Mid-week Small-Cap round up featuring Mothercare, Luceco and Hotel Chocolat

Mothercare (LON:MTC) – Big buyer takes holding up to 23.66% ahead of AGM

I was interested to see that a very large trade in this retail group’s shares went through the market late last week. Over 24m shares went through in one transaction.

Then on Monday it was announced that Lombard Odier Asset Management (Europe) had increased its stake, from 19.35% to 23.66% of the recovering group’s equity.

With 563.84m shares in issue Mothercare’s equity is already very tightly held, which probably helps to explain the gradual improvement in price, closing at 16.8p last night.

Remember, I am hoping that Chairman Clive Whiley might give a positive AGM Statement tomorrow morning.

The whole company has been reshaped under Whiley’s management since his arrival onto the Board in early 2018.

I consider that he is getting things very right now and that the global brand for parents and young children is set upon a much leaner, tighter and potentially very profitable road now under his stewardship.

There is still plenty of time to follow Lombard Odier’s lead. Obviously, my price objective is soon to be achieved and we are getting closer to the group’s brokers estimate of 20p. The shares are destined to go considerably higher in due course.

(Profile 30.08.21 @ 15p set a Target Price of 18p)

The Alumasc Group (LON:ALU) – Building up as expected, further growth to come

This group, which supplies building products, realises that there could well be short-term disruption to its customer’s operations from shortages of building materials, labour and road haulage, as well as delays in the global container shipping industry.

However, its Board believes that the group’s strong platform provides confidence for another year of progress.

The year to end June saw sales rise 19% to £90.5m, while underlying pre-tax profits were 187% higher at £10.5m, with earnings up 189% at 23.7p per share.

A very confident signal came from the company yesterday with it raising its dividend 379% to a handsome 9.5p per share.

For the current year Chairman John McCall noted that demand from the group’s markets remained buoyant. He states that “it is therefore reasonable to anticipate another strong performance from Alumasc in the coming year, as the UK economy recovers from its recent misfortunes.”

The group’s broker finnCap has maintained a 315p price objective on the shares, which closed last night up on the day at 250p, after touching 223p at one stage before the buyers came in. Yesterday’s dealing volume was more than twice the daily average.

I am keeping my recent 287.5p aim for the shares, which standing at a big discount to its sector peers, still look undervalued to me as they offer such a good upside.

(Profile 13.02.20 @ 116p set a Target Price of 145p*)

(Profile 08.06.20 @ 80p set a Target Price of 105p*)

Luceco (LON:LUCE) – Up five times in 15 months

The manufacturer and distributor of high quality and innovative wiring accessories LED lighting and portable power products saw its revenues rise 51% to £108.2m in its first half year to end June.

Its pre-tax profits were 97.6% better at £16.6m and its earnings some 98% better at 8.7p for the interims.

It was a benefactor of good market conditions across the UK and in its overseas trades.

Daniel Cunliffe at Liberum Capital reckons that this current year will see group sales at £220m (£176m) and its profits at £36.2m (£34m) with earnings of 19.5p (15.5p) per share, amply covering a 7.5p dividend.

He rates the group’s shares a ‘buy’ with an objective of 520p.

At one stage they were up 15p on the overnight price touching 487.5p, before falling swiftly away to a day’s low of 423.88p.

We have seen a wonderful price progression in the last fifteen months, having topped out at 513p towards the end of last month, a rise of over 500% over that time.

Despite the improvement in the business, despite the recent profit-taking spate, I would not be chasing these shares at around the levels of last night’s close of 427.5p.

(Profile 15.06.20 @ 96.1p set a Target Price of 125p*)

Belvoir Group (LON:BLV) – The growth continues

The interim results for the six months to end June showed this property franchise group reporting a continuation of its recent strong growth, better than its insiders were expecting.

It saw a 41% increase in its revenues at £13.8m and a 51% rise in pre-tax profits at £4.8m – both helped slightly by the acquisition of Nicholas Humphreys earlier in the year.

Analyst Guy Hewett at its Corporate Brokers finnCap is estimating full year revenues of £27.7m (£21.7m) and profits of £9.3m (£7.5m), taking earnings up to 19.8p (16.7p) and a dividend of 8.5p per share.

The broker has raised his price objective to 365p, which compares with the current 267.5p, thereby offering a quite substantial upside for the shares.

Hold tight.

