Small-Cap comment on SAA, SNWS, ACRL, BOOT, TEG, HFD, SRC, INL, VTU, and SDI
M&C Saatchi (LON:SAA) – don’t underestimate this lady
Last March I selected Vin Murria as one of my ‘women to watch’ on International Women’s Day.
She is a very canny lady and has a certain determination that must not be knocked.
So, the way that she has played her hand with her equity positions in this scandal-hit advertising group, just has to be watched very closely.
Her Board of Directors are believed to be against the possibility of her AdvancedAVT (LON:ADVT) vehicle making an all paper approach for control of the group’s equity.
Way back in May 2020 I profiled the company following disclosure of her initial interest.
The shares were then just 64p and I set no price objective because of the highly speculative situation that could well have developed within the agency group’s organisation.
After news of her approach late last week the shares touched 210p on the back of some fairly heavy trading, before easing back to end at 183.5p on Friday night.
What would I do now?
She is a canny lady and she is certainly not in a rush.
I would keep on backing Vin because I would hate to play cards with her, but I would be happy just looking at her when she plays.
(Profile 11.05.20 @ 64p set no Target Price)
Smiths News (LONSNWS) – well over 34% pa interest on your money?
If you buy shares in Smiths before the 12 January you should be entitled to a 1.15p per share dividend to be paid to you on 10 February. That is a very attractive 2.9% return on your money inside a month.
If the shares were not cheap enough already, I would have thought this gives them even more of a certain attraction.
They closed at 39.5p on Friday night.
(Profile 24.07.20 @ 20.25p set a Target Price of 27p*)
(Profile 24.06.21 @ 39.5p set a Target Price of 55p)
Henry Boot (LON:BOOT) – as yet to kick in
Realising just how much I like the property sector, in its various forms, you will not be surprised to know that I am looking forward to seeing the latest Trading Update from one of the UK’s oldest property groups.
On Tuesday of next week (18) this Sheffield-based investment, development and construction group, which was set up over 135 years ago, will hopefully reveal a recovery from 2020’s fall back in revenues and profitability.
The Update will cover the final period to the end of last month.
The group’s shares have not been a good performer as yet, so I am hopeful of good news to come to aid their upward spurt in price.
Friday night’s close was 276.5p, some way off my price objective, but time and value are on my side.
(Profile 24.05.21 @ 276p set a Target Price of 340p)
Accrol Group Holdings (LON:ACRL) – not on its bottom
This tissue converter has extended itself over the last couple of years.
It now has some six manufacturing sites in the UK and despite pressure on its raw material prices it has been able to wipe them over to its group customers.
We shall see just how well it has been trading of late when the company announces its interim results to end October last on Tuesday 18 January.
The group’s shares are currently bouncing along on their backside at just 31.25p.
This time last year they were trading up at around the 75p level – could an item or two of good news help them to stage some price recovery?
Worth a small gamble?
(Profile 12.03.19 @ 22p with no set Target Price)
Ten Entertainment (LON:TEG) – a striking action to come
We have been lucky so far with the performance of this bowling alley and entertainment centres group.
The shares have more than doubled on my profile price in the last fifteen months or so.
Despite the major impact of Covid-19 it has managed to pull through and is now looking very capable of a good pick-up this year and next.
Douglas Jack, analyst at brokers Peel Hunt, remains bullish and has the stock as a ‘buy’ after the group reported a 29% like-for-like sales growth last year.
His price objective is a very strong 350p, compared to Friday night’s close of 255.5p.
Over at Liberum Capital their analyst Anna Barnfather also rates the shares as a ‘buy, but with a 340p price objective.
She is estimating that sales will have risen from £36.3m to £67m last year, with the previous £19.1m loss being wiped out and replaced by a much heathier £3.1m pre-tax profit, worth 3.6p per share in earnings.
Going forward into this year her take is on £96m of sales generating a £14.4m profit, worth 17p in earnings and covering a 5.5p dividend per share.
(Profile 02.10.20 @ 135p @ 135p set a Target Price of 170p*)
Halfords Group (LON:HFD) – really bulking up its operations
The recent near £64m cash raise by the motoring and cycling products and services group proved successful @ 320p a share. The funds were required to help fund its acquisition of the National tyre and automotive servicing business – a very complementary purchase.
The shares closed last week at 360.5p, which is more than twice my price objective of 180p fixed in July 2020.
This bulking up deal will, in my view, really help margins improve and the very fact that it has used its equity for funding the addition is a very positive factor.
However, at this level, despite its current strength, I would not find it difficult to persuade you to sell half your holdings – putting the balance in for free.
(Profile 02.07.20 @ 156.5p set a Target Price of 180p*)
SigmaRoc (LON:SRC) – a classic user of what the market is about
This ‘buy and build’ group just goes from strength to strength.
Last week’s acquisition of the Johnston Quarry Group is earnings enhancing purchase.
Analyst Charlie Campbell at brokers Liberum Capital has upped his price objective for the group’s shares to 130p.
