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  • Writer's pictureMark Watson-Mitchell

Small Cap Specifics … JNEO, FIF, PDG, KINO, TIG, HAT, WNWD

Journeo (LON:JNEO) – Making the Right Moves

Wednesday morning’s announcement by my favourite transport community technology solutions group has pleased the market.

For just €2.5m in a debt-free cash-free acquisition it has acquired MultiQ Denmark, which is a leading full-service provider of Intelligent Transport Systems with customers in Denmark, Sweden and Iceland.

The deal offers JNEO cross-selling opportunities for products, software, technologies and software, in the process strengthening the expanding group’s Nordic market operations from its existing Stockholm office.

CEO Russ Singleton stated that:

“The acquisition of MultiQ provides Journeo with an established, full-service provider of Intelligent Transport Systems in Denmark and further strengthens our expansion into the Nordic markets.

MultiQ has a leading position and strong SaaS based sales approach with approximately 40% recurring revenue that will complement our existing offering and bring further scale to our cloud-based applications.”

Analyst Andrew Renton at Cavendish Capital Markets, who has a Price Objective of 338p on the group’s shares, increased his 2024 estimates by 5%.

For the current year to end December he is looking for £41.7m (£21.1m) revenues while adjusted pre-tax profits could rise to £3.7m (£1.0m), generating almost doubled earnings at 19.7p (10.3p) per share.

The 2024-year estimate is for £44.7m sales, £4.2m profits and 22.2p per share earnings.

He notes that further upside could be seen if cash balances are deployed on additional acquisition opportunities.

The group’s shares, which hit 205.88p in late June before easing back to 178p a month later.

They closed last night up 5% on the day at 202p.

The corporate growth, sales and profits of this group deserve a far btter rating than currently accorded to its shares.

I can easily see them doubling my Target Price within months.

Hold very tight.

(Profile 07.04.21 @ 95.5p set a Target Price of 120p*)

Finsbury Food Group (LON:FIF) – Hit My Target At Long Last

It has been a very long slog.

The 30% appreciation that I sought in the share price of this Cardiff-based cakes, breads, bakery snacks maker has only just occurred this week following the mid-week

declaration that DBAY Advisors was offering to pay 110p for its shares.

After having previously made several unsolicited and rejected approaches by DBAY, the latest £143.4m cash bid has now been recommended by the FIF Board.

Chairman Peter Baker noted that:

The Finsbury Board has carefully reviewed the terms of DBAY’s Cash Offer, and believes it provides shareholders with an accelerated, de-risked opportunity to realise their investment in full and in cash at an attractive premium to both the current share price and the long term weighted average share price.”

With the Board’s 3.3% stake acceptance together with DBAY’s 13.6% holding, together with an undertaking from Investec Wealth & Investment for its 9.0%, it would already be a fair way down the line to winning through, but in these markets and in such times nothing is certain.

A 30% gain is appealing but if you have been holding on this long then you may do better to take that turn – after all ‘a profit is not a profit until it is in your pocket’.

The shares closed last night at 109.68p.

(Profile 12.12.19 @ 84.5p set a Target Price of 110p*)

Pendragon (LON:PDG) – Positively Taking The Lithia Test

Not all bid approaches win through.

Just take a look at how the Board of this Nottingham-Based motor sales and technology group has firmly rejected the highly conditional proposal from Hedin Mobility Group and PAG International, worth 28p per share in cash.

Anders Hedin is the group’s largest holder with 26.3% of the equity.

However, the Board remains excited about the Lithia Motors deal announced on Monday, which boosted the group’s share price from 18.48p to 23.70p in response.

Analyst Carl Smith at Zeus Capital considers that the Lithia deal offers potential for the group to significantly accelerate the growth in its Pinewood Technologies business after Lithia acquires Pendragon’s motors and leasing businesses.

He noted that Pinewood DMS is a software suite offered to motor retailers that is capable of combining sales, aftersales, OEM integration, and other apps and services required for omnichannel motor retailing.

The business offers software-as-a-service to 31,700 users across in the UK, Europe, Africa and Asia, with 87% of revenue from external customers in FY22.

Its scalable business model has attractive financial characteristics, such as high recurring revenue at around 90%, a low net user churn of about 2%, and high EBITDA margins of some 60%.

The £378m capitalised group’s shares, which closed last night at 27.10p, are a hold.

(Profile 05.05.23 @ 18.2p set a Target Price of 22.5p*)

Kinovo (LON:KINO) – hold very tightly

The group’s Board has held various discussions with certain key shareholders, other than with possible bidder Tim Scott who holds 29.58%, and it also considered direct shareholder feedback on a possible 56p a share cash offer from one of Scott’s companies.

The Directors emphasised that no improvement in the offer price was either discussed or offered by Rx3 following the Board’s rejection of the Possible Offer Price.

Accordingly, the Board’s view that the Possible Offer Price was at an unsatisfactory level such that the Directors did not believe it was appropriate to allow Rx3 to undertake due diligence.

We will now have to wait until November when the group announced its Interims, unless there is reason for any other corporate news in between times,

Remember analyst James Wood considers that the shares of this specialist property services provider are Speculative Buy, with a recently raised Price Objective of 62p a share.

They closed last night at 51.50p, so hold very tightly.

(Profile 29.08.23 @ 49p set a Target Price of 62p)

Shares On the Move …

CentralNic Group (LON:TiG) – edging gently ahead now that it has climbed above the 130p level. Now at 134.90p and destined to ascend above the 150p level very soon.

H&T Group (LON:HAT) – after hitting 428p yesterday they closed at 418.5p last night, Shore Capital expect a Trading announcement next month.Heading to 500p and higher.

Windward (LON:WNWD) – this £47m group’s shares, from just 41p ten days ago, suddenly put on a spurt this week, closing at 55p last night. Canaccord Genuity has a Buy out on the shares up to 115p, so could easily double.

(Asterisks * denote that Target Prices have been achieved since Profiles were published)


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