TEK, PIER, CODE and IOF, then WINE and TWD
Tekcapital (LON:TEK) – IP portfolio constituent picks up
Yesterday morning saw the interim results from one of this intellectual property investment groups portfolio constituents – its first float-off, namely Belluscura (LON:BELL).
The latter, which is a medical device developer that is focussed upon lightweight and portable oxygen enrichment technology, declared its interim results to end June.
The figures showed that the group is getting all of its ducks in order. It now has manufacturing capacity, confirmed supplies in line, lower production costs and widening markets for its machines.
Dowgate Capital, the company’s broker, has a 200p price objective on its shares, looking for the company to sell some 2,000 units of its new device this year, then 18,000 next year and doubling again each year until 2025.
In the period it could swing around from small, operating losses into some very useful profits in 2024 and 2025, dropping the group’s price-to-earnings ratio down to some 2.9 times in the process.
Tekcapital owns about 13.9% of the Belluscura equity. It has high hopes for its portfolio constituent company’s improved portable oxygen concentrator to provide on-the-go supplemental oxygen. The device is smaller and quieter than most competitive products and has a replaceable filter cartridge that will enable the user to upgrade the unit as their disease progresses.
Across the world there are some 250m sufferers of chronic obstructive pulmonary disease, most of those patients require supplemental oxygen. Belluscura’s machine offers them the potential for significantly more affordable oxygen therapy for the patient’s life.
Belluscura only floated on AIM in May last year, since when its shares have been as low as 64p and as high as 152p, that was in January this year.
Shrewd serial investor Nigel Wray is the second biggest holder of stock in the BELL equity, with the company’s 121.8m shares valued at just £81m. With its shares at 66p. I see them going a great deal higher as more beneficial COPD developments become evident.
An easy 82p is my near-term guesstimate, they are a longer-term investment.
As for Tekcapital, this looks to be an ongoing improver and helps to make the IP technology commercialiser’s shares even more attractive at the current 21.75p?
(Profile 12.09.22 @ 24.75p set a Target Price of 32p)
The Brighton Pier Group (LON:PIER) – a buyer not a seller
Next Monday will see this mini-entertainment venue group declare its results for the twelve months to the end of June.
The company which not only owns and operates the famous Brighton Palace Pier, but also operates an eclectic mix of bars, mini-golf centres and the Lightwater Valley theme park in Yorkshire.
The company is reorganising its financial appearance by extending its trading period to end on 31 December this year. Thereafter it will report on a calendar-year basis.
Now, I am a fan of this group and its main shareholder Luke Johnson, I believe that its shares at just 75p are substantially undervalued and still very capable of rising back up to the 117p level reached in mid-April this year.
Hopefully the figures and statement next Monday will help to restoke the price recovery for its shares.
(Profile 30.06.21 @ 61p set a Target Price of 75p*)
Northcoders (LON:CODE) – this one has some ‘running power’
Yesterday’s interims to end-June from this software coding bootcamp group showed that it is getting its expansion and development absolutely right. There is no rush, as long as you are doing it correctly.
And that is just what is happening with this company that is now up to five bases across the country.
In the first half-year it has more than doubled the number of its employees as it copes with increasing demand for its various services. It offers training bootcamps for software development and data engineering. Also, its business services include tech talent pipelines and corporate academies.
Apart from its close relationship with the Department for Education, it has a stream of ‘top name’ clients, including Rolls Royce, BAE Systems, moonpig, Barclays Bank, AO.com, the Co-operative Bank, Legal & General, Jaguar Land Rover, Wren Kitchens, SkyVet, Deloitte, Evry, Accenture, On The Beach and NHS Digital amongst hundreds of others.
Analysts Nick Spoliar and Charlie Cullen, at the group’s corporate brokers WH Ireland, have lowered their estimates slightly, looking for £6.5m (£3.0m) in full year revenues, with adjusted pre-tax profits for 2022 of £0.7m, worth 12.2p in earnings per share.
For next year they go for £10.5m sales, £2.7m profits and 33.8p per share in earnings.
On the face of it the rating for the shares, at some 30 times current year earnings, may look fanciful, but I do consider that the kick in for the next few years makes them an excellent medium-term play.
My price objective was achieved in early February this year when the shares hit 390p. The subsequent fall back with the market to the current 360p, up 10p yesterday, now makes them primed for another climb to that High and above.
