Monday morning small-cap round-up with IDOX, Palace Capital and Premier Foods

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5 mins. to read
Monday morning small-cap round-up with IDOX, Palace Capital and Premier Foods

IDOX (LON:IDOX) – encouraging update

Last Tuesday’s Trading Update, from this software group that sells its services Public Sector and Engineering clients globally, indicated that all was going to plan and that it was well up to expectations.

The year to end October is estimated to have seen revenues slightly lower at £65.9m (£68.0m) while pre-tax profits could have advanced to £12.1m (£10.5m), with earnings rising to 2.2p (1.8p) per share.

Analysts Ian Robertson and Gareth Evans at Progressive Research are estimating revenues to rise to £70.2m this year and then up to £74.0m in the year to end October 2023. In those periods they see £15.6m then £17.5m in profits and 2.8p then 3.2p in earnings per share.

They note the strategic and operational progress that the group is making, as well as noting that it is ready to pursue its ‘buy and build’ acquisition programme.

The group’s shares, which have been up to 77p, are currently trading at around the 72p level.

Stay with the shares because progression is afoot.

(Profile 30.04.20 @ 38.5p set a Target Price of 50p)

Palace Capital (LON:PCA) – more rents being collected

After last week’s Interim results from this commercial real estate property investment group it is apparent that it is back on the right track again.

In the six months to end September the group turned around significantly from its previous £7.2m loss to a much more encouraging £8.0m profit pre-tax.

Even its net asset value was gently improved by 3.6% to 362p per share, meaning some £163.6m net.

That reflects a much higher rental collection, some 97% by the end of the June quarter.

Net debt was down by £25.7m to just £93.2m.

Analyst Andrew Simms at Arden Partners rates the group’s shares as a ’buy’ with a price objective of 330p. He points out the hefty 30% discount that its shares are trading against the 2022 estimate. He is estimating that the group will make £6.2m pre-tax for this year to end March 2022, then up to £7.9m in 2023, worth 13.5p then 17.2p in earnings per share respectively. Dividends should rise from 10.5p last year, to 12.0p this year and 13.8p next year.

This group to date has not been a good performer in my profile ranks, even so I am still hopeful that the current share price at around 25p, will pick up substantially in the next year or so.

(Profile 26.12.19 @ 324p set a Target Price of 365p)

Premier Foods (LON:PFD) – still a good mix

After everyone started baking again during the Covid-19 lockdowns this multi-brand foods group has done very well facing up to all the challenges that beset it in the last year or so.

The halfway report to 2 October showed revenues down fractionally, 6.5% lower at £394.1m, while pre-tax profits were off just 2.9% at £46.4m, while earnings came out 3.8% lower at 4.4p per share.

Alex Whitehouse, the group’s CEO, declared that the group was firmly on track to deliver full year profit expectations. There is already a strong momentum for the second half year.

House broker Shore Capital analysts Clive Black and Darren Shirley estimate sales of £902m for the current year to end March 2022, with £119.6m of profits and 11.2p of earnings and 1.3p of dividend per share. They see the group recovering to its pre-pandemic levels next year looking for £932m in sales and £126.9m profits, 11.8p earnings and a 1.6p dividend followed by another progression in 2024 to £963m sales, £133.1m profits, 11.5p in earnings with 2.0p per share in dividend.

We shall just have to wait until the late January 2022 Q3 update to see whether trading was better than expected. This stock, now trading at around 114p, has been an excellent performer over the last fifteen months or so. I rate its shares as an ongoing hold.

(Profile 29.06.20 @ 67.5p set a Target Price of 101p)

D4T4 Solutions (LON:D4T4) – increasing fraud market winner?

The data collection, management and analysis solutions provider is set to enjoy some real success with its Celebrus Fraud Data Platform, its behavioural biometrics solution. It is aiming at an absolutely mega-global marketplace, which is increasing by the minute.

Analyst Lorne Daniel, at the group’s brokers finnCap, is sticking to his 450p a share price objective, even though he is anticipating the current year to end March 2022 reporting lower profits at £2.6m (£4.4m) on the back of higher revenues at £24.3m (£22.8m), earnings of 5.7p (9.5p) but an increased dividend of 3.1p (2.8p) per share.

For next year he goes for £27.0m sales, £4.7m profits, 9.8p earnings and 3.4p per share dividend.

The first half year results are due next month, so the shares now at around 370p could well respond to further positive market reaction. Hold tight.

(Profile 09.04.20 @ 170p set a Target Price of 215p)

Tribal Group (LON:TRB) – even more ARR

In its Business Update announced last week this world-leader in the education market software and services group stated that it had just won its fifth major customer.

In a £3m Cloud contract the group has tied up University College London to its fully managed service, worth £0.5m in annual recurring revenue. That takes the group up to an impressive almost £50m ARR, serving clients in over 55 countries globally.

House broker Singer Capital Markets analyst Harold Evans estimates that revenues this year to the end of next month will be £78.6m (£73.0m) while pre-tax profits should rise to £12.9m (£11.5m) pushing earnings up to 5.1p (4.0p) per share. He sees a lower dividend of 1.25p (2.3p) per share.

The group’s finals Trading Update should be declared in January.

The group’s shares at 97.5p have performed very well to date and merit a hold.

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

Revolution Bars Group (LON:RBG) – let us drink to that

With some 67 premium bars within its national estate this group is spreading its own ‘cheers’.

Its work upon its various venues over the lockdown periods has helped it to do well subsequent to the easing.

The current year to July 2022 has started well with revenues already 137% up on the 2021 trading year and a like-for-like increase of 14% over the comparable period of last year.

Nigel Parson and Michael Clifton, analysts at finnCap, estimate that the current years revenue will rise from £39.4m to £141.1m, with pre-tax profits turning around significantly from the 2021 loss of £24.3m to just a £0.3m loss.

For the end June 2023 trading year they estimate £159.9m of revenues, £2.8m of profits and earnings of 1.0p pr share.
Then on to £174.4m takings in 2024, £4.3m profits and 1.4p earnings per share.

They have a price objective of 40p for the group’s shares, currently 25.25p.

Going higher yet.

(Profile 13.10.21 @ 24.25p set a Target Price of 31p)

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


Comments (1)

  • Surinder Douglas-Bhanot says:

    Hi Mark,

    A round-up on MCLS would be very welcome.
    Has the company got into deep waters and is this now a binary situation?

    Many thanks in advance.

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