(Profile 09.01.20 @ 141p set a Target Price of 175p*)

Hotel Chocolat (LON:HOTC) – Current rating assumes too much

Ahead of this premium British chocolatier and digital-led retailing group announcing its results on Tuesday 28 September its broker, Liberum Capital, has issued a ‘buy’ note increasing its price objective for the group’s shares to 620p.

Their analyst Wayne Brown is looking for the June year end figures to show sales of £165m (£136m) and an almost quintupled profit increase from £2.4m to £11.1m, generating earnings of 6.9p (3p) per share.

Sales this year could be £205m and then £247m in the 2022/23 year, with profits jumping to £19.5m then £25.3m, with earnings of 11p and 14.1p per share respectively.

Co-founder and CEO of the group, Angus Thirlwell, is very positive about the group’s potential stating that “I am fortunate to be able to say that the growth avenues ahead of us have never been better in Hotel Chocolat’s history. The strategies we put in place two years ago are now delivering accelerated growth.”

I did note that one of the group’s institutional holders, the Chelverton UK Equity Growth Fund, considers the shares as an attractive position.

Their fund manager James Baker is quoted by CityWire as stating that “This business has performed well throughout the pandemic, successfully shifting its primary sales channel from retail to online, making its ambitious growth plans less capital intensive and therefore more attractive to the fund.”

Now I have to say that I do like this company, the way that it operates and the commitment of its management, but I find the current rating takes a lot into account going forward.

At 375p I would not be keen on taking out new positions until more evidence is visible of the recovery that is expected.

(Profile 21.03.19 @ 340p set a Target Price of 402p*)

Flowtech Fluidpower (LON:FLO) – 11.3p earnings estimate for this year

This UK-based distributor of technical fluid power products is on its way to show a very strong recovery in its sales and profits for the current year to end December.

The half-timers to end June saw sales of £55.3m (£46.6m) and pre-tax profits of £2.3m (loss £0.9m).

CEO Bryce Brooks stated that “We are pleased that current trading continues to support our ‘return to growth’ agenda and we have made meaningful progress with each of our strategic goals. Volumes are recovering, margins are stable, and we are proactively addressing the short-term headwinds associated with problematic global supply chains.”

For the full year to end December Zeus Capital is looking for sales of £104m (£95.1m) and pre-tax profits up to £4.7m (£0.3m), with earnings leaping from 0.4p to 6.1p per share.

For the next year the group’s NOMAD and broker goes for sales of £110.4m and profits of £8.7m, worth 11.3p per share in earnings.

The company’s shares closed last night at 133p.

Still heading higher.

(Profile 23.04.21 @ 105p set a Target Price of 130p*)

Ted Baker (LON:TED) – Liberum says 225p possible

Yesterday this global lifestyle brand group declared its Q2 results together with a pre-close trading update.

The sales trends have been positive, group sales were up 50% year on year as the stores and its wholesale business has rebounded subsequent to the impact of Covid-19.

Analyst Wayne Brown at Liberum Capital, the group’s broker, rates the group’s shares as a ’buy’ with an aim of 225p compared to last night’s closing price of 166p.

He is estimating sales up at £466m for the year to end January 2022 (£352m), while the losses will have been sliced by some 60% to just £22.6m (£59.2m).

Already he sees a big swing next year into £553m of sales and £28.8m of profits, worth 12.2p in earnings per share.

The shares touched 172p at one stage after the corporate news, just pennies away from my mid-July featured price objective.

It will happen very soon, of that I am sure.

We now await the interim results on Thursday 11 November.

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

Centaur Media (LON:CAU) – just who is selling?

Long time holder and founder Graham Sherren has recently sold down a chunk of his holding in the marketing and business information group.

It is now reduced from 5.64% to just 3.88% of the group’s equity.

Now with 5.7m shares to his name, could Sherren be considered a ‘tap’ if he offloads more?

The shares closed at around 50p, down from a recent high of 53p.

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

Wilmington (LON:WIL) – Just who is buying?

On the share stakes front, I did note yesterday that FIL Investment have taken their holding in the data information, networking and education group’s equity up to a declared 5.01%, some 4.4m shares.

That looks like a good move to me.

They closed last night at 221p.

Hold tight.

(Profile 22.06.20 @ 143p set a Target Price of 175p*)

(Asterisks * denote that Target Prices have been achieved subsequent to profile publication)