Begbies, Brown, Circassia, Cohort, Coral, D4T4, DWF, Epwin, Frontier, Gateley, Gattaca and much more
28th May 2021
In this Bumper Spring Bank Holiday Small-cap round up Mark Watson-Mitchell updates his readers on previous company profiles and other news of interest from the exciting world of small-cap shares - together with a diary of profile company events due over the next fortnight.
Begbies Traynor Group (LON:BEG) – good corporate recovery
The year end Trading Update from this business recovery, financial advisory and property services consultancy group was extremely bullish – with the management predicting that its finals will be far better than market expectations.
Analyst Rachel May at brokers Shore Capital upped her estimates for the end April year from £77.6m revenue to £83.7m (£70.5m), while lifting her profit view £0.4m to £11.5m (£9.2m).
Going forward the expanded group could see £97.5m sales this year and £17.2m profits, worth 8.6p per share in earnings.
Those estimates make the shares continue to be attractive, trading at around the 134p level.
(Profile 26.11.19 @ 85p set a Target Price at 110p*)
(Profile 21.04.20 @ 93p set a Target Price at 110p*)
N Brown Group (LON:BWNG) – ‘insider’ still a big buyer
The forecasts for this clothing and footwear digital retailer for the year to end February 2022 now suggest around £750m in sales and nearly £40m in profits, worth 7p in earnings per share.
Already analysts are looking for almost £800m in sales and £47m in profits for the 2023 year, worth 8.2p in earnings per share.
Let us hope that those estimates are close to the mark, if so then the shares now 66p still look good value.
Director Joshua Alliance seems to agree, he is an ongoing buyer, having bought some 8.4m shares at prices from 62p to 65p in the last week.
(Profile 06.07.20 @ 36.15p set a Target Price at 50p*)
Circassia Group (LON:CIR) – don’t hold your breath
Now concentrating upon its Niox asthma diagnostics products business, it is glad to have sorted out previous legal hassles concerning its Beyond Air agreement.
Analyst Chris Glasper at brokers N+1 Singer suggests the current year could see £26.6m of sales (£23.8m) and a £4.7m loss (£14.7m) for this current year to end December.
The July first half Trading Update will show just how well the group is viewing its prospects.
Trading at around the 34p level the shares could eventually break my price objective but holding your breath in anticipation could be lethal.
(Profile 23.01.20 @ 25p set a Target Price at 40p)
Cohort (LON:CHRT) – overseas buyer interest?
This defence and security group put out a Trading Update last Wednesday. Despite showing increased order books, the company predicts that its profits growth is expected to slow.
Wow! You don’t get many of those nowadays – a statement that tempers investor interest.
Understandably the group’s shares fell 7% to 628p on the news.
Although they have already achieved my price objective, I still find the group’s shares an appealing counter.
If they get too cheap, I still suggest that a foreign bidder could well show its hand.
(Profile 06.08.19 @ 446p set a Target Price at 607p*)
Coral Products (LON:CRU) – see for yourself
At 6pm on Tuesday 8 June Shares Magazine will be presenting one of their investor events online.
It will feature three of my profile stocks - Cake Box, Strix and Coral Products.
The latter company is a manufacturer and distributor of plastic injection, extruded and blow moulded products into the food packaging, personal care, household, healthcare, automotive, telecoms and rail sectors.
I rate its shares, now only 13.75p, as a cracking addition to SQC growth portfolios.
(Profile 28.04.21 @ 14p set a Target Price at 18p)
D4T4 Solutions (LON:D4T4) – building up the ARR
On Tuesday 29 June this software and computer services group, which specialises in data collection management and analysis solutions, will be declaring its end March final results.
Despite a rise in revenues from £21.7m to around £23m the last year will have seen pre-tax profits fall back from £5m to some £4.2m, with earnings easing from 11.2p to 8.4p per share.
At the time of the finals the group, which is admirably increasing its annual recurring revenues, will outline its hopes for the current year.
