GetBusy and more…

Mark Watson-Mitchell delivers his end of week catch-up featuring GetBusy and some other updates from the small-cap sector.

GetBusy (LON:GETB) – 93% annual recurring revenues

I always love to see a finance director buying more shares in the company that employs them.

Paul Howorth bought another 10,000 shares @ 75.9p straight after his employer had announced its interim results for the six months to the end of June on Wednesday morning.

That purchase took his holding up to 85,000 shares representing just 0.17% of the equity – it may not look a meaningful amount, but I still take it as a good sign. After all, as Chief Financial Officer he must know how and where the business is going.

Still losing money as it develops

GetBusy’s document management and task management software enables over 68,000 professional paying users around the world to digitise their operations and be productive while working in the office or remotely.

It is the leader in specialist document management software for accountants. 

The interims showed that the group is still losing money as it develops its business.

Revenues were up 7% at £7.5m while it lost £0.5m in the first half year.

What I always look for

But what I also rave about, apart from finance directors buying more shares, is annual recurring revenues (as if you did not know that by now).

And the group is now running at a massive 93% ARR, up from 91% previously, with it running at £14m as at end-June (£13.1m).

Analyst Janardan Menon, at the group’s brokers Liberum Capital, estimates the full year will show £15.1m of revenues and a £1.2m loss.

For next year he sees £16.2m revenues and a slight reduction in losses at just £1.1m.

However, what is strong about this little group is that it has £2m of cash in the bank with another £2m of undrawn facilities available.

Confident Management

The group’s CEO Daniel Rabie commented with the interims that, “We remain confident that we are in the right markets, with the right people and products to accelerate our growth in high quality recurring subscription revenues over the medium to long term. We continue to invest to support that growth and we look forward to the future with increasing confidence.”

My View

It is no wonder that the broker has put out a 130p a share price objective.

This is a tuckaway stock which has significant upside potential, I see them soon creeping back up through the 100p mark.

The shares, which touched 112p in March, close the week at around the 82p level after dipping to 76p at one stage this week.

(Profile 05.05.20 @ 60p set a Target Price of 75p*)

Some Quickies…

RPS Group (LON:RPS) – This one is edging better ahead of the multi-sector consultancy group’s interim results in the next two week’s (11 August). 

Liberum is going for revenues up from £457m for 2020 to £492m for the year to end-December 2021, with profits of £20m against £13.4m and earnings of 5.3p (4.3p) per share.

It also looks for further progression next year. 

Hopefully the interims will present positive picture, at least good enough to get the shares, now 112p, well back onto their upward path again, after their mid-June 119p.

(Profile 05.05.21 @ 88p set a Target Price of 110p*)

Shearwater Group (LON:SWG) – This week’s final results from the cybersecurity and security services group showed up better than expected. 

Revenues for the year to end-March were slightly lower at £31.8m (£33m) but it came in with a 9% advance in EBITDA at £3.7m. 

Analyst Simon Strong at Cenkos Securities rates the shares a ‘buy’. 

Now closing the week at around the 150p level, I take the view that the shares are capable of rising back above the 200p level in the next few months or so.

(Profile 14.04.20 @ 245p set a Target Price of 310p)

Cohort (LON:CHRT) – This undervalued defence and security group declared a 9% increase in its revenues to end-April at £143.3m and an adjusted pre-tax profit of £17.9m against £17.5m. 

Earnings in the Covid-19 impacted year were 33.6p (37.1p), while the dividend was increased from 10.1p to 11.1p per share. 

There is a strong order book for this year and ahead. 

The shares have enjoyed a quick reactionary run upwards since this week’s results. 

Now at 579p they do have the look of wanting to grab at much higher price levels again. 

Hold very tight – they will be back up in the 650p price range fairly soon, methinks. 

(Profile 06.08.19 @ 446p set a Target Price of 607p*) 

Epwin Group (LON:EPWN) – Last Wednesday’s announcement of the low maintenance building products group’s half-term report showed strong trading having continued in the six months to end-June. 

It was 69% better than the comparative period last year. It appears that the repair, maintenance and improvement markets were the driver. 

We will get the figures in the middle of September; however, the outlook for the year certainly feels good. Analysts Andy Hanson and Rachel Birkett at Zeus Capital are bullish. 

They are going for sales lifting from £241m to £312.1m and adjusted pre-tax profits having much more than doubled from £5m to £12.9m, with earnings trebling from 2.8p to 7.2p for the year. 

The group’s shares at 110p have a good momentum about them, with possibly a try at 120p/125p fairly soon.

(Profile 22.08.19 @ 73.5p set a Target Price of 100p*)

(*Asterisk denotes that the Target Price has been attained subsequent to publication)