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  • Writer's pictureMark Watson-Mitchell

Small-Cap CatchUp – TLY, TEK, LGRS, BRCK, CODE, MGP, IOF, WNWD, PIER, BILN, SDG and ZIN

Totally (LON:TLY) – still cheap despite 52% price uplift in last two weeks


I do hope that readers followed up on my latest comments on this out-of-hospital healthcare services group.


Last Friday morning I reiterated that I liked the shares for an upwards push, despite them having risen from 15.5p to 19.5p that week.


They closed last night at 23.5p – that makes for a 52% uplift since the beginning of last week.


I also suggested to readers who had taken an investment in the Sureserve Group (LON:SUR), that they should sell into the market at 123p and reinvest into Totally.


We have had a cracking run with SUR and we have also done well with TLY previously and could so again.


Last week I featured the company after it gained a contract with the Welsh NHS.

On Wednesday of this week, it announced a new Urology contract for the West and North-West of Ireland.


This group could lift its pre-tax profit by 66% to £6.3m, worth 3.5p per share in adjusted earnings.


My new Target Price for the outsourcing group’s shares was 25p. I remain convinced that this is (totally) achievable which is why I still say that the shares are cheap and going higher still.


(Profile 12.03.20 @ 12p set a Target Price of 18p*)

(Profile 21.04.23 @ 19.5p set a Target Price of 25p)


Windward (LON:WNWD) – these shares could still more than double


This group, which operates the only Maritime Artificial Intelligence system, has performed well in this month.


On 3 April I profiled the company with its shares then at 37.5p and setting a short-term Target Price of 47p.


They hit that price on Wednesday, so I am very pleased.


The closing price last night was 48p, even so I would suggest that patient investors should take out further shares because this £36m capitalised group has considerable potential over the next few years.


Analysts at Canaccord Genuity rate the shares as a Buy, with a Target Price of 115p.


(Profile 03.04.23 @ 37.5p set a Target Price of 47p*)


Tekcapital (LON:TEK) – shares at a 55% discount to net asset value


Analyst Tania Maciver at brokers SP Angel has this week put out a Buy note on this group suggesting that its updated net asset value has to be around 31.7p a share.


That compares with the £27.5m group’s shares currently standing at 15.45p, which is a significant discount to that value.


Admittedly this intellectual property investment company’s portfolio has been predominantly in private companies, however they all seem to be at various stages of grooming ahead of public float, either here in the UK or over in the US.


This company has not been a good selection of mine to date, but I still believe in its potential.


The basis of this company has strong attractions, and its shares have very good appeal at the current price.


(Profile 12.09.22 @ 24.75p set a Target Price of 32p)


Medica Group (LON:MGP) – take the cash and reinvest


The agreed 212p a share cash bid from IK Partners, the private equity players, saw the teleradiology reporting services group’s shares touch 215p in fast market response, possibly on a view that a counterbid may well ensue.


However, I would suggest that if you have been a holder patiently waiting for the group to show its value, it feels like for years now, then I would suggest taking the market bid right now and use the cash to reinvest elsewhere (possibly in Totally, which is showing value).


(Profile 07.01.20 @155p set a Target Price of 215p*)


Sanderson Design Group (LON:SDG) – increased Target Price of 210p


After this week’s results for the year to end January 2023, analyst David Jeary at Progressive Research reflected that the leading brand names group was delivering to strategy against an unhelpful global backdrop.


The group’s FY23 performance showed flat revenue, with adjusted underlying PBT rising £0.1m to £12.6m. Net cash dropped back to £15.4m, with the total dividend maintained at 3.5p.


The star performers were Licensing (reported revenue +25%), the Morris & Co brand (+16%) and the US market (+20%).


Jeary’s forecast revisions assume more modest sales progression, with global uncertainties offsetting speed of delivery from SDG’s strategy but with profits growing over its forecast horizon.


For the current year to end January 2024 he estimates £115.8m sales, £12.2m profits and earnings of 13.7p per share.


For next year he looks for £119.9m revenues, £13.0m profits and 14.2p earnings.


Over at Singer Capital Markets analyst Matthew McEachran rates the shares as a Buy with an increased Target Price of 210p.


His 2024 estimates are for £116.2m sales, £12.0m profits and 12.9p earnings.


For 2025 he sees £122.1m takings, £13.0m profits and earnings of 13.6p per share.


The shares have been up to 148p this week and closed last night at just 129.5p, which is a bargain for such a solid little company.


(Profile 24.04.23 @ 135p set a Target Price of 168p)


Brickability Group (LON:BRCK) – ready to edge higher again


Wednesday’s Pre-Close Trading Update from this leading brick factor was really quite positive.


The year to end March showed a strong performance in its second half and that was despite the uncertain macroeconomic environment.


It guided that the results should show some £681m in revenues, up 30.9% year on year, while its adjusted EBITDA is expected to be not less than £50m, which is ahead of market expectations.


Analyst Andrew Gibbs at Cenkos Securities reiterated the group’s shares as a Buy, looking for an adjusted pre-tax profit for the last year of some £43.1m (£34.7m), while lifting earnings to 11.6p (10.1p) and easily covering a 3.2p (3.0p) dividend per share.


