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  • Writer's pictureMark Watson-Mitchell

Small Cap Catch-Up: BAG, TIME, ACRL And More

AG Barr (LON:BAG) – A Solid Investment

The £544m capitalised branded multi-beverage business (IRN-BRU, Rubicon, FUNKIN and Boost) reported a strong first-half performance to 30th July, showing a 33.2% advance in sales to £210.4m (£157.9m) with just a 6.7% improvement in adjusted pre-tax profits at £27.0m (£25.3m).

However, earnings were 0.6% lower at 18.87p (18.98p) per share while dividends improved 6% to 2.65p (2.50p) per share.

CEO Roger White stated that:

“We have made significant financial and strategic progress in the first half and have exciting plans in place for the balance of the year to sustain our growth momentum.

We remain confident in delivering a full year profit performance in line with our recently increased market expectations and are well positioned to deliver strong shareholder returns for the long-term.”

Analysts Darren Shirley and Clive Black at Shore Capital have estimates for the current year to end January 2024 for £404m sales, £47.5m profits, 31.8p earnings and a dividend of 13.7p per share.

This solid group’s shares, at 486p, are an excellent medium-term growth investment.

(Profile 31.07.20 @ 444.5p set a Target Price at 525p*)

Time Finance (LON:TIME) – Gathering Trading Momentum

This independent specialist finance provider declared its results to end May showing a 17% increase in revenues to £27.6m (£23.6m) helped to push pre-tax profits up 281% to £4.2m (£1.1m), generating earnings of 3.7p (1.0p) per share.

Its lending book was 24% higher at £170.1m (£136.8m), with own-book lending at 96% (87%) against broked-on lending at 4% (13%).

CEO Ed Rimmer stated that:

“The financial year to 31 May 2023 marked the halfway point in our four-year, medium-term strategic plan through to the end of May 2025.

Our performance to date and the steps taken throughout the year suggest we are well on track to achieve our stated targets.”

The Board continues to expect the £26.2m capitalised group’s trading for the current financial year to 31 May 2024 to be in line with market expectations.

Commenting upon the first quarter of the current year, with profits already 44% better on the back of a 3% increase in its lending-book to £175.8m, Rimmer stated that:

“As we enter the second half of our four-year medium-term strategic plan, I am very encouraged that the first quarter of the new financial year has delivered continued growth in both revenue and profits.

These results are driven by the increasing size of our lending book, which has now grown consistently for over twenty-four months."

Analyst Andrew Renton at Cavendish Capital has a Price Objective on the group’s shares at 47p and considers that the shares look extremely cheap, trading on just 5.6 times his 2025 estimates.

For the current year to end May 2024 he looks for £30.1m revenue, £5.4m adjusted pre-tax profits and 4.3p earnings.

The 2025 revenue prediction is £33.1m, with £6.7m profit and 5.4p earnings.

The shares closed at 28.30p, still looking cheap.

(Profile 23.12.20 @ 21.5p set a Target Price at 30p*)

(Profile 07.01.22 @ 23.5p set a Target Price at 30p*)

Accrol Group Holdings (LON:ACRL) – 2024 To Beat Expectations

The UK’s leading independent tissue converter performed strongly in the year to end April, showing accelerating margin recovery.

Revenues were 52% up at £241.9m (£159.4m) while adjusted pre-tax profits were £6.5m (£1.1m), lifting earnings six-fold to 1.8p (0.3p) per share.

Chairman Dan Wright stated that:

“The Group has delivered a very strong set of results of which we are very proud.

The management team successfully navigated and mitigated the well-reported and substantial inflationary pressures on a broad range of input costs, through further process efficiencies and by engaging constructively with our customers to pass-on these additional costs.

We have a strong, market-leading position, with a clear focus on remaining the lowest cost producer of any scale.

Our product mix is strengthening margins and cash generation is growing.

We are, therefore, confident that our FY24 EBITDA will be ahead of initial Board expectations.”

Analysts Tom Fraine and Clive Black at Shore Capital upgraded their current year estimates to £205m revenues (down due to lower sale pricing) while profits could rise to £10.1m, worth 3.2p earnings per share.

Analyst Rachel Birkett at Zeus Capital, the group’s Nomad and Broker, has a discounted cash flow value of 46.7p on the company’s shares.

She is looking for the current year to show £205m sales, £11.5m adjusted pre-tax profits with earnings of 2.7p per share.

The broker considers that:

The group is well positioned as it enters FY24 with volumes expected to grow ahead of the overall private label sector.

Prices are expected to soften in the year ahead as on shelf prices reduce, but the group’s margins are now improving faster than previously reported as the group benefits from the significant investments made over the last few years and the improving revenue mix.

The group now anticipates delivering FY24 EBITDA ahead of prior expectations.”