The market eased back the group’s shares mid-week to just 337p.
(Profile 09.04.20 @ 170p set a Target Price at 215p*)
DWF Group (LON:DWF) – Target Price achieved
Revenue growth, profit transformation, strong cash generation and the benefit of accretive ‘bolt-ons’ have helped this legal and business services group in the year to end April 2021.
Revenues were up 13% at £338m, while pre-tax profits were £34m, worth 8.4p in earnings and easily covering a 4.5p dividend per share.
The group will be publishing its annual results on 21 July, by which time I feel that its shares, now 104.5p, could well be a lot higher.
Zeus Capital is going for £343.8m of current year revenues, with £39.6m of pre-tax profits, generating 9.8p per share in earnings and a 5.9p dividend.
Hold very tight.
(Profile 01.06.20 @ 67p set a Target Price at 100p*)
Epwin Group (LON:EPWN) – headed higher
At last Tuesday’s AGM this low maintenance building products group stated that it is enjoying strong demand currently.
Its broker Zeus Capital is looking for sales to lift from £241m to £282m for the year to end December, with pre-tax profits more than doubling from £5m to £11m, worth 6.1p in eps and able to pay a 3.1p per share dividend.
For the 2022 year it sees steadier sale at £290m but with profits increasing to £16.9m, giving 9.5p in earnings and a 4.7p dividend.
This groups shares have a lot further to climb from the current 108.5p.
(Profile 22.08.19 @ 73.5p set a Target Price at 100p*)
Frontier Developments (LON:FDEV) – broker sees shares a lot higher
As its May year end closes it is sensible to seek latest news when this video games developer and publisher issues its June Trading Update.
At that time we should be getting reports on just how well its latest release ‘Odyssey’ part of the Elite Dangerous franchise has been doing.
Analyst Olivia Honychurch, at the group’s brokers Liberum Capital, has estimated £90m of sales (£76.1m) and £22.0m of profits (£18.2m), worth 51.4p (46.4p) per share in earnings.
For the 2022 year she sees £145m of sales, £37.6m of profits and 86.8p per share in earnings.
She has a ‘buy’ out on the shares, with a price objective of 3540p on the group’s shares, now at around 2570p.
Hold very tight.
(Profile 01.10.19 @ 1000p set a Target Price at 1500p*)
Gateley (LON:GTLY) – price aim attained
The CEO Rod Waldie stated that “We are carrying a strong pipeline of work into FY22 and are looking forward to continuing to grow the group, both organically and via acquisition."
Joint broker finnCap is looking for this commercial legal and professional services group to show £120m (£109.8m) of revenues for the year to end April 2021, while pre-tax profits of £20.0m (£18.7m) will help earnings to rise fractionally to 12.7p (12.5p) per share.
The current year could see £130m of revenues and £21.0m of profits, with 14p in earnings.
The shares at 201p look capable of rising further yet.
(Profile 18.05.20 @ 155p set a Target Price at 195p*)
Gattaca (LON:GATC) – big price aim uplift
Analyst Sanjay Vidyarthi at Liberum Capital rates the shares of this specialist engineering and technology recruitment solutions business as a ‘buy’ with a price objective of 260p raised from 180p.
Well, that is positive enough for me to continue to anticipate an early penetration of my own aim for the group’s shares, now trading at around 174p.
We should be able to see that price being beaten well before trading for the current year to end July is updated in late August.
Still time to get aboard.
(Profile 10.05.21 @ 148p set a Target Price at 195p)
Gresham House Strategic (LON:GHS) – bye Richard, he was good
I have to say that I was both surprised and disappointed to see that Richard Staveley, the company’s lead fund manager has resigned with ‘immediate effect’.
There has been some turmoil inside the investment group’s management of late.
However, the portfolio is still looking good, so just sit back and await further developments.
The shares at 1472p currently are well worth holding onto for a while yet.
