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  • Writer's pictureMark Watson-Mitchell

A Christmas mix of chocolate, gas, information, logistics and toys

Hotel Chocolat Group (LON:HOTC) – worth a little nibble

At this time of year there certainly is a very much higher rate of chocolate consumption – however, if you have not eaten enough by next Thursday, then you may digest the news coming from this premium chocolate makers AGM being held on that day.

If no Update is produced or even emanates from the meeting, then investors may well have to just wait until mid-January when the group should declare a Trading Update concerning the Q1 progress to the end of this month.

Analyst Wayne Brown at Liberum Capital rates the group’s shares as a Buy, looking for them to rise to 300p as the group’s new strategy starts to show through.

His estimates for the current year to end June see sales slip about 5% to £213m, while pre-tax profits could fall significantly from £21.7m to £8.3m, dropping earnings by over two-thirds to 4.8p (15.3p) per share.

He sees a swift recovery coming in the next year to £224m sales, £20.5m profits and 11.2p earnings per share.

Better still, trading forward his estimates for the year to end June 2025 suggest £235m sales, £32.7m profits and 17.8p per share earnings.

We have previously enjoyed a very successful run with this group’s shares. After this year’s hassles concerning its Japanese expansion and other pressures, the group’s shares,

which touched 530p earlier this year, responded with a severe fall in price to a 115p low.

Now at 155p I have to state that I do fancy the stock as we go into next year.

(Profile 21.03.19 @ 340p set a Target Price of 402p*)

i3 Energy (LON:I3E) – from assets down under this one is heading higher

Yesterday morning this oil and gas group, operating in both the UK and in Canada, declared that its production this month has peaked at over 24,000 barrels of oil equivalent per day, as expected.

It has also increased its dividend rate for next year, to a yield of 9.7%.

The £295m group is an oil and gas company with a low cost, diversified, growing production base in Canada's most prolific hydrocarbon region, the Western Canadian Sedimentary.

It also has appraisal assets in the North Sea which offer significant upside.

The company states that it is well positioned to deliver future growth through the optimisation of its existing 100% owned asset base and the acquisition of long-life, low-decline conventional production assets.

CEO Majid Shafiq stated that:

"2022 was a year of exceptional performance for i3 Energy. We entered the year with corporate production of circa 18,000 boepd and will exit having achieved our target of 24,000 boepd having successfully implemented a USD 97 million capital program on time and on budget in Canada and the UK.

The success of our 2022 drilling program in Canada has continued to de-risk our growth strategy in certain key development assets within our portfolio and we are confident that our 2023 capital program will be equally successful and should result in production growth of up to 13% in 2023.

We are also pleased to offer year-on-year dividend growth from £3.4 million in 2021, to £15.4 million this year and a minimum pay-out of £24.5 million in 2023."

Having touched 32.70p in June this year and after starting the year at around the 12.05p level, I see the shares continuing to react to positive news over the next few months.

The guidance news really helped to boost the group’s shares by 16% on the day to close at 24.52p, up 3.37p.

A clear rise to 30p and above is my early 2023 prediction.

(Profile 13.12.21 @ 11p set a Target Price of 14p*)

Journeo (LON:JNEO) – acquisition and funding are totally positive

A timely comment on this information group earlier this week.

The Rail acquisition mooted has required a £7m fundraising of new shares @ 105p, successfully handled and announced yesterday.

Analyst Andrew Renton at Cenkos Securities has increased his estimates for the year to end December 2023 to £33.0m revenues and £3.3m pre-tax profits, worth 17.8p per share in earnings.

Renton now has a ‘fair value’ of 210p on the shares, which closed up 10p at 128p last night.

Obviously, to me anyway, these shares are clearly headed a great deal higher.

(Profile 07.04.21 @ 95.5p set a Target Price of 120p*)

Xpediator (LON:XPD) – a logistic hold

This logistics group has never lived up to my hopes since I first profiled the company in May 2019, although its shares hit 79p in July last year, still up 58% on my Profile price, but not quite up to the Target Price.

After having been as low as 18p since the Profile, I have to admit I was switched off to the hopes that my TP would ever actually be achieved.

Well now that looks to be a likely non-event.

On Tuesday morning former boss Stephen Blyth and others declared their intent to bid 42p a share to take control.

Still a ‘fluid’ situation, the shares hit 40p on the news and have settled back to 37p by last night’s close, they were 29p at the end of last week.

I guess that, with Zeus Capital handling the proceedings, this is not far off the final solution, but we shall just have to wait and see.

Hold the shares for the time being.

(Profile 28.05.19 @ 50p set a Target Price of 90p)

The Character Group (LON:CCT) – cost pressures impact

Higher input costs and a stronger US dollar created pressures on this toys and games group in its year to end August.

The finals, announced yesterday, showed revenues for the year up from £140.0m to £176.4m, while adjusted pre-tax profits were fractionally better at £11.4m (£11.2m), taking earnings up from 40.9p to 45.7p and amply covering a 17.0p (15.0p) dividend per share.

However, for the current year analyst Ian Jermin at Allenby Capital is estimating that times will get rougher for the group.

He anticipates £145.0m sales, with a halving of profits to £5.5m, chopping earnings to 22.2p per share. But it has to be noted that he expects the group to increase its dividend in the year to end August 2023 to 19.0p per share.

Despite such hassles in the current year Jermin expects that the group’s net cash position will only ease back from £20.0m to £18.0m, which really is quite strong compared to the group’s market capitalisation of only £81.2m.

The shares have been as high as 650p in February this year and as low as 360p a month ago. Now at 420p they may well look friendless for a while, certainly until better news is released.

(Profile 14.12.20 @ 395p set a Target Price of 500p*)

(Asterisks * denote that Target Prices have been achieved since Profile publication)


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