MIDAS SHARE TIPS UPDATE: TClarke is a versatile firm with a spark of genius
When the Peninsula opens in London this September, it will be one of the most prestigious spots in the capital, a five-star luxury hotel on Hyde Park Corner that cost almost £1billion to build. Engineering group TClarke played a key role in the process, from fitting IT systems to lighting controls and room service panels.
The hotel is a brisk walk from Sloane Square, where young electrician Tommy Clarke opened his first shop in 1889. TClarke has come a long way since then but the focus on reliability, efficiency and quality remains the same to this day.
Those attributes have helped the business to win customers across a range of sectors. Google and Apple have used TClarke for their new UK headquarters. Hospitals hire the firm to install the necessary electrics around patient beds. Schools and prisons turn to TClarke too.
Stylish: Engineering firm TClarke has played a key role in the building of the £1bn Peninsula in London
Housebuilders use the firm to fit piping, air conditioning, even ready-made utility cupboards, while businesses employ TClarke to bring their offices up-to-date in the post-pandemic hybrid working environment.
Crucially too, chief executive Mark Lawrence has been winning contracts to supply data centres with the internal gubbins they need to function effectively.
Statistics on data are staggering. Across the world, there are 5.9million Google searches and 16million text messages every minute, not to mention videos streamed, wi-fi calls made and meetings undertaken online.
All this activity requires data centres, so demand is growing fast, with new sites springing up across the UK. These buildings generate enormous amounts of heat and TClarke fits chilled water pipes and air conditioning units to ensure computers stay cool.
Last month, Lawrence unveiled upbeat interim figures for 2023, including a record order book valued at £781million, up 33 per cent year-on-year. Opportunities are such that the group raised £10.7million on the stock market – to ensure it has the wherewithal to keep customers happy.
The fundraising, at £1.22 a share, was a big deal for TClarke, equivalent to almost 20 per cent of its market value. But the placing was oversubscribed, as large investors showed their support for this fast-expanding business.
Brokers expect recent orders to translate into hefty revenue gains. Turnover is forecast to rise 17 per cent to £500million this year, increasing to £600million in 2024. Profits are likely to climb by a modest 4 per cent this year to almost £11million but they should surge to £17million in 2024.
Lawrence and his team are keen to reward shareholders for their loyalty too, so a dividend of 5.9p is forecast for 2023, rising to 6.5p next year.
TClarke’s success is no accident. The firm has a longstanding apprentice scheme, training both school and college leavers and then promoting them.
Lawrence himself started out as a 17-year-old apprentice. Almost 200 young people are on the TClarke training scheme right now and there is a campaign to ensure 25 per cent of the firm’s apprentices are female by 2028 – from engineers to designers to health and safety specialists.
Midas verdict: Midas recommended TClarke in 2017 when the shares were 76p. By last year, the price had surged to £1.53. Today, they are £1.30. That decline should swiftly reverse.
TClarke is known for delivering top-notch work, 90 per cent of its customers come back for more and the recent fundraise highlights management confidence in the future. Existing investors should hold. Newcomers to this business could also find the current price attractive.
Traded on: Main market Ticker: CTO Contact: tclarke.co.uk or 020 7997 7400
