Small Cap catch-up – HWG, BILN, PRV, HTG, SCE and WINK
Harworth Group (LON:HWG) – undervalued at such a discount to NAV
This group invests to transform land and property into sustainable places where people want to live and work.
It owns and manages a portfolio of some 14,000 acres of land on around 100 sites located throughout the North of England and Midlands.
The £368m capitalised group’s AGM is due to be held on 23 May, when we might expect a Trading Update for the first four months of the current year.
Analysts Chris Spearing and Bjorn Zietsman at Liberum Capital currently rate the group’s shares as a Buy, looking for 140p.
They estimate that the current year to end December will show a slight pick-up in sales to £29.5m (£28.8m) while its pre-tax profits could fall 60% to £3.7m (£9.2m), slashing earnings to 1.1p (2.8p) per share, but notably actually increasing its dividend to an uncovered 1.3p (1.2p).
The brokers suggest that end year net debt may be close to double at £48.4m (£25.7m) while its net asset value could work out at around 202p (207p) per share.
The shares, having been down to just 99p in the last year, are currently trading at 114p, that is a level that is too deep a discount to value to be ignored.
(Profile 25.07.19 @ 130p set a Target Price of 170p*)
Billington Holdings (LON:BILN) – a solid quality business
This company is one of the UK's leading structural steel and construction safety solutions specialists, focused on structural steel and engineering activities throughout the UK and European markets.
It is announcing its 2022 finals next Tuesday (18), following the positive Trading Update in early March we already know that profits, cash and dividends will be ahead of market expectations.
Analyst David Buxton at finnCap has a 541p price objective out on the shares.
He looks for the year to end December 2022 to have shown £90.0m (£82.7m) revenue, with adjusted pre-tax profits leaping from £1.3m to £6.6m, while earnings may have increased to 45.7p (8.1p), admirably covering a 15.5p (3.0p) per share dividend.
For the current year he has £115m revenues, £8.8m profits, earnings of 57.1p enabling a 20.0p dividend per share.
The £50m group’s shares have moved up impressively since its 180p low last September. In chunks it has climbed to 390p currently at which level they are a very strong hold for existing shareholders and a tempting bargain for new investors.
(Profile 02.04.19 @ 266p set a Target Price of 314.5p*)
(Profile 13.06.22 @ 217.5p set a Target Price of 295p*)
Porvair (LON:PRV) – don’t be too pessimistic
Earlier this year this group’s shares touched 700p, having risen from 481p last September.
They are now trading at around 629p and ahead of next week’s AGM Trading Update they look somewhat hesitant in direction.
The company, which is a specialist filtration, laboratory and environmental technology group, had a good year to the end of November 2022.
Sales were 18% higher at £172.6m (£146.3m), while adjusted pre-tax profits were 31% better at £19.4m (£14.8m), leaving earnings 23% higher at 32.1p (26.0p) per share, amply covering the meagre 5.7p (5.3p) dividend.
The £291m group has cautioned that near-term supply chain hassles and inflationary pressures could well temper the current year’s business.
Next Tuesday morning may cast away pessimistic thoughts.
In the meantime, the shares are a hold.
(Profile 05.10.20 @ 510p set a Target Price of 600p*)
Hunting (LON:HTG) – drilling down to go up
It has been through so many ups and downs over the decades since I have been following this 149-year-old group which provides oil and gas tools and components on a global basis.
Next Wednesday the £395m capitalised business will be holding its AGM and will no doubt be issuing an AGM Trading Update.
Analyst Daniel Slater at Zeus Capital has a current value of 300p on the shares, with a view to seeing 370p based on his 2024 estimates.
For this year to end December he goes for revenues up to $815.9m ($725.8m), with adjusted pre-tax profits of $41.4m ($10.2m), more than trebling earnings to 18.9c (5.8c), covering a 10.0c (9.0c) dividend per share.
For the coming year he has $939.4m sales, $54.6m profits, 25.0c earnings, while maintain a 10c dividend per share.
I remain a long-term fan of this company and am optimistic that its share price, now 240p, will continue to recover to more realistic valuation levels, with 300p being an easy aim.
(Profile 15.03.21 @ 275p set a Target Price of 350p*)
Surface Transforms (LON:SCE) – freeing the brakes
Earlier this month this manufacturer of carbon fibre reinforced disc brakes for the automotive sector declared in a Trading Update that it has rectified certain problems that it has been enduring, while it is now ramping up its output.
That helped to lift its depressed shares from 27.5p to the current 30.5p, leaving a lot of upside potential as the group continues to develop its business.
Capitalised at £74.5m the group are experts in the development and production of carbon-ceramic materials and the UK’s only manufacturer of carbon-ceramic brakes for automotive use.
The company utilises its proprietary next-generation carbon-ceramic material – CCST – to create lightweight brake discs for high-performance applications, including automotive and aircraft brakes.
The Liverpool-based company has extensive in-house engineering and manufacturing capabilities, including the facilities for manufacturing carbon-ceramic brake discs.
Next Monday (17) the company will be announcing its end December 2022 final results.
Michael Clifton and David Buxton, analysts at finnCap, are impressed by the group’s order book from major global motor manufacturers. They see the shares being worth 120p.
Their estimates for 2022 are for revenues to have more than doubled from £2.4m to £5.1m, while the adjusted pre-tax loss could have increased to £5.5m (£4.3m loss).
For the current year they go for more than trebled sales at £16.2m, chopping losses down to just £0.9m.
For the coming year their figures suggest £30.5m revenues and a healthy £4.7m profit, worth 2.0p in earnings per share.
Some good news is what we would like to see with the results, certainly enough to tickle in buyers to take the shares back up to at least 40p in early reaction – we shall just have to wait and see what occurs.
Holders should stay very tight, while newbies should take a risky punt.
(Profile 19.09.19 @ 17p set a Target Price of 30p*)
(Profile 08.01.21 @ 50p set a Target Price of 65p*)
M Winkworth (LON:WINK) – an improving property market will help
On Wednesday of next week (19), this £23m capitalised franchisor of Winkworth estate agencies operating in the UK, Portugal and France, will be declaring its 2022 finals.
The business, which traces back some 188 years, franchises out residential estate agencies with a pre-eminent position in the mid to upper segments of the sales and lettings markets.
The franchise model allows entrepreneurial real estate professionals to provide the highest standards of service under the banner of a long-established brand name and to benefit from the support and promotion that Winkworth offers.
Following the company’s Trading Update in early January this year, analyst Alastair Stewart at Shore Capital noted that in 2022 the company had a buoyant year for the London-based agent’s sales and letting activities.
He raised his end December 2022 estimates to £9.3m (£9.5m) revenues, with £2.5m (£3.2m) adjusted pre-tax profits, easing back earnings to 14.7p (19.5p) and sufficient enough to cover an increased dividend of 11.0p (9.3p) per share.
For the current year he forecasts £9.4m sales, £2.4m profits, 13.9p earnings and an improved dividend at 11.8p.
Stewart likes the steadily increasing net cash position of the group, looking for £5.0m net at end 2022 and up to £6.0m by the end of this year – which is really quite healthy.
It may be some while before the group’s shares, now 180p, hit my Target Price – but investors should stay firm with their positions.
(Profile 19.07.21 @ 190p set a Target Price of 240p)
(Asterisks * denote that Target Prices have been achieved since Profile publication)