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  • Mark Watson-Mitchell

Small Cap catch-up featuring STV Group, Filtronic and Revolution Bars

STV Group (LON:STVG) – still plenty of time to get tuned in


Come Tuesday 6 September we will see the interim results from this broadcast and media group.


Although these results will not show the benefit of recent commissions, I am still hoping to see some good figures being presented.


The recent wins for the group’s STV Studios division include 80 sixty-minute episodes of ‘The Great Auction Showdown’, the recommission of ‘The Screw’, an eight-part crime thriller for Apple ‘Criminal Record’, a 58-episode ‘Auction House’ order from Really TV, and for eight 45-minute episodes of Bridge of Lies for BBC One amongst many others.


Yesterday the group declared a unique partnership with premium Acorn TV for its Original dramas to be shown on STV’s Player for free.


Analyst Roddy Davidson at Shore Capital considers that the group’s stock valuation has decoupled from its growth prospects and attractive fundamentals.


“We believe that its share price could almost double before achieving fair value and see a compelling opportunity to build exposure to this high-quality company.”


I have recently repeated my opinion of this group’s undervalued rating and I totally concur with Davidson in his view.


The current year to end December could see revenues rise from £144.5m to £153.3m, with adjusted pre-tax profits rising to £25.0m (£23.7m), worth 42.1p (41.0p) in earnings and paying a 12.5p (11.0p) dividend per share.


Next year we look for £28.7m profits and 46.2p earnings, while 2024 estimates show £31.0m profits and 49.6p earnings.


These shares at just 295p are capable of a good rise over the next six months and would still look cheap at under 500p.


(Profile 10.12.21 @ 345p set a Target Price of 425p)


Filtronic (LON:FTC) – growing order book gives more hope


This designer and manufacturer of advanced radio frequency communications products has shown another year of EBITDA growth, its third in a row.


To end May it saw revenues increase just 10% to £17.1m (£15.5m) while its EBITDA leapt 56% to £2.8m (£1.8m), while reported pre-tax profits were significantly better at £1.5m (£0.1m). Basic earnings improved from 0.3p to 0.68p per share.


Interesting to note that net cash was well up at £3.1m (£1.9m).


A note of caution though for the current year surrounds the company’s ongoing supply chain hassles, which could slow down ongoing growth for a while.


The shares at 14p are trying to maintain their recent firm stance, after having peaked at 17.34p.


Analysts Lorne Daniel and Michael Hill at finnCap currently have a price objective of 20p on the shares.


Hold for now awaiting the AGM Trading Update in late October.


(Profile 04.02.22 @ 11.6p set a Target Price of 14.5p*)


Revolution Bars Group plc (LON:RBG) – the take from two different brokers


Cenkos Securities opined that –


The Group’s pre-close statement on Tuesday confirmed the continued momentum in performance, with FY22 results expected to be in line with expectations.


The Group confirmed that given the ongoing inflationary environment, the Group is focusing on cost management whilst also benefiting from previously fixing their energy costs (until spring 2023).


Despite the challenging market, the Group continues to invest in the estate with 18 sites expected to be refurbished in FY23 alongside six new site openings. This expected investment builds on the 19 sites refurbished during the year (28% of the LFL estate), which are delivering returns in line with the payback target of two years.


Whilst management remain conscious of the challenging environment, early Christmas bookings have given management confidence for the important seasonal period and the broader return of corporate bookings.


The Group continues to trade below our listed UK bar and pub peers in terms of both EV/EBITDA and P/E.”


While over at finnCap they stated quite clearly that –


RBG’s full-year pre-close trading statement reads like a ray of sunshine in a market obsessed with rising consumer pressures. The update reveals that results will be in line with expectations, having upgraded following the mid-June trading update.


It continues to trade well and the outlook remains positive. Its customers have a degree of insulation from cost-of-living pressures and there are early signs of a return of the pre-Christmas corporate market.


The refurbishment projects are on track, initial trading at the two recent openings is encouraging and there is a healthy pipeline of new sites building. We leave our forecasts unchanged and reiterate our 36p target price, implying 146% upside.”


My view is that this group’s shares are clearly undervalued. It has so much potential and with the current economic environment it will, undoubtedly, be offered so many more possible sites for its bar expansion.


Once the whole market gets underway again, I feel that the shares, which closed at 15p last night, offer a great deal of upside.


My Target Price remains very firm.


(Profile13.10.21 @ 24.25p set a Target Price of 31p)


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

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