He is already going for the building materials group to have more than doubled sales in the year to end December 2021, at around £255m (£124m) and similarly expanding its pre-tax profits to £26.9m (£12.2m), worth 4.9p per share in earnings.
For this new year he is now looking for £455m of group revenues and £57m of profits, worth 6.6p per share in earnings.
This now £625m capitalised group is an excellent example of how to construct a profitable group out of a ‘cash shell’ and its valuation is nowhere near the ridiculous levels of the growing number of ‘SPACS’ out there in the market.
Campbell is right and I am convinced that his price aim will be achieved.
The shares traded at around the 97.5p level at the end of last week.
(Profile 04.09.20 @ 49p set a Target Price of 65p*)
Inland Homes (LON:INL) – who else is getting interested in this group’s equity?
I was sorry to see the U & I Group (LON:UAI) shares de-listed and trading in its shares cancelled.
However, I was delighted for readers of this column who took heed of my comments this time last year when seeing the shares at just 63p as being an exciting ‘brownfield’ investment.
The recommended cash offer from property sector major Land Securities, last November was 149p a share. So that gave readers a very handsome 136.5% return inside the year.
The concluding of that deal brought about attention to other players in the ‘brownfield’ sector, like Inland Homes.
If that was not enough, a little whisper of certain private equity players being interested in what Inland has to offer could well have lit flames of interest last week.
After my ‘follow-up’ profile on the company last Tuesday the dealing activity was fairly intense.
In fact, very intense. On that day some 448,335 shares were dealt, more than twice the average daily dealing volume.
Then on Wednesday some 1,232,990 shares changed hands.
On Thursday the action was even heavier at 2,111,201 shares dealt – almost ten times the daily average.
Friday’s close was after more gentle trading, with 479,063 shares transacted.
They closed at 58.5p, within a whisker of my price aim of 60p set on 29 October.
Will they get there and go above?
Yes, of course they will.
As I have said before this company’s shares are undervalued and with so much interest beginning to build up in the ‘brownfield’ development sector they are obviously destined to climb in value.
Will a ‘Land Securities’ type group or even a ‘private equity’ player like Elliott make a pitch at Inland – that is the question – last week’s dealing action was more than interesting and fanning the flames somewhat.
I would rather be a buyer of the shares now than a seller.
(Profile 13.08.19 @ 68p set a Target Price of 110p)
(Profile 24.10.19 @ 77p set a Target Price of 110p)
(Profile 29.10.21 @ 46.5p set a Target Price of 60p)
Vertu Motors (LON:VTU) – more motoring in prospect
Despite a very harsh climate in the new cars market, it has been more than interesting to see just how strongly the shares of this multi-franchise motor group have performed over the last year or so.
With some 154 sales outlets across the UK, this group is the fifth largest automotive retailer in the country – its brand names are mainly under Bristol Street Motors, Vertu and Macklin Motors.
Its franchises include Mercedes-Benz, Jaguar, Land Rover, Toyota, Audi, BMW, Honda, Jeep, Kia, Smart, Mini, and Volkswagen.
This company was another ‘buy and build’ operation.
It has been doing well in its used car business, but there has been something of a supply shortage as prices have risen in the last year.
In early December the group stated that, based upon its recent trading, it will be looking to upgrade its outlook for the full year to the end of next month.
Early last week the company’s shares hit a 52-week trading range peak of 75.21p, before ending the week at 68.6p.
With current year pre-tax profits now expected to be over £70m it is reasonable to see the shares as a more active market, despite having risen 125% since my first profile on the company fifteen months ago.
(12.10.20 @ 30.5p set a Target Price of 40p*)
SDI Group (LON:SDI) – getting up a head of steam
The design and manufacture of scientific and technology products for use in digital imaging, sensing and control applications is this group’s business.
Its shares have almost trebled since my profile in October 2020 and I consider that they can go even higher yet.
In the year to end April 2022 it could see revenues increase from £35.1m to £46.1m, with adjusted pre-tax profits rising from £7.7m to almost £10m, worth over 7p per share in earnings.
A month ago the group reported a good set of interim results to end October, with Ken Ford, the group’s Chairman declaring
“We are pleased to report yet another strong set of financial results. SDI Group continues to execute on its business model, investing in quality businesses that are able to grow while generating cash. We look forward to delivering a full year performance in line with market expectations."
Then last Friday announced continued expansion with the £4.9m acquisition of Scientific Vacuum Systems, a UK-based maker of physical vapour deposition equipment, which appears to fit well into the group’s expanding portfolio.
Analyst Mark Brewer at broker finnCap upped his price objective on the company’s shares by 14% from 210p to 240p on news of the accretive acquisition.
The shares touched 220p before easing back to rest at 210p at the end of the day.
Hold very tight.
(Profile 28.10.20 @ 76p set a Target Price of 95p*)
(Asterisks * denote that Target Prices have been achieved since profile publication)