• Mark Watson-Mitchell

Taking a small-cap look at MRL, TED, CNS, ITIM, and BILN

Marlowe (LON:MRL) – Compliance pays off with assurance


The shares of this business-critical services and software group, which specialises in safety assurance and regulatory compliance, were just 753p a month ago.


They announced a Trading Update on 21 March stating that the group had continued to make strong and strategic progress in the year to the end of March, with its results expected to be in line with market expectations.


The group has bedded down a number of recent earnings-enhancing acquisitions, while more are in the pipeline. They also offer attractive cross-selling possibilities.


That news helped to get the shares nudging the 800p level. At the same time the company announced that it was to hold a Capital Markets Day (CMD) on Tuesday 5 April.


Within days they had moved up again, hitting 906p by the end of March.


They hit 932p on the CMD and peaked at 960p three days later.


Analyst Peter Renton at the group’s brokers Cenkos Securities has estimates out currently for the end March 2022 revenue up from £192.0m to £303.5m, giving £37.2m of adjusted pre-tax profits (£17.1m), worth 36.3p (24.6p) in earnings per share.


His ‘buy’ rating on the shares is backed up by him going for £410.0m sales this year, kicking profits up to £58.9m, generating 49.2p in earnings.


And what is more, I note that the group is running at 85% annual recurring revenues.

Capitalised at around £851m, this group is really growing very well.


Its shares have been as high as 1094p this year.


Now at just 920p they remain very firm hold.


(Profile 30.01.20 @ 468p set a Target Price of 550p*)


Ted Baker (LON:TED) – The formal sale process is now underway


It may well not happen, but my gamble would still be that it will.


Sycamore Partners, the $10bn US private equity group, is participating in the sale process now taking place at this lifestyle brand group.


What is more, we are also told that market rumours include other possible interested parties, such as Marks & Spencer and Next.


My bet continues to be 180p as a potential victory price.


Just as easily all bidders could well back away when they face competition and there may be no offer made for the group.


However, that was me just being cautious.


I reckon that reader gamblers could still have the opportunity of a useful punt.


The shares closed at 155p on Thursday night.


(Profile 14.07.21 @ 139p set a Target Price of 175p)

(Profile 22.03.22 @ 124p set a Target Price of 150p*)


Corero Network Security (LON:CNS) – 2021 finals due later this month


This group is a leading provider of real-time, high-performance, automatic Distributed Denial of Service (DDoS) cyber defence solutions.


Its shares have tripled since I profiled it in April 2020.


For the year to end December 2021 estimates are for $21m of sales revenues to have taken it out of operating losses of around $3.4m into at least a $0.5m pre-tax profit.


The company, which has operational centres in Edinburgh and in Massachusetts in the States, is headquartered in Amersham.


This cyber security software group sells more efficient and automated protection solutions through ‘channel partners’ as well through telecom and cloud service providers.


It has a strong annual recurring revenue building up but is still in the early stages of its corporate development, it has massive upside potential in its global growth.


It will be announcing its 2021 results on Tuesday 26 April.


I am looking forward to reading the statement from the group on just how well it traded last year and what it sees as its current year and future prospects.


Its shares are trading at around their five-year High at 14.50p.


I feel that good news will start to flow through in 2022 and that its shares could well break the 20p barrier within months.


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


Itim Group (LON:ITIM) – winning new business


This company, which floated on AIM in June last year, is a disruptive SaaS-based platform that enables store-based retailers to implement a proven and highly effective omni-channel solution to successfully compete with online-only players.


On Wednesday morning it announced that it had secured three contract wins that have helped it to put an added £1.8m on its annual recurring revenue., which could be running at £14m by the end of its 2022 trading year.


There is a growing list of potential wins being worked upon by the group and that encourages me to stick securely to my current price aim of 130p compared to the current market price of 124.50p.


These shares are undervalued and could well shoot a great deal higher than my price objective.


(Profile 07.03.22 @ 104p set a Target Price of 130p)


Billington Holdings (LON:BILN) – hassles in 2021 and better times in 2022


This group is one of the UK’s leading structural steel and construction safety solutions specialists.


It will be declaring its 2021 final results on Tuesday 26 April.


It had a number of hassles within the last year, including the failure of one of its main contractor clients. I understand that it is discussing how the particular contract gets completed and that it gets its due payments from the business that has now been placed under administration.


Despite its trading problems I continue to like this group, it is a ‘goer on’ in my view and I take the view that it will win masses more new business over the next few years.


I first profiled the company in April 2019 with its shares at 266p, they hit 443p in February 2020 just before Covid-19 impacted markets generally.


Since then, its shares have been back to 188p and are currently trading around the 227p level, at which I would be a buyer.


This £28m capitalised group could be in line to more than double its 2021 pre-tax profits this year, estimates of £1.3m for 2021 and £2.7m this year.


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


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

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