The group, which has a strong acquisition pipeline, is due to declare its finals in July.


Ahead of that date I would expect its shares, now 68p, to start to edge higher again, they were up to 93p this time last year.


(Profile 16.04.20 @ 39p set a Target Price of 55p*)


Corero Network Security (LON:CNS) – slowing down but going for 10p


Broker Canaccord Genuity continues to rate the shares of this cyber security software company as a Buy.


On Tuesday of this week the group reported that the leading provider of Distributed Denial of Service (DDoS) protection saw a slight fall in revenues for the year to end December 2022 to $20.1m ($20.9m) while its adjusted EBITDA almost halved to $2.0m ($3.8m).


But what was reported was a 13% improvement in its annual recurring revenues at $14.4m ($12.8m) – and you know just how positive I am about a strong ARR (every finance director’s dream figure).


The broker is looking for the group’s healthy order book and its existing customer expansion to help to counter any economic pressures.


However, noting that the group’s demand is stabilising it suggests that its growth may well see some inflection.


For the current year to end December it goes for $21.6m sales and just $1.8m EBITDA, dropping earnings to nil per share.


Even so the broker has a 10p Price Objective against the current 6.75p.


(Profile 14.04.20 @ 4.2p set a Target Price at 6.5p*)


The Brighton Pier Group (LON:PIER) – I dislike 18-month figures


I am never too keen on companies when they change their trading period times – it so often turns out to be a prelude to slower sales or profits.


Let us hope that is not the case with Luke Johnson’s diversified entertainment venues group.


On Monday this company, which owns and trades Brighton Palace Pier, some eight premium bars, eight indoor mini-golf sites and the recently acquired Lightwater Valley Adventure Park, reported its figures.


The group stretched its Trading Period to cover the 18 months to the end of December last year.


Its reason for the elongation is to see a better performance comparison when it has one whole summer trading season included in its figures as opposed to its previous end June, which covered pieces of two summer seasons.


However, for the 18 months that it reported on this week it showed revenues of £58.9m against the end June 2021 year at £13.5m, pre-tax profit did not show up that well though, at £6.4m for the 18 months against £4.2m for the 12 months.


Basic earnings per share came out at 17.1p (11.3p for 2021).


So now comes the explanation – from CEO Anne Ackord:


"Like many in our industry, we have had to absorb higher costs relating to wages, energy prices and other inputs. Nevertheless, our businesses remain profitable, well managed and backed by a strong balance sheet and asset base.


We are confident in the ability of our management teams to operate successfully in our markets, but we remain mindful of the continuing pressures from the wider economic environment in which we trade."


Despite broker Cenkos Securities rating the shares as a Buy, I have to say that I am disappointed and my previous enthusiasm for the equity has been somewhat daunted.


The shares, which are now 62p, may well take a very long time before they climb up again to the 115p level achieved this time last year.


We have had a good run in this company’s equity but now it has lost its appeal, especially while there is still so much good value elsewhere in the market.


(Profile 30.06.21 @ 61p set a Target Price of 75p*)


Billington Holdings (LON:BILN) – steel going higher


Two weeks ago, I suggested that the shares of this structural steel business represented an investment in a solid quality business.


The shares, then 390p, were a very strong hold for existing shareholders and a tempting bargain for new investors.


Last night they closed at 450p getting ever closer to the Price Objective set by analyst David Buxton at brokers finnCap, which is 541p.


There is certainly no reason to sell just yet, unless you are very tempted at taking a quick 15% profit in a fortnight.


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

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


Iofina (LON:IOF) – will the growth continue at the same pace


The 2022 trading year for this iodine group reported an increase of 8% in revenues to $42.2m ($39.0m), while its adjusted EBITDA was comfortably ahead by 65% at $11.5m ($6.9m).


Its adjusted earnings per share were 3.7c (2.5c) while its group net debt was well down at $0.9m ($3.1m).


For the current year the group reports that the iodine global spot price had remained steady at $70 per kg and expected to stay around those levels into the second half of the current year.


Canaccord Genuity analyst Alex Brooks continues to rate the group’s shares as a Buy, looking for 40p a share.


His estimates for the current year are for sales of $48.7m, with EBITDA of $13.0m and earnings of 4.2c per share.


Iofina has been a wonderful performer for this column and for former fund manager Richard Sneller, who was already a big holder of the group’s equity before his turn of the year big purchase for more stock at around 19p, taking his holding up to 34.88m shares representing some 18.2% of the stock.


They closed last night at a healthy 31.75p – showing both Sneller and existing shareholders a good return for their money.


Let us hope that the group can maintain its existing growth.


(Profile 29.07.20 @ 13.5p set a Target Price of 18p*)


Loungers (LON:LGRS) – shares could ease before July finals


Despite the macro challenges analyst Anna Barnfather at Liberum Capital continues to rate the shares of this all-day café/bar/restaurants operator as a Buy, looking for 400p a share against last night’s closing price of 200p.