(Profile 28.01.22 @ 296p set a Target Price of 370p)
Iofina (LON:IOF) – interims due shortly could lift the shares
We can only be a few days away from the Iodine and specialty chemicals producer announcing its interim results to end June this year.
Having already had a strong pointer from the company when it revealed that it had secured additional loan facilities in early July, I would now expect to see it announced that stronger prices had countered the slight fall in production in the first half-year.
Jonathan Wright at the group’s corporate brokers finnCap has maintained his 30p price objective on the shares.
He is expecting a slight increase in full-year sales of $40.5m ($39.0m), but with adjusted pre-tax profits leaping ahead from $4.9m to $6.2m, which would be worth 3.2c per share in earnings.
For 2023 the analyst goes for $45.9m sales, $7.8m profits and 3.5c per share earnings.
The shares, which touched 28.5p in July, are currently 24.5p, up 1.25p on a Sunday newspaper tip.
I still rate this company’s prospects and consider that they will soon touch that higher level again, possibly even 30p.
So, hold very tight.
(Profile 29.07.20 @ 13.5p set a Target Price of 18p*)
And finally ……..
Naked Wine (LON:WINE) – ‘corked’ and certainly not for me thank you
I have not profiled this company, nor do I intend doing so.
That is because I was a close follower of its predecessor Majestic Wine, an excellent dispenser of my favourite drinks.
A year ago, this company’s shares were trading at 879p each, last Tuesday they were 147p, the next day they fell to just 81p as one of its recently appointed directors walked out of the job.
The old Majestic Wine business was established by the Apthorp family, behind the old Bejam frozen foods retailer, it was spun out of the old Wizard Wines company.
It did very well for some years, while its shares followed in the group’s growth.
It had a hiccup along the way and then, to their bad luck, in 2015 a South African chap called Rowan Gormley reversed his loss-making Naked Wines business into what had become the Majestic vehicle.
He did very well out of the deal – seen and hoped for by many as the potential ‘saviour’ of the group.
But it was not to be – and after he had enjoyed a significant ‘take’ from the company he then backed out prior to a US private equity group, Fortress, taking control in August 2019 for £95m.
That has since not proven successful either and now I see the collapsed Naked Wines has called Gormley back in again.
Oh, my goodness – hasn’t he done enough already?
He may well be seen as a ‘saviour’ but not by me – which is why I will stay far away from ever profiling Naked Wines.
And that even with the news of his return to the group helping to see its shares pick up from last Wednesday’s low of 81p to close two days later at 101.15p.
This one is definitely ‘corked’ in my view and the only winner may well prove to be none other than Gormley.
Trackwise Designs (LON:TWD) – my bearish article has borne results
It takes a lot to make me into a pessimist, my nature is one of pure positivity, despite the detritus that may be around.
I liked the background to this harnessed printed circuit technology company – having profiled its potential on 10 April 2019 when its shares were 92.5p, looking for 150p, even 200p, which they achieved before going up to an overblown 363p.
The shares were spoofed upwards from 70p in March 2020 to a 363p High in late December 2020.
It seems to me that the company’s Finance Director must have led corporate brokers and analysts to believe that his assumptions were correct.
They were not and ‘miss’ after ‘miss’ became the norm.
That must have been very embarrassing for brokers finnCap who had sponsored the company along the way.
I called the shares out as a total bear on 24 September 2020 stating that:
“I do not think that I could trust any revenue and profit indications coming from this company. How can its shares at 165p, be worth anything like this current price.
This company is capitalised at a stonking £38m, I would suggest that a holding price of 50p would still be too high until the company has shown itself to be of value and that its indications can be trusted.”
I returned to comment on the company on 27 June this year when I noted that:
“When will this Tewkesbury-based group stop hyping itself up and actually present realistic statements about its prospects that later bear out in truth?”
The shares were then down to 49p.
A year ago the Finance Director, Mark Hodgkins, declared that he was going to step down from his role as a director of the company. He eventually resigned this year and is now Executive Chairman of Ensilica (LON:ENSI) – so the best of luck to that company’s shareholders.
Last Wednesday morning TWD announced a contract Update, the news of its contents which shattered the group’s shares down to a year’s low of just 9.25p.
It may well take some time, if ever, to see a price recovery based upon a truthful corporate position.
Stay out and do nowt.
(Profile 10.04.19 @ 92.5p set a Target Price of 150p*)
(Profile 24.09.20 @ 165p ‘a stonking short’ looking for 50p*)
(Asterisks * denote that Target Prices have been achieved since Profile publication)