MIDAS SHARE TIPS UPDATE: Our Tip Learning Technologies rises 12 times in just 7 years
Jonathan Satchell, like Supreme’s Sandy Chadha, was not one for academia. After earning five O-levels in school in 1984, his principal felt that Satchell had the aptitude but not the attitude for A-levels and that he should enter the big, bad world of commerce.
Good advice. Satchell now runs Learning Technologies Group (LTG) which is valued at nearly £1.75 billion on the exchange. LTG helped companies deliver training and evaluation courses and started trading on AIM in 2013 and was recommended by Midas the following year, when the stock was at 20p. The price has since risen to £2.21 and more growth is to come.
LTG did not emerge unscathed from the Covid-19 pandemic. Demand for some services fell and profits for 2020 remained at just over £39 million. But Satchell used the time well, buying complementary businesses at low prices and making sure his company was well positioned for recovery. The approach worked.
Helping hand: Learning Technologies Group is valued on the stock exchange at almost £1.75 billion
Last week, LTG unveiled interim numbers showing double-digit revenue and earnings growth, with a 20 percent increase in the half-year dividend to 0.3 pence. Brokers expect annual turnover to rise 32 percent to £175 million, with profits rising 22 percent to £48.5 million and total dividend rising 13 percent to 0.85 pence.
Satchell also closed his most daring deal to date earlier this summer, buying New York-listed GP Strategies for £284 million. GP’s turnover is double that of LTG and the American group counts companies such as General Motors and HSBC among its customers. The company also has a strong presence in Asia, enabling LTG to work with more customers in more places than ever before.
GP may be big, but it is much less profitable than LTG. Satchell has a history of turning around inefficient businesses and is confident of doing the same with his latest purchase.
If all goes to plan, the deal should boost growth at LTG, pushing sales to well over £500m next year and even higher in 2023. Earnings and dividends should follow suit.
Midas verdict: Shareholders have been richly rewarded by Learning Technologies and they may be tempted to sell for £2.21. But Satchell remains as driven as ever, online training is a rapidly growing field and GP Strategies should take this business to a new level. Cautious investors can reduce their holdings in case the US deal goes awry. For Satchell supporters, however, this remains a strong point.
Traded on: TARGET ticker: LTG Contact: ltgplc.com or 020 7832 3440