Small Cap Catch-Up: All On The Move

Filtronic (LON:FTC) – New Defence Contract Wins Really Points Way 

This group is involved in the design, developing, manufacturing and selling of advanced radio frequency communications equipment. 

Based in Sedgefield, the £49m capitalised company, which employs some 125 people, operates in the UK, European and in the markets of the Americas. 

Over the years it has developed a track record of delivering high-reliability RF components, hybrids, multichip modules and sub-systems for particularly demanding aerospace and defence applications. 

The group in the year to end May 2023 reported total revenues of just £16.3m, upon which it made a £0.1m adjusted pre-tax profit. 

On Tuesday morning the group announced that it had secured a major new contract worth £4.5m which should get underway in the final quarter of next year. 

With Tuesday’s contract announcement, CEO Richard Gibbs stated that: 

“We have been working closely with the new customer over several years and this contract win represents a successful collaboration between the MoD, the customer, Filtronic and PRFI, a leading UK-based technical design consultancy providing monolithic microwave integrated circuits services.  

It is yet another example of Filtronic’s ability to support the UK Defence Industry with a sovereign supply chain for advanced semiconductor packaging solutions that are optimised for both thermal and radio frequency performance.” 

But the good news keeps on flowing – just like London buses, nothing for a while then coming one after another, out yesterday came a second announcement of a big contract win. 

This time worth £4.8m, the company has declared a new contract with a leading global provider of low earth orbit satellite communications equipment. 

Upon this piece of news CEO Richard Gibbs stated that: 

“We are delighted to continue our partnership with the leading global provider of LEO satellites and are pleased to supply production volumes of the Cerus32 SSPA module for deployment in its ground station antenna network.  

The customer has always valued the flexibility of the Cerus32 design, and with this new contract is keen to take advantage of the scalable form factor and the additional power our second-generation E-band product provides.” 

Estimates for the current year suggest that sales will increase 25% to £20.5m, while its profits will catapult to £0.8m (£0.1m), worth 0.3p (0.2p) per share in earnings. 

Analysts Kimberley Carstens and Michael Hill at Cavendish Capital are bullish about the group’s shares, looking for 25p in due course. 

For the year to end May 2025 they have estimates out for £22.6m sales, £1.4m profits and 0.6p per share in earnings. 

Over at Edison Investment Research their analysts Don Ridsdale and Katherine Thompson are looking for current year’s £20.7m sales to hit £0.7m profits, worth 0.32p in earnings. 

For 2025 they see £22.7m revenues and £1.2m profits helping to kick in earnings of 0.56p per share. 

After having touched 24p at one stage yesterday, the group’s shares closed last night at around the 22.5p level, after more than four times the average daily dealing volume at 2.11m transacted.  

That still leaves more upside to be achieved within the next few months. 

The Interim Results to end November are due to be announced on Tuesday 6^th February, by which time the shares could well have easily climbed over the Cavendish Capital Price Objective. 

(Profile 04.02.22 @ 11.6p set a Target Price of 14.5p*) 

Elixirr International (LON:ELIX) – US Expansion Will Boost Group Returns 

The latest acquisition announcement, of the US based Insigniam consultancy group, by the Elixirr US subsidiary, clearly shows the expansion possibilities by the award-winning challenger consultancy group. 

By delivering innovative and bespoke solutions to its repeat, globally-recognised client base ELIX is also intent on its own growth. 

Estimates for the current year to the end of this month are for £87.5m sales (£70.7m) and adjusted pre-tax profits of £23.9m (£19.3m), with earnings of 34.8p (30.5p) comfortably covering a 12.3p (10.8p) dividend per share. 

The benefit of the latest round of acquisitions, having done five since its July 2020 IPO, three of which were US-based, shines through in estimates for the coming year of £108.0m revenues, £28.5m profits, 39.6p of earnings and a 14.0p per share dividend. 

For the year to end December 2025 current guesstimates suggest £118.8m turnover, £31.4m profits, 43.0p earnings and a 15.2p dividend. 

The group’s brokers have a massive 998p Price Objective on the shares, which closed last night at just 485p. 

The shares climbed fairly close to my latest Target Price, when they hit 625p in mid-September, I feel that they will get back up there again soon. 

(Profile 21.09.20 @ 227p set a Target Price of 285p*) 

(Profile 06.02.23 @ 517.5p set a Target Price of 650p) 

And finally … 

• I do like the way that the shares of Frasers Group (LON:FRAS) are performing of late. Last night they ended the day at 938p, up 9p on the day, after hitting 949.50p on Monday. They are climbing ever closer to my 1000p Target Price – that has to be just days away now, possibly early in the New Year. 

(Profile 28.07.23 @ 798p set a Target Price of 1000p) 

• They hit 190.40p on Monday of this week before bounding back to close last night at 219p, up nearly 5% on the day – however I still feel that there is a great deal more to go for right now in buying shares in Aston Martin Lagonda Global Holdings (LON:AML). In my view they will easily be 50% higher in 2024. 

(Profile 10.05.23 @ 213.5p set a Target Price of 265p*) 

(Asterisks * denote that Target Prices have been achieved since Profile publication)