(Profile 16.10.20 @ 985p set a Target Price at 1300p*)
Harworth Group (LON:HWG) – broker sees shares as a purchase
This leading regenerator of land and property for development and investment reported at its AGM earlier last week that it had made a strong start to its 2021 year as it sees robust demand for its serviced land and industrial units.
Estimates for this year, to end December, suggest some £24.3m of sales and£1.1m of pre-tax profits.
Analyst Chris Spearing at Liberum Capital, the group’s broker, rates the shares, now at 145p, as a ‘buy’ looking for 161p.
(Profile 25.07.19 @ 130p set a Target Price at 170p)
Idox (LON:IDOX) – more in store
The recent first half Trading Update from this information management software and solutions specialist, reported a strong performance building upon last year’s improvements.
Analysts Gareth Evans and Ian Poulter at Progressive Equity Research are going for revenues to ease in the year to end October from £68m to £64m, while pre-tax profits could rise from £10.5m to £10.9m, worth 2p in earnings.
At 61p currently the group’s shares may appear expensively rated, but I have a feeling that there is more in store.
(Profile 30.04.20 @ 38.5p set a Target Price at 50p*)
Iofina (LON:IOF) – non-performer
This group specialises in the exploration and production of iodine, as well as manufacturing specialty chemical products.
Its results for the year to end December 2020 were announced last Tuesday. They showed $29.7m of sales ($29.2m) and pre-tax profits of $1.3m ($1.0m).
Estimates are out there for current year sales of $32m, profits of $4.4m, worth 2.3 cents per share in earnings (0.7c).
The group’s shares are an almost persistent non-performer, trading at 12.5p.
Its broker goes for them to rise to 25p – please do not hold your breath waiting for that to happen, because I could lose you as a valuable reader.
(Profile 29.07.20 @ 13.5p set a Target Price at 18p)
Kape Technologies (LON:KAPE) – I love this stock
Would you buy shares in a global specialist technology company where revenues will rise five times over five years?
Where its adjusted pre-tax profits rise ten times in the same period.
And where its earnings increase more than six times?
While its price/earnings ratio drops from 86 times to just 13 times.
Well now you can see why I was so keen on this group’s shares last December, since when they have almost doubled in price.
This digital security and privacy software business is now 60% of its way through that cycle of figures.
On Thursday 20 May the company held its AGM which declared a strong start to its full year to end December 2021. Its subscriber numbers are up 100,000 at 2.61m, while its ability to cross-sell is rising.
The estimates of analysts Ian Poulter and Gareth Evans at Progressive Equity are shown in the attached box. I thank them for highlighting the group’s attractions late last year.
Their estimates I remain very optimistic of another hike due to occur in the group’s share price, now 331.5p.
I think that we could see such anticipatory action ahead of its next Trading Update in July.
(Profile 21.12.20 @ 172p set a Target Price at 215p*)
Luceco (LON:LUCE) – a little left yet
Analyst Daniel Cunliffe at brokers Liberum Capital rates the shares of this LED lighting and wiring products group as a ‘buy’.
He is looking for 350p after having upped his estimates following the recent AGM update.
Cunliffe sees sales rising this year, to end December, from £176m to £209m, then next year up to £221m.
In that same time frame profits should rise from £34m last year to £36.2m this year and £40.6m next year. With earnings going from 15.5p to 18.4p to 20.6p per share.
The analyst has previously argued that the company has a valuation of 400p a share.
Currently 335p they have more upside.
(Profile 15.06.20 @ 96.1p set a Target Price at 125p*)
Portmeirion Group (LON:PMP) – shares for keeping
“We are delighted to report that we have had an excellent start to the year. Our sales for the first four months of the year (to 30 April 2021) have increased by more than 50% on the same period in 2020. On a like-for-like basis, our sales for this period are slightly ahead of pre-Covid levels achieved in the same period in 2019.”
Mike Raybould, the Chief Executive of this designer, manufacturer and distributor of this global sales pottery group, was in bullish tone in his AGM Trading Statement last Tuesday.
