenner I guess. I'm thinking that will take 2 years.

http://www.constructionenquirer.com/2018/10/16/north-midland-wins-225m-south-west-water-alliance-deal/

South West Water has named its partners for the H5O Alliance to deliver its capital works programme over the next control period.

North Midland Construction will be the main construction delivery partner over AMP7, supported by consultant Stantec UK on design and cost consultant ChandlerKBS.

The deal is expected to be worth around £25m-£45m a year to NMC, equating to up to £225m, while Stantec UK could receive fees over the period of up to £50m.

South West Water may also appoint a second contractor to the alliance, although this process is on hold at present.

Balfour Beatty and Interserve are the present AMP6 H50 alliance partners. Interserve is still working on several legacy energy from waste contracts for South West Water’s parent company Pennon, which blew a hole in the contractor’s balance sheet.

The AMP7 alliance deal is a major coup for NMC, which until now has worked for South West Water only on MEICA-type installation work through its Nomenca business.

Trading update 2018

The Board is pleased to announce that the progress reported, on 9 August 2018, with our Interim Results, for the six months ended 30 June 2018, is continuing into the second half of the financial year.

0n 25 January 2018, we announced that the order book for 2018 stood at approximately "£257M which is just under 80% of the Directors' revenue expectations for the current year." with targeted "net margins of between 1.5 and 2.0 per cent for the current year".


The Directors are now confident that revenue for the current year will exceed these full year expectations and anticipate revenue being circa £340 - £345 million, with net margins within the anticipated range previously set out above, but more specifically between 1.7 - 1.8%.

New single Company identity and brand

I expect it will do it's usual thing, which is it will drift lower until the results and then explode upwards again when they arrive.

HR director buys £45k of shares at 550p.

With the spread now 520-540 I can confidently say we are over £5. Not a bad result since my post in June when it was around 330 to buy.

Good call, CC. Missed it.

Thanks Iturama. CTO might be worth a look as it's same sector and still provides clear value.

Today's NMD news:
http://www.northmid.co.uk/media-centre/news/nm-group-named-in-%C2%A3100m-highways-england-regional-delivery-partnership
We have been awarded a place on Highways England's Regional Delivery Partnership to deliver major projects worth up to £100m across the motorway and trunk road network.

Partnering with design consultants BWB Consulting, our specialist construction business has won one of just six available places within band A of the framework, which involves delivery of work packages over a six year period

continues...

NMD rebranding

North Midland Construction and its subsidiary Nomenca are being rebranded as nmcn as a national recruitment drive gets underway.


John Homer, chief executive of nmcn, has launched the group into expansion
The expanding business has a growing £700m project pipeline, after securing a series of major built environment and water industry contracts during 2018.

It is now starting the hunt to find talented people to join its 1800-strong team across 12 UK offices, off-site build and fabrication facilities.

Head office expansion plans are also underway.

John Homer, chief executive of nmcn since 2016, said: “We are in a robust industry position and the launch of the nmcn brand signals the start of a new growth era for us.”

“Revenues have continued to rise, our cash position remains solid and a series of major contract wins are feeding our growing pipeline of work for the next five years and beyond.

“We are therefore looking to extend our team with an intensive recruitment campaign running over the coming months.”

Revenues have surged 76% during the last five years for the £340m turnover company.

Recent major contract wins include the £55m Bellozanne Treatment Works in Jersey, the multi-million Highways England’s Regional Delivery Partnership and South West Water Civil Engineering K7 Capital Works and MEICA frameworks.

Now working with 10 of the biggest water providers, Homer said several large-scale infrastructure contracts wins were instrumental in nmcn’s progression to becoming the largest multi-disciplined contractor in the water sector.