The shares closed at 30.80p, valuing it at £102.7m.

Hold tight.

(Profile 12.03.19 @ 22p set no Target Price)

FRP Advisory Group (LON:FRP) – Stronger Organic Growth Expected

The £291.1m capitalised FRP company is a leading national specialist business advisory firm established in 2010.

It offers a range of advisory services to companies, lenders, investors and other stakeholders, as well as individuals. 

At 10am on Thursday morning it will be holding its AGM to approve its end April Report and Accounts.

I would expect a positive Trading Update from the group.

Analysts Peter Renton at Cavendish Capital is keen on its shares, with a Price Objective of 165p a share.

He estimates revenues for the current year to rise to £111.8m (£104.0m), with adjusted pre-tax profits of £25.4m (£24.1m), while earnings could slip slightly to 7.6p (7.8p) but with an increased dividend to 4.8p (4.6p) per share.

The group’s shares closed last night at 116p look excellent value.

(Profile 15.02.21 @104p set a Target Price at 130p*)

Cohort (LON:CHRT) – MOD Boosted Order Book Giving Work To 2032

Since the beginning of May this £209.1m group has secured over £90m of new orders, taking its current order book to £370m by the end of last week.

I really like the mix of this group’s companies, their products and services, within the defence and related markets sector.

At yesterdays AGM the company stated that its order book now has business stretching out to 2032, while its pipeline for future contracts is looking very healthy.

It continues to have a strong financial position with some £15.2m cash as at the end of August.

Analysts Mike Jeremy and Andy Edmond at Equity Development have estimates for the year to end April 2024 for revenues of £188.1m (£182.7m), while adjusted pre-tax profits could come in at £18.7m (£17.7m), generating earnings of 36.2p (36.4p) per share but paying an increased 14.7p (13.4p) dividend.

They have a ‘Fair Value’ on the shares at 650p, compared to last night’s close of 504p.

A solid Hold.

(Profile 06.08.19 @ 446p set a Target Price at 607p*)

CentralNic (LON:TiG) – Seeking Approval

On Thursday my favourite global internet domain services group is holding its General Meeting to seek shareholders approval to change its name to Team Internet Group.

Having recently celebrated its tenth birthday with loads of special guests at the London Stock Exchange, together with a Capital Markets Day, the group brought more change through a ‘rebranding’ – which will be approved on Thursday.

At long last the £356.6m company’s shares have climbed back above the 130p level, touching 136.80p on Friday of last week.

They closed last night at just 130.40p.

I remain convinced that they will break 150p and then climb even higher.

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

And Finally …..

Braemar (LON:BMS) – Undervalued Shares Returning From Suspension Next Month

Well at last we know that the shipping services group is expecting to publish its 2023 results next month, thereafter seeking to return its shares from Suspension.

The complex investigation by FRP Advisory into $3m of small transactions way back in the years 2006 to 2013, leading to payments being made for the following four years, is nearing completion.

It was laudable of the group’s Board to affect the independent analysis and also to suspend its dealings – without doing so I do believe that the shares could well have fallen to 100p to 150p.

The shares, which were trading at 324.84p in the second week of January this year, subsequently gyrated between 275p to 310p range for some months before the investigation announcement in late June.

On 26th June they fell to 224p before being suspended at 233p.

What we do know now is that the group’s results to end February will show record revenues, up nearly 50% at around £150m (£101.3m) while the underlying operating profit, also a record, was at least £20m (£10.1m), with a 33% increased dividend at 12p (9p) per share.

Net cash at that year end was about £6.9m.

As for the current year the company has traded well and is on track to report around £18m of profits.

The first half year to end August is likely to report £7m profits, while its forward order book is running 21% higher than the same period last year.

Upon return to the market, it is inevitable that there will be a hectic melee of dealings by those traders who now need to get out, or by those ‘short’ players who will need to rapidly cover positions.

It will be the canny ones who watch from the sidelines, until calmer waters are visible, before taking out new positions in what is still a very undervalued cash-generating business.

(Profile 05.12.19 @ 185p set a Target Price at 250p*)

(Profile 20.05.20 @ 99p set a Target Price at 150p*)

And Finally, Finally ….

Journeo (LON:JNEO) – Now Just 2.04p Away From Doubling My Target Price!!!

After yesterday morning’s very pleasing Interim Results announcement the group’s shares hit 237.96p, just 2.04p away from doubling my 120p Target Price.

Last night they closed up 5% on the day at 235p, valuing the group at only £38.1m.

Remember analyst Andrew Renton at Cavendish Capital has a 338p a share Price Objective out on the stock, reckoning that:

Journeo looks compelling on an FY24E Adj P/E of 10.1x vs peers on 13.2x.”

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

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


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