SigmaRoc (SRC) is perhaps one of the more boring businesses I have written about. It is operating a buy-and-build strategy in construction materials (although its website says it invests in businesses and this is not the same as acquiring them). It doesn’t have any fancy technology or the latest gadgets, and it isn’t a blue-sky story or a Covid-19 testing play. Naturally, many punters will be put off by the sheer tedium of this business.
But I’m reminded of the great Peter Lynch who was a staunch advocate that boring businesses are the best businesses. I doubt that is always the case, but you can see his point – the fact that businesses are boring puts a lot of people off from further research. In an illiquid and inefficient market, such as Aim, this can mean gems are left on the shelf, waiting for those who are willing to dust them off to discover them.
The company released its half-year results on 7 September with underlying revenue coming it at 83 per cent growth. Note that “underlying” comes with a long list of exclusions including acquisition related expenses and restructuring expenses, and so when we look at underlying profit after tax and actual profit after tax there is a glaring difference: £5.01m against £3.21m. However, this is double the previous year’s actual profit after tax of £1.42m. With underlying revenue growing at 83 per cent and strong cash generation I decided to add it to my watch list.