Small-cap round-up: featuring Kape, Sureserve, Worsley and more…

In this weekly summary, Mark Watson-Mitchell updates his readers on previous company profiles and other news of interest from the exciting world of small cap stocks…

Kape Technologies (LON:KAPE) – flying away

Wednesday’s 2020 final results statement from this digital security and privacy software business showed very strong growth, with revenues up 85% at $122.2m and adjusted pre-tax profits up more than 146% at $26.1m ($10.6m). Earnings more than doubled from 6.5c to 13.5c per share.

The year did include a $25.6m once-off tax benefit. Even so broker’s estimates, for this current year and next, show $200m of sales for 2021, then $250m for 2022. Profits could more than double to $64m this year and move up to $84m next year, worth 25.5c, then 33c in earnings per share.

This group is building up fast and I would suggest that those estimates will be soon left well behind.

The shares remain an excellent hold.

(Profile 21.12.20 @ 172p set a Target Price of 215p*)

Sureserve Group (LON:SUR) – Bob has done a totally good job 

The news yesterday that Bob Holt, the Chairman of Sureserve Group, is leaving the board was a surprise but certainly not devastating. The group held its AGM yesterday, with Bob stepping away before the meeting.

He has done a bloody good job having pulled the company around in the last five years and leaves it looking very strong and investment worthy, despite its shares having eased 8% to 67p on the announcement.

Don’t forget he is still in the chair at Totally (LON:TLY).

(Profile 14.01.20 @ 36p set a Target Price of 50p*)

Worsley Investors (LON:WINV) – substantial discount to its fair value

On Wednesday of this week, I was pleased to see the latest announcement from this Guernsey-based investment company. 

The interims to end-December showed net assets of 39.89p per share, compared to the almost static share price of just 25.5p, a massive 36% discount to their value.

I see this little company becoming a very interesting vehicle in due course.

I now set a target price of 32p on the shares, which I will be profiling next week.

(Profile 10.09.20 @ 25.5p, now setting a Target Price of 32p)

Tribal Group (LON:TRB) – well below fair value

This education sector software specialist showed only a £5.2m fall in revenues last year at £73m, with its adjusted pre-tax profits coming out unchanged at £11.5m.

Brokers N+1 Singer estimate that current year revenues will increase by £5m to £78m, then up to £80.3m next year, kicking in £12.4m then £12.7m in adjusted pre-tax profits.

They reckon that the shares, now 102p, are trading some 30% below fair value.

Hold steady for the time being.

(Profile 11.11.20 @ 65p set a Target Price of 80p*)

Centaur Media (LON:CAU) – on track to achieve its goals

The 2020 finals saw this media group ending the year with £8.3m in cash despite it still trading at a loss. But that was expected.

What was encouraging was that the H2 improvement in trading has continued into this current year.

Broker N+1 Singer is going for profits of £1m this year, against a loss of £0.3m last year. They look for £3.3m pre-tax next year, then £6.3m of adjusted pre-tax profits for 2023, worth 3.4p in earnings per share.

After hitting 40p on Wednesday evening, the day of the results, the shares close the week at around that price, just a fraction below my early March price objective.

Hold tight.

(Profile 03.03.21 @ 33p set a Target Price of 41p)

Gresham House Strategic (LON:GHS) – very positive update due shortly

2020 could well have proved to be a real bonanza year for this investment group. 

It invests in UK smaller public companies, applying private equity techniques and due diligence alongside a value investment philosophy to construct a portfolio focused in 10-15 companies.

We saw a very positive first-half statement last November, so the trading update for the year to the end of this month should show even further advancements.

That could well be announced early next month, ahead of which a couple of the company’s directors have been adding to holdings.

A very firm hold at the current 1,390p.

(Profile 16.10.20 @ 985p set a Target Price of 1,300p*)

Capital Ltd (LON:CAPD) – still offering upside

With an increased number of rigs in its fleet, 98 last year against 92 in 2019, and an increase in their utilisation, up from 54% to 59%, it was good to see this expanding mining services group record better results.

For the year to end-December it saw a 17.5% increase in revenues to $135m and an uplift in net profits at $24.8m against $10.4m previously. Earnings came out 130.6% better at 17.8c, with an almost doubled dividend at 2.2c (1.4c).

The net assets per share were up 68.3% at 106c, while net cash was 13.1% better at $5m at the year end.

The year ahead is expected to see a heavier focus upon the group’s mining services side.

I have been disappointed at the continual dribbling of holders reducing positions in the shares over the last few months, coupled with more stock coming out onto the market for the recent fundraising.

However, I remain confident that this group’s strategy going forward is well-based and that its shares, now 11% better at 68.75p after the results yesterday, still offer strong upside potential.

(Profile 23.07.19 @ 48p set a Target Price of 76p*)

(Profile 22.10.19 @ 61p set a Target Price of 100p)

(Profile 03.08.20 @ 77.5p set a Target Price of 100p)

Some extra comments in passing ….

I note that the 2020 Medica Group (LON:MGP) final results will be announced very soon, but no date as yet. The shares have been edging better this week, now 148p, up from 135p a week ago. Remember that the group recently took on board Liberum Capital as its corporate broker, which is looking for 200p a share.

Lovely Vin Murria is going to write out a cheque for £17.5m for new shares in the currently named Marwyn Acquisition (LON:MAC21) company. She is the Chairman of the company, which is soon to change its name to AdvancedAdvT Limited (LON:ADVT). The company is raising £130m of new funds @ 100p a share. Knowing Vin, I would strongly suggest that the shares will climb a great deal higher than 100p in due course – give her a bit of time to really get it moving.

Coming up next week ….

Another busy week in store starting next Monday with loads of interesting company results, updates and other statements to be announced.

Three of the companies will hold investor presentations next week.

I list below a number that I am looking out for:

Tues 23         MP Evans (LON:MPE)                   fins

Tues 23         Luceco (LON:LUCE)                    fins

Tues 23         SimplyBiz Group (LON:SBIZ)     fins

Tues 23         Zotefoams (LON:ZTF)                   fins

Wed 24          Anglo Pacific Grp (LON:APF)     fins

Wed 24          Circassia Group (LON:CIR)        fins

Wed 24          TClarke (LON:CTO)                       fins

Wed 24          Luceco (LON:LUCE)                     event

Wed 24          Strix (LON:KETL)                           fins

Thur 25          Capital (LON:CAPD)                      event

Thur 25          Ebiquity (LON:EBQ)                      fins

Thur 25          Lamprell (LON:LAM)                     fins

Thur 25          Robinson (LON:RBN)                   fins

Thur 25          Safestyle UK (LON:SFE)              fins

Thur 25          Strix (LON:KETL)                           event

Fri 26              Kape Technol (LON:KAPE)         GM

Fri 26              PCF Group (LON:PCF)                 AGM