On Tuesday the £208m capitalised group announced its Trading Update for the 52 weeks ended 16 April, showing a 7.4% like for like sales growth.


Liberum is estimating that the 2023 figures will come in at around £264m (£237m) sales but with pre-tax profits down at £9.4m (£21.6m), with earnings falling to 7.0p (17.1p) per share.


For the current year Barnfather goes for a lift-up in takings to £332m, with profits of £11.9m and earnings of 7.8p per share.


I am impressed by the confidence shown by CEO Nick Collins:


"We have once again delivered a truly stand-out performance over the year. Our sales have been exceptional with the mature estate trading 18% ahead of pre-pandemic levels and 7% ahead of what was a really strong performance last year.


We have progressed well with our accelerated site roll-out programme, opening 29 sites during the year which as a cohort are trading well above average.


The property market continues to work in our favour and our pipeline of around 35 sites for FY24 is incredibly exciting with nine openings planned for the first quarter.


The first site of our new roadside concept, Brightside, has opened well, and we look forward to opening the next two Brightside sites in the summer.


For almost a decade now we have consistently out-performed the market as we strive to deliver better for our customers and our teams.


The inflationary pressure across our supply chain looks to be easing, and our scale and continued growth have allowed us to mitigate much of the impact.


We look forward to continued strong performance as we enter FY24."


The group’s shares, which touched 295p in May 2021, closed last night at just 200p after having been as low as 178p just before last Christmas.


I like the way that the group has maintained its new openings programme, which as long as the cash does not drain away, will obviously help to improve its buying strength and hopefully improve its margins in difficult price-rise conditions.


I feel that its shares could well ease back before the group’s next corporate results statement in early July.


(Profile 03.09.19 @ 205p set a Target Price of 275p*)


Deltic Energy (LON:DELT) – a 20 for 1 consolidation


This week’s penny stock selection within the North Sea resource sector is looking to consolidate its 0.5p shares into shares of 10p each.


That means that if you had 100,000 previously then your holding would be reduced to just 5,000 shares.


They will still have the same cash value but instead of being quoted at 1.71p they would be at around 34.2p each.


I consider that at that pricing level they could well attract significantly more serious investors than penny punters.


That is very good news as the £34m capitalised group moves further with its North Sea prospects.


(Profile 26.04.23 @ 1.82p set a Target Price of 2.50p)


Zinc Media Group (LON:ZIN) – looking for a turnaround in price


To date this stock has been a failure as a selection for this column.


A year ago, I profiled the company, which I still like very much, but its shares have proved to an extremely weary performer.


In fact, they have not been higher than my Profile price of 117.5p, dipping to an interim period low of 77p.


I find a certain confidence continuing in the stock after this week’s results from the media group.


A number of new wins with Channel 5 and others will help to reduce its 2022 loss of £1.3m to an almost minimal loss this year of just £0.1m.


Analyst Harold Evans at Singer Capital Markets estimates that the year to end December 2024 could see £39.1m revenues and pre-tax profits of £1.0m, worth 4.7p per share in earnings.


With its shares trading at 87.5p they may look expensive but my faith in its management's ability to bring in the numbers in due course has not waivered.


Hold very tight.


(Profile 25.04.22 @ 117.5p set a Target Price of 148p)


Northcoders Group (LON:CODE) – fast-growing business


When I profiled this company in late January last year, I pitched my Target Price at 370p a share, which was 50p higher than that of its brokers at 320p.


That objective was breeched in late September, with 375p at its peak.


Having since slipped back on low activity, the shares dipped to 281p a month ago before bouncing back up again to trade at around the 320p level, before closing last night at 301p down 19p on the day.


That price recovery has been helped by the 2022 results having been published this week.


The provider of software coding training programmes reported revenues up 86% at £5.6m, while its adjusted EBITDA was better than market expectations, up 152% at £0.9m.


Pre-tax profits were £0.3m against a loss of £0.5m last time.


Earnings came out at 7.9p per share.


Cash at the December year end was standing at £2.8m (£1.6m), boosted by the £2.1m oversubscribed Placing last November.


CEO Chris Hill stated that:


"I am pleased to report our first full year results as a quoted company.


We have had a successful year, significantly growing revenue and profitability, whilst keeping our core values at the heart of everything we do.


A strategic priority was to create a presence in many regions across the UK, which has been achieved successfully during the period.


We have also been able to focus on the expansion of our Business Solutions division, which has been an immense success with a number of major corporates onboarding and making repeat orders.


Digital transformation is a growing priority for corporates, trying to find new and innovative ways of filling their teams and goals at a time of economic restraint, and Northcoders is incredibly well placed to satisfy this demand.”


Analysts Nick Spoliar and Charlie Cullen at WH Ireland have current year estimates of £9.5m revenues, £1.2m adjusted pre-tax profits and 16.2p earnings per share.


For 2024 they go for £12.5m sales, £2.0m profits and 25.2p earnings.


Based on those estimates you can see why this fast-growing business offers some very good upside, with its shares at 301p.


(Profile 28.01.22 @ 296p set a Target Price of 370p*)


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

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