Sureserve Group - Well positioned for clean growth strategy

In our last note, we commented that Sureserve was in the ‘show me’ stage and we expected it would gain traction with investors once it had delivered full-year results. The stock has risen from 30p at the time we made the comment to 50.5p as of yesterday’s close. FY19 results beat our expectations across the board (revenues, EBITA, EPS, net debt and divisional performance), affirming Sureserve’s transition to a service-based business underpinned by regulatory requirements. Over the next decade we see increased opportunity as the UK policy on energy efficiency gets more attention. We have increased our FY20e EPS forecast from 4.4p to 5.1p and introduce our 2021 forecast. Our fair value estimate increases from 45p to 65p.