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  • Writer's pictureMark Watson-Mitchell

CentralNic, Costain, McColl’s, MPAC, RBG, Severfield, and Surface Transforms

3rd September 2021

CentralNic Group (LON:CNIC) – dollars and cents keep rolling in

This company really is a little money machine.

It enjoys a staggering 99% ARR, which really helps to underpin its forward growth strategy.

On Tuesday of this week the global internet platform company declared its interim results for the six months to end June this year.

They showed revenues up 57% from $111.3m to $174.7m and its EBITDA was 36% better at $20.5m ($15.1m).

The group reckons that the full year results will come in at the higher end of market expectations.

Analyst Bob Liao at the group’s brokers Zeus Capital estimates that revenues will be $355.1m ($241.2m), while EBITDA could rise from $30.6m to $41.4m, worth 10.4c per share in earnings.

The Q3 results will be announced in November, which is when further profit upgrades could be made.

In the meantime, I do see that group’s shares, now 102p, edging gently higher towards my price objective.

(Profile 12.07.21 @ 89p set a Target Price of 110p)

Costain Group (LON:COST) – building strongly

Liberum Capital rates the shares of this aspirational leading smart infrastructure solutions company as a ‘buy’ looking for them to rise over 33% from the current 60p to 80p in due course.

Their analyst Joe Brent reckons that the business is operating effectively and should be capable of seeing its fully diluted earnings coming in at 20p per share in due course.

He already sees 11.8p per share due in 2023, so he will not be too far off that aim.

Brent estimates that the group will this year come in with end-December sales of £1.08bn and will double its pre-tax profits to £26.8m, worth nearly 8p per share.

On that broker’s estimates alone the shares of this group stand out as an excellent purchase.

We should be getting a Trading Update in a month’s time.

(Profile 05.09.19 @ 151p set a Target Price of 250p)

(Profile 02.08.21 @ 55p set a Target Price of 69p)

McColl’s Retail Group (LON:MCLS) – four months too early

I note from a piece of research, by Singer Capital Markets analyst Matthew McEachran, that this convenience stores group could see a decrease in its sales from £1.24bn to £1.16bn in the year to end November.

On that he estimates the group will make a loss of £1m against a £1.4m profit last year.

But that is nothing to really worry about, especially if you are just buying into this group’s shares right now.

That is because, after the massive refunding last month, the group could well be correcting itself sufficiently to see sales rise to £1.2bn next year, with profits rebounding to £7.7m up, worth 2.2p per share in earnings.

For the 2022/2023 year he estimates £1.28bn sales, £15.1m profits and earnings of 4.3p per share.

Like all ‘armchair commentators’ it is easy to look back in retrospection.

I should not have profiled this company when I did, upon reflection I was far too early, such that I would be really enjoying suggesting readers jump in right now as virginal MCLS investors.

Perhaps a trebled-up averaging at these levels would help to recover losses and then make a useful return on funds employed.

The shares at 20.15p certainly have attractions going into the New Year.

(Profile 26.04.21 @ 32.5p set a Target Price of 41p)

MPAC Group (LON:MPAC) – smart packing

What can I say about this high-speed packaging and automations systems provider?

It has done exactly what it said it would do and then some.

Yesterday’s interim results showed a very strong first half and promised more to come.

Revenues for the six months to end June were £44.2m (£36.8m), while underlying pre-tax profits almost doubled from £2.5m to £4.7m, pumping earnings up from 11p to 18.3p per share.

The group’s order book at the period end were 69% up at £51.7m (£30.5m).

CEO Tony Steels stated that “we remain well placed, serving markets with strong underlying demand and are pleased to be upgrading expectations for the full year results given the strength of current trading and our outlook for the second half. The group's long-term prospects also remain positive.”

Analysts Robin Speakman and Akhil Patel at Shore Capital, the group’s brokers, upgraded their estimates by 5% on the back of the half-timers.

Now they are looking for sales of £97.5m (£83.7m), profits of £8.2m (£6.3m), and earnings of 32.2p against 31.4p per share.

The group’s shares bounded ahead by 30p to close around the 630p level, now more than trebled my Profile Price inside 22 months.

Do not chase, however a little ‘top slicing’ could be in order.

(Profile 19.12.19 @ 182p set a Target Price of 235p*)

RBG Holdings (LON:RBGP) – don’t chase higher yet

It seems that the integration of the recently acquired Memery Crystal specialist international law firm is going well.

Rosenblatt and Memery will work alongside each other in a new legal services division – RBG Legal Services.

The group’s results interim results to end June this year, will be published on Wednesday 15 September, when, no doubt, we will get much more news on how the larger group is performing.

James Bayliss, analyst at Singer Capital Markets, is expecting the full year to see revenues rise from £25.6m to £45.5m while profits should improve from £5.8m to £9.1m, with earnings of 7.9p (5.1p) a share.

The shares have shown a stunning short-term performance to date.

Now at 141p, after hitting 168.95p in early July, they should trade a narrow 140p/160p band for a while.

Even though I really do like this grouping I would be very reticent in chasing the shares until a lot more becomes visible.

(Profile 05.02.21 @ 80p set a Target Price of 100p*)

Severfield (LON:SFR) – dominant and positive

The AGM Trading Update issued on Wednesday by this market leading structural steel group was very encouraging.

So far in this current year the first five months have shown through very well.

The group has a record order book for its UK and European operations, while its Indian Joint Venture is beginning to see an improved outlook.

Analyst Alastair Stewart at Progressive Equity Research is very positive about the company – it should benefit from sectors such as infrastructure, logistics and datacentres, from its dominant market position and because it boasts a strong balance sheet.

For this year to end March 2022 he estimates revenues of £370.5m (£363.3m) while adjusted pre-tax profits of £28.1m (£24.3m) could generate earnings of 7.4p (6.4p), more than double covering a 3.1p (2.9p) per share dividend.

The group’s half-timers will be declared on Tuesday 23 November.

The shares have been up to 84.84p recently but have slipped back to the current 79.1p, at which level they look inexpensive and very capable of hitting my price objective.

(Profile 12.09.19 @ 62p set a Target Price of 88p*)

(Profile 04.06.21 @ 79p set a Target Price of 100p)

Surface Transforms (LON:SCE) – increased capacity

Just a couple of weeks ago the carbon fibre reinforced disc brake manufacturer announced a cracking new contract with its OEM 10 (it does not name the major motor manufacturers with whom it is chasing business, until orders get underway).

Yesterday morning it stated that OEM 5 has declared it as a Tier One supplier and negotiations are continuing, with work being carried out on the next vehicle brake disc with that client.

Later that day it issued a Strategy announcement, in which it stated that it is working with its furnace supplier partners with a view to increasing its sales capacity by £15m pa to £50m pa.

Both finnCap and Zeus Capital appeared very positive about the contracts and the changes.

The shares jumped 5p on the double hits of news, closing at around 70p.

Hold very steady.

(Profile 19.09.19 @ 17p set a Target Price of 30p*)

(Profile 08.01.21 @ 50p set a Target Price of 65p*)

(Asterisks * denote that Target Prices have been attained subsequent to profile publication)


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