Small-cap round-up featuring MRL, CRU, ALU, TPT, HOTC, IDOX, RFX, FAN, DX and finally SUR
Marlowe (LON:MRL) – are these shares toppy?
This group, which supplies business-critical services and software which assure safety and regulatory compliance, has been very busy this week.
On Monday it announced two acquisitions – VinciWorks and Hydro-X – for a combined total of £84m.
Then yesterday it followed those buys with a tiddler – Sterling Hydrotech – for £1.75m.
Each of the purchases marks a strategic push by the growing group, now valued at £715m with its shares moving ahead to 926p.
Analyst Peter Renton at Cenkos Securities rates the group’s shares as a ‘buy’.
He is looking for the current year revenues to end March 2022 of £292m (£192m), doubling profits up to £33.8m (£17.1m), with earnings of 35.1p (24.6p) per share.
For next year he sees £330m of sales, £43.2m of profits and 44.8p of earnings.
The shares are beginning to charge ahead too fast, methinks. Even so, they remain a strong hold, if you are not tempted to ‘top slice’.
(Profile 30.01.20 @ 468p set a Target Price of 550p*)
Coral Products (LON:CRU) – still aiming for 18p a share
Even after this week’s final results the group has been buying in more of its own shares.
The last year has seen quite a lot of corporate movement, selling off subsidiaries and buildings and making in-roads into its future growth through acquisitions.
The year to end April saw sales of £10.7m (£8.7m), with profits more than trebled ££0.76m (£0.23m).
Cash reserves in the group rose from £0.5m to £3.8m and will shortly be boosted further following the property disposal worth another £3.5m.
That will leave the shares with a net asset value of 15.3p a share.
Since the year-end raw material prices have risen so the current year to end April 2022 may only see £12m of sales and profits of £1m, taking earnings up to 1.2p (1p) per share.
Analyst Jason Streets at WH Ireland has pencilled in a fair value range of 15p to 22p, for the shares, now trading at 14p.
A dull performance to date but my ‘water’ tells me that this one will come very right in due course.
My price objective remains firmly intact.
(Profile 28.04.21 @ 14p set a Target Price of 18p)
The Alumasc Group (LON:ALU) – AGM due in two weeks time
It must have been rough over the last few months for not only the construction sector generally, but also for the building product suppliers like this group.
Shortages across the board will not have helped, I am sure, however, the orders are still increasing.
The group, which saw sales rise from £76m to £90.5m in the year to end June, is predicted to see some £97m revenues in this current year, despite the hassles.
That should help the group to at least maintain its very much increased level of profitability – it almost trebled the 2020 £3.7m, coming in at £10.5m, with earnings jumping to 23.3p (8.2p) per share, while its dividend rose significantly from 2p to 9.5p per share.
Analyst David Buxton at finnCap, the group’s brokers, looks for £10.8m profits this year, 23.6p earnings and a 10p per share dividend.
Buxton has a price objective of 315p on the shares.
Considering that the shares are now trading at only around 230p, after touching 288p a few months ago, they still look very undervalued to me. The AGM is on 21 October.
(Profile 13.02.20 @ 116p set a Target Price of 145p*)
(Profile 08.06.20 @ 80p set a Target Price of 110p*)
Topps Tiles (LON:TPT) – grout there and buy some
The Q4 Trading Update from the UK’s leading tile specialist retailer, for the 53 week period to 2 October showed sales were some £227.5m against the 52 weeks in 2020 of £192.8m. That was a record turnover year for the group.
The end period cash for the debt-free group was £28m against £26m.
The group remains confident in its strategy and outlook. However, it is continuing to monitor rising costs and supply chain pressures.
Rob Parker, the group’s CEO, commented that: “The group has delivered an excellent final quarter and we have achieved a record level of annual revenue, despite operating with trading restrictions for significant parts of the year.”
He went on to note that “We remain confident on the outlook, against a backdrop of strong demand for DIY products and continued investment into home improvements.”
Analyst Adam Tomlinson, at the company’s brokers Liberum Capital, rats the group’s shares as a ‘buy’ looking for 110p.
For the current year to end September 2022 he estimates £235m, profits of £14.9m, earnings of 6.2p and a 3.1p dividend per share.
Trading at around the 64p level the shares look extremely good value to me, although my price objective time period is having to stretch out a bit.
(Profile 09.05.19 @ 75p set a Target Price of 100p)
Hotel Chocolat (LON:HOTC) – smooth rise due
After a short delay, this chocolatier and multi-channel retailer, on Tuesday morning announced the results for the 52 weeks to 27 June.
They reported a 21% advance in sales to £164.6m, with pre-tax profits rising from £2.4m to £10.1m, worth 6.4p in earnings per share.
Wayne Brown at Liberum Capital has estimated sales of £205m for the 2022 year and £19.5m profits, with 11p earnings.
Going forward the analyst goes for £247m sales in 2023, then £288m in 2024. Profits could rise to £25.3m in 2023 then up to £34.2m in 2024, with earnings of 14.1p and 18.2p respectively.
