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  • Writer's pictureMark Watson-Mitchell

K3 Capital Group (LON:K3C) – "I liked it so much I bought the company"

I think it was way back in the late 1980’s that the famous US entrepreneur Victor Kiam fronted an ongoing series of adverts for Remington Razor’s.

Boldly on screen he would declare that “I liked the shaver so much that I bought the company” – he also later went on to buy the New England Patriots professional football team. But enough of his biography.

I raised the catchy title because it occurred to me that is exactly how the management team at the UK’s top small-cap mergers and acquisitions group must have felt when they discovered the services of Stephen Crossley.

He was the man that identified a number of the group’s recent acquisitions for K3C.

Crossley and K3C have just set up a new company called Market Mapping. Its purpose is to find appropriate M&A targets. The group has taken 40% of the equity, together with an option to take out the balance 60% in 2024, depending upon certain criteria having been met.

They liked Crossley’s services so much that they then took him out. Great business for both sides.

The shares of this group have been in very fine form of late, closing up 16p on Monday, the day that the new deal was announced.

Broker’s estimate that the group in the year to end May 2021 will see revenues boosted by £20m to £35m, with pre-tax profits jacking up 150% to £9.6m, worth 11.4p per share in earnings and covering 8.4p per share in dividends.

Estimates are for the prospective 2022 and the 2023 year’s revenues of £47.5m, then £58m, with profits of £13.5m then £17.6m respectively.

Earnings for 2022 then 2023 could well be 16p then 21p per share, again respectively, easily covering dividends of 12p then 15.6p per share.

I am really delighted with the swift progress of this £147m group and I do see its shares, now 220p, hitting 250p and then trading up to the 300p level.

(Profile 21.10.20 @ 147.5p set a Target Price of 200p*)


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