Analyst Sahill Shan at N+1 Singer viewed his comments as further positive trading newsflow.
He is looking for current year sales to end December to rise from £87.9m to £90.1m, while pre-tax profits should rise from £1.4m to £6.4m, with earnings rising more than seven times to 36.4p per share (5.0p) and covering a 12.13p dividend.
Looking at next year he is already going for £98.9m of revenues, £10.0m of profits, earnings of 56.8p per share, amply covering a dividend of 18.93p.
These shares at 690p are for keeping.
(Profile 28.08.20 @ 376p set a Target Price at 480p*)
SDI Group (LON:SDI) – going higher
The manufacturer and distributor of digital imaging and sensor control technology last Wednesday issued the Trading Update for its year to end April.
It confirmed the strong 2021 order intake across all of its businesses.
The results will be announced in July.
In the meantime, sales of £35.5m (£24.5m) for last year are expected to have seen pre-tax profits to have risen from £4.3m to £7.4m, giving earnings of 6.1p per share.
Estimates for the current year suggest £42.1m of sales and profits of £8.8m, worth 7.1p per share in earnings.
Broker finnCap has raised its price objective from 180p to 195p.
After hitting 197p the shares, which close the week at around 186p, have further to climb.
(Profile 28.10.20 @ 76p set a Target Price at 95p*)
Speedy Hire (LON:SDY) – a rapid purchase
I fancy these shares for another run upwards.
As the lockdown’s end the construction, infrastructure and industrial markets are all wanting to use the group’s tools, equipment and plant hire services.
Estimates suggest that £380m of sales (£364m) are possible this year to end March 2022, with pre-tax profits rising from £20.1m to £28.0m, worth 4.2p in earnings (3.2p) covering a 1.9p dividend (1.4p) per share.
Building sector analyst Charlie Campbell at brokers Liberum Capital rates the shares as a ‘buy’ looking for 90p in due course.
Even though they have already achieved my price aim, I would not put anyone off if they are considering adding to holdings at the current 75p per share.
(Profile 15.10.19 @ 52p set a Target Price at 75p*)
Sureserve Group (LON:SUR) – just 10.2 times 2022 estimated earnings
Alastair Stewart at the group’s broker Shore Capital is very positive about the compliance and energy services group’s shares at the current 80p.
In a note referring to the appointment of a new Chairman, Nick Winks, he rates the shares give the group a very compelling valuation trading on just 10.2 times the estimated earnings for the coming year to end September 2022.
I would agree.
(Profile 14.01.20 @ 36p set a Target Price at 50p*)
Tremor International (LON:TRMR) – US IPO could be a good time to top slice
Well, it has gone and done it now.
Yes, at long last the end-to-end software advertising platform group has filed its Registration Statement with the SEC in the US with reference to its planned IPO.
Against the current 810p market price broker finnCap has a 1200p a share price objective.
Since the beginning of last year we have enjoyed a cracking ride with this group’s shares, however I could not dissuade holders from taking part profits, or even selling half and keeping the balance.
(Profile 16.01.20 @ 156p set a Target Price at 235p*)
U+I Group (LON:UAI) – regenerating itself
The results from this urban regeneration property development group were as bad as expected.
The year to end March 2021 saw sales of just £10.4m and a £56.8m loss, with net assets falling to 163p per share.
The effects of the pandemic did not help. Furthermore the 100-day Strategic Review is now complete so big changes are now underway.
I like the feel of what is going on at this group as it does self-inflicted surgery upon its operations.
I see profits being made in the next trading year to end March 2023, not in this current year though.
The net asset value per share has further to fall back as the slicing is actioned, to perhaps 140p.
However, the shares are showing some firmness hovering between 87p and 97p. I see them rising through the 100p level soon and then possibly 105p.
(Profile 13.01.21 @ 63p set a Target Price at 80p*)
(Asterisk* denotes that Target Prices have been achieved since profile publication)