High hopes are still being shown for the group’s ‘Velvetiser’ which is due to commence a TV campaign shortly.
Impressively the group now sees some 70% of its sales coming in from its digital side, its continuity products and through its various partners.
It has enjoyed a 31% advance in its active customer database, now at 1.8m buyers.
A stretch into Japan and the States is growing apace.
CEO Angus Thirlwell stated “I am confident that the strategic progress we have achieved over the past year has improved the performance and prospects of the business for significant years to come.”
Liberum has a ‘buy’ out on the shares, going for 620p as its objective.
The shares, now 460p, have some real upside.
(Profile 21.03.19 @ 340p set a Target Price of 402p*)
Idox (LON:IDOX) – going spatial
Selling to the UK Public Sector and globally to engineering clients this software group, earlier this week acquired a geospatial information services technology business, exeGesIS Spatial Data Management, for £7m cash.
The Brecon, Wales-based business enjoys strong margins and recurring revenues, which is good news as far as I am concerned.
Gareth Evans and Ian Poulter at Progressive Equity Research, ahead of the Trading Update on 21 November, estimate that the revenues for the October year-end will be some £65.7m for the group (£68m) while profits could rise to £12m (£10.5m).
For the next two years £70.2m then £74m of revenues for 2022 and 2023 respectively, with £15.6m then £17.5m profits.
Revenue and profits growth seem very good, however, the earnings are still some way off at 2.2p in 2021, 2.8p then 3.2p per share.
At the current 67.8p that makes the shares get valued on very high ratings. Hold.
(Profile 30.04.20 @ 38.5p set a Target Price of 50p*)
Ramsdens Holdings (LON:RFX) – treading water
Yesterday’s Pre-Close Trading Update from this pawnbroker come jeweller come foreign exchange trader showed that the last year has taken its tolls on the group.
On £44m estimated revenues it might have made just £0.5m pre-tax profits for the year to end September (£9.2m).
It could well bounce back in the current year to around £55m of revenues and £5m profits, generating 12.5p per share in earnings and possibly paying out a 5p dividend.
Until that recovery is visible, I feel that the shares, now 165p, may well just tread water.
(Profile 07.11.19 @ 204p set a Target Price of 250p*)
Volution Group (LON:FAN) – blown away by the figures but looking toppy
The year to end July reported a 25.8% jump in sales to £272.6m, while adjusted pre-tax profits leaped 70.2% to £53.2m, with earnings up 115.2% to 10.5p, sufficient to resume dividends at 6.3p per share.
The air quality solutions group, which sells globally its products, should see further advances over the next couple of years, but not at such a strong rate.
Profits of £59m, then £62m, and for 2024 £65m, are market estimates, with respective earnings of 22p, 23.5p, then 24p per share.
We have had a magnificent run with these shares, now 465p, which although they could well nudge higher, are not for chasing.
A gentle ‘top slicing’ would be appropriate.
(Profile 23.05.19 @ 174p set a Target Price of 250p*)
(Profile 25.01.21 @ 301.5p set a Target Price of 350p*)
DX (Group) (LON:DX.) – you are late, we have been waiting
This group’s deliveries are said to be both safe and fast. It is expanding at quite an impressive rate.
However, its accounts are late.
That is due to problems with its Auditor Grant Thornton. GT’s problems and no material hassles at DX.
Analyst Guy Hewett at finnCap, its brokers, has estimated £383.3m of revenues (£329.3m) for the year to end June, generating £11.8m of profits against just £0.3m previously.
For the current year, now more than three months underway, he goes for £408.9m revenues and £16.5m of profits, worth 2.3p against an estimated 1.9p for 2021.
Leaping forward for 2023 some £439.8m of sales could produce £23m of profits, worth 3.3p per share in earnings.
I really like this group and the way it operates. Its growth has been impressive, as too its profits.
The group’s shares have been up to 38p but are now idling at around 30.75p. Even so, that level is more than double my price objective of early last year, some 246% up on my profile price in twenty months.
And what do I think now?
They have the ability to almost double up again.
(Profile 20.02.20 @ 12.5p set a Target Price of 15p*)
Sureserve Group (LON:SUR) – much more growth ahead
Yesterday’s Trading Update from this compliance and energy services group reported a strong performance in its revenues, its cash position and its profitability.
The group’s broker Shore Capital expects its sales to have grown from £195.7m to £243.1m for the year to end September.
It is looking for pre-tax profits to have risen from £9.4m to £12.9m, with earnings of 6.6p (4.9p), easily covering a 1.5p dividend (1p) per share.
The strategy of organic and acquired growth will continue.
The shares jumped 14% on the news to close 1p better at 80p.
Still looking good value, if the group can make £15.4m of profits this year. Then £17m in 2023, with earnings rising to 7.8p then 8.4p per share.
They could well test that 100p level again soon.
(Profile 14.01.20 @ 36p set a Target Price of 50p*)
(Asterisks* denote that the Target Prices have been achieved subsequent to profile publication)