Small cap catch-up featuring MPAC, HLCL and BEG

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5 mins. to read
Small cap catch-up featuring MPAC, HLCL and BEG

MPAC Group (LON:MPAC) – order books increasing

The company issued a Trading Update for its year to end December 2021 a few days ago.

Mpac made good progress and a robust financial performance for 2021, in line with market expectations, in which we reached a milestone by exceeding £100m of order intake for the year.  The positive H1 2021 performance has continued into H2 and the Group ended 2021 with both a strong closing order book and a healthy prospect pipeline, providing an encouraging outlook for 2022.

Robin Speakman at Shore Capital has estimated sales up from £83.7m to £97.5m for last year, with profits up from £6.3m to £8.2m, with earnings fractionally better at 32.2 (31.4p) per share.

For this year and next the analyst has pencilled in £105m then £113m of sales, profits of £11.5m

(Profile 19.12.19 @ 182p set a Target Price of 235p)

Helical (LON:HLCL) – switching to REIT status is a good move

This London and Manchester prime property developer and investor this week announced that, due to UK Corporation Tax rising from 19% to 25% in April 2023, it is planning to convert its status to a REIT.

That move will exempt it from UK CT on its property activity profits that fall within the REIT regime from that date onwards.

CEO Gerald Kaye stated that: “Helical’s business has evolved in recent years, from a developer/trader model, selling its development schemes to third party funders, to become a developer of and investor in new or refurbished Grade A buildings that are retained for their capital growth and long-term income potential.”

Helical’s shares jumped from 430p to 470p on the news, before profit taking set in and pulled them back to 445p.

This company is a ‘class act’ and its shares have excellent long-term capital appreciation potential, aided by its future REIT status that will enable it to pay out greater dividends.

Hold very tight.

(Profile 11.06.19 @ 389p set a Target Price of 489p)

Begbies Traynor Group (LON:BEG) – 165p ‘fair value’ per share

It must have been the thought that more companies are going bust this year and next that spurred this business advisory group’s shares to top out last September at 150p.

A couple of days ago they were traded at around the 128p level, upon consideration of the £2m acquisition of chartered surveyors Daniells Harrison, which will be a complementary fit in with the group’s own property advisory side Eddisons.

Roger Leboff and Andy Edmond at Equity Development currently have a 165p ‘fair value’ estimate on the group’s shares.

They are looking for the year to the end of April to show a £20.8m uplift in revenues at £103.5m together with a £5.5m rise in adjusted pre-tax profits to £17.0m, lifting earnings up to 9.2p per share (6.9p).

The shares closed last night at around 129p, offering some fair upside on the ‘fair value’ estimate.

Hold tight.

(Profile 21.04.20 @ 93p set a Target Price of 110p)

Portmeirion Group (LON:PMP) – much stronger years

The Royal Worcester, Spode and Portmeirion pottery group on Wednesday updated shareholders on its 2021 full year results, due to be announced on 17 March.

Above market expectations by almost 10% the group is guiding that its pre-tax profit will be not less than £7m for last year, against the 2020 figure of £1.4m.

Sahill Shan, analyst at brokers Singer Capital Markets, rates the shares as a ‘buy’ with a price objective of 840p.

He is going for £98.9m of sales this year, with £10m profits, worth 57.4p in earnings and easily covering a 19.12p per share dividend.

For the year to end December 2023 his estimate is £107.8m revenues, £11.8m profits, 66.9p earnings and a 22.31p dividend per share.

On the basis of those figures, it is totally understandable why he reckons the shares are going higher, for that matter so do I.

They closed last night at 705p, up from just 620p on Tuesday night.

(Profile 28.08.20 @ 376p set a Target Price of 480p)

M Winkworth (LON: WINK) – give this one more than a passing nod

Is it at all possible that in between now and the second week of April that this property sales and lettings group will see its shares improve in price?

Yes, I do believe that is possible.

On Wednesday morning the company’s boss Dominic Agace informed shareholders that he is looking for better business this year.

In his Trading Update for the year to end December 2021 he reported that it has enjoyed increased activity and he gave guidance to the market that the results in April will be better than previous market expectations.

We are conscious of the rising interest rate environment, but the cost of finance remains at a record low and we believe that there is still pent up desire from households to relocate. Buyer demand over the end of year break has been reported at record levels and sellers finally seem to be returning to the market. While this may hold back the solid growth in prices of the last two years, it bodes well for the number of transactions and we expect another busy year.

Analyst Alastair Stewart at brokers Shore Capital has upgraded his estimates – with revenues for 2021 of £9.3m (£6.4m) and adjusted pre-tax profits leaping from £1.5m to £3.2m. That should more than double earnings from 9.1p to 19.2p per share, with the normal and special dividend rising from 6.7p to 9.3p.

Cautiously reflecting upon last year’s strength, he now goes for £8.6m revenues, £2.1m profits. 12.7p earnings and a 10.8p per share dividend for the current year.

The shares have eased from the 220p peak in reaction, but at 207p I consider that they have further to climb yet.
My price objective remains very firm for this year.

(Profile 19.07.21 @ 190p set a Target Price of 240p)

Accrol Group Holdings (LON:ACRL) – never try to catch a falling knife!

I still do not think that the shares of this loo roll and household tissue group are on their bottom.

Last week I wondered whether its shares were worth a small gamble at the then 31.25p, ahead of its interim results being announced.

Well, they came out this week and they were ghastly. It appears that margins are being shot to pieces for the trading year to end April this year.

The group’s brokers Zeus Capital are reckoning that despite sales higher at £160.4m (£136.6m) its adjusted pre-tax profits will be slashed from £9.1m down to £1.2m, worth only 0.3p in earnings per share (2.2p).

The broker, who floated the group at 100p a share in 2016, is anticipating a recovery bounce in the coming year, to £185m sales, £6.7m profits, and 1.7p earnings.

Those hopes may well give potential group buyers some confidence, if the rumoured management suggestions of putting the business up for sale.

It would take a brave investor to take a gamble on this group’s shares, even a small gamble.

They are now 22.85p, almost back to my 2019 Profile price, after touching 72p at this time last year.

(Profile 12.03.19 @ 22p set no Target Price)

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


Comments (1)

  • Gordon says:

    Mark,
    Having been a subscriber to Master Investor for some time I tend these days to only follow you, Evil Knievel and the insightful articles of Victor Hill. However I would like to comment that while accepting that nobody has a crystal ball, I enjoy your rationalisations and have taken onboard a number of your recommendations and certainly benefited from them, but….it has to be said that you have picked some ‘turkeys’ too (in some cases not a failure of research on your behalf, so not a criticism, but often overtaken by unforeseen events eg. (LAM) Lamprell Plc) .
    However your periodic small Cap market updates invariably are stocks that have exceeded your original price targets whereas I’m sure I’m not alone in welcoming any insights on the ‘turkeys’ too, as to how their rectifications are progressing (or not) and your thoughts as to whether investors should cut and run or hang on.
    Just a thought….

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