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  • Writer's pictureMark Watson-Mitchell

Small Cap Catch-Up: Billington, Pendragon and Avingtrans

Billington Holdings (LON:BILN) – Shares Up 14.3% Since Last Week

Yesterday morning’s Interim Results announcement from this Barnsley-based structural steelworks group really pleased the market.

The first six months to end June showed a 30.2% leap in revenues to £60.15m (£46.19m) while adjusted pre-tax profits were 237.4% better at £4.96m (£1.47m), with earnings up 231% at 28.8p (8.7p) per share.

Through its subsidiaries the group designs, manufactures, and installs structural steelwork in the UK, Europe and internationally.

The company designs, fabricates, and installs bespoke steel staircases, balustrade systems, and secondary steelwork.

It also provides safety solutions and barrier systems to the construction industry; protection and fall prevention systems; and site hoarding solutions.

In addition, the company engages in the property rental and management services.

It provides services to construction projects and operates in sectors, such as retail, data, commercial offices, education, healthcare, rail, and others. 

At the end of the first half the group reported a strong balance sheet with £10.82m cash in the bank.

Analyst David Buxton at Cavendish Capital upped his profit estimates after the results, now looking for £115m (£86.6M) revenues for the year to end December, taking adjusted pre-tax profits up to £9.9m (£5.8m) and jacking up earnings to 62.9p (39.1p) and hoisting the dividend to 20.0p (15.5p) per share.

He has a 541p Price Objective on the £52m capitalised company’s shares, which touched 410p in response to the excellent H1 news, before closing better at 400p.

The shares were up to 476p in May this year, which is a level to be anticipated again in due course.

(Profile 02.04.19 @ 266p set a Target Price of 314.5p*)

(Profile 13.06.22 @ 217.5p set a Target Price of 295p*)

Pendragon (LON:PDG) – Shares Up 34.6% On US Deal

On Monday this Nottingham-based group announced that it has agreed to sell its UK motor and leasing business to the US Lithia Motors for £250m.

Lithia, which is one of the largest motor dealerships in the States, will now form a joint venture company with Pendragon to roll out its Pinewood Technologies dealer management software system into the US.

Lithia will also invest £30m into the rest of the Pendragon group.

Employing some 5,300 people, the automotive retail sector group operates through three segments: UK Motor, Software, and Leasing segments.

Its UK Motor segment includes sale and servicing of vehicles in the UK; Software segment includes Licencing of Software as a Service to global automotive business users; and Leasing segment includes provision of fleet and contract hire.

The £332.56m capitalised company sells new and used motor cars, motorbikes, trucks, and vans, as well as offers associated aftersales activities of service, body repair, and parts sales.

It also operates, an online marketplace for used cars; and distributes aftermarket parts, accessories, and workshop consumables under the Quickco brand.

In addition, the company provides cloud-based dealer management systems; and Licence Link, an online license checking tool for fleets, as well as hires and leases cars and vans to small, medium, and large fleets under the Pendragon Vehicle Management brand, and retails vehicles under the Evans Halshaw and Stratstone brand names.

It is considered that this whole Lithia deal is worth some 27.4p a share to Pendragon’s investors.

The shares, which leaped 34.6% from 18.48p to 24.50p as the deal was analysed, closed last night at 26p.

This could well be an incredible rebirth for the group, but the 30% plus profit in just over four months could well tempt investors to take their turn.

(Profile 05.05.23 @ 18.2p set a Target Price of 22.5p*)

Avingtrans (LON:AVG) – Shares Just Treading Water

Next Wednesday morning will see this £127.62m capitalised specialist precision engineering group declare its results for the full year to end May.

David Buxton, analyst at Cavendish Capital, has a Price Objective of 495p on this group’s shares.

The company manufactures and sells engineered components, systems, and services to the energy, medical, and infrastructure industries worldwide.

It operates in three segments: Energy-EPM, Energy-PSRE, and Medical-MII.

The company designs, manufactures, integrates, and services electric motors and pumps, steam turbines, gas compressors, pressure vessels, blast doors, containers, and skidded systems.

It also designs and manufactures equipment for the medical, science and research communities, including products for medical diagnostic equipment; high-performance pressure, vacuum vessels, and composite materials for research organisations; and superconducting magnets and helium-free cryogenic systems for use in magnetic resonance imaging and nuclear magnetic resonance. 

Buxton is estimating that the end May 2023 results will show revenues of £109.0m, with adjusted pre-tax profits of £8.6m (£8.4m), lifting earnings up to 22.8p (21.6p) and maintaining its 4.2p per share dividend.

He continues to be impressed by the group’s PIE strategy – Pinpoint, Invest and Exit – recognising its ability to turn around underperforming businesses then look for medium-term disposal, creating value in the process.

Just how well the group’s separate businesses are performing in the first half of the current year will, no doubt, be referred to in the results outlook comment.

Ahead of the finals next week the group’s shares, which in March were up to 479p, are currently just treading water at 395p.

Not for chasing yet until good news is published.

(Profile 04.11.20 @ 260p set a Target Price of 325p*)

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


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