Small-Cap catch-up featuring Zinc Media, Avingtrans, Bango, and Chamberlin

Zinc Media (LON:ZIN) – the picture is getting a lot better

The interim results to end June from this television, brand, content and audio production group were up to market expectations.

Revenues were 54% better at £10.8m (£7.0m) and the EBITDA loss was almost halved at just £0.65m (£1.1m).

By 26 September the group had booked £27.0m of revenue which has been or is expected to be delivered in the year to the end of December.

That figure was well up from the £10.0m at this time last year.

The recent acquisition of The Edge Picture Company has certainly scaled up the group’s operations, while a strong pipeline of potential new business is being worked upon.

In the first-half the group was awarded an impressive number of programme successes from the BBC, Channel 5, BBC One, and the Warner Bros Discovery Group.

Chief Executive Mark Browning stated that:

“We are delighted with the current performance of the Group which has seen a considerable increase in turnover whilst maintaining an attractive margin, with good visibility of sustainable profitability.  The organic growth, coupled with the acquisition of The Edge, provides initial scale and the Board is optimistic about the Group’s outlook and views the future with confidence.”

Brokers Singer Capital Markets are rating the group’s shares as a Buy, with a price objective of 163p.

Their estimates for the current year are for £26.5m (£17.5m) revenues and an adjusted EBITDA loss of £0.7m (£1.0m).

Benefits of the group’s scaling will show through next year with an expected £35.7m sales and an EBITDA profit of £0.6m.

For 2024 the brokers are already going for £39.1m revenues and an EBITDA profit of £1.7m.

I would now expect the group’s shares to rise gradually over the 100p level and up to 110p before the full year Trading Update in January.

I remain very bullish about this group and its potential and its shares at only 93p stand out as very appealing.

(Profile 25.04.22 @ 117.5p set a Target Price of 148p)

Avingtrans (LON:AVG) – steady progress will pay off

Publicly quoted group’s do not have to set the world alight with their results.

Good steady progress and the achievement of the guidance given to the markets is paramount.

Take a look at this mixed bag of a specialist engineering group, its interest take in critical components, modules, systems and services for the energy, medical and industrial sectors.

On Wednesday it delivered a set of in-line final results for the year to end May.

They showed revenues up just 1.9% at £100.4m and an adjusted pre-tax profit of £8.2m (£7.7m), giving 21.8p of earnings per share against a lower taxed 22.4p previously.

I have been following this group for decades and have never been disappointed in its performance.

Its management is very professional and is coping well with the hassles of Covid and Ukraine that have been effecting its operations.

Analyst Richard Hickinbotham, at Singer Capital Markets, is looking for sales to rise to £108.7m in this current year to end May 2023, generating profits of £8.6m, worth 22.0p per share in earnings together with a 4.4p dividend.

He rates the shares as a Buy, with a price objective of 510p, compared to the current 425p.

In my view the group’s shares are a very firm hold,

(Profile 04.11.20 @ 260p set a Target Price of 325p*)

Bango (LON:BGO) – recent deals will product better synergies

This group, which is a global platform for data-driven commerce, yesterday declared its interim results to end June.

They showed a 9% increase in revenues to $10.79m, a rise in its adjusted EBITDA to $2.85m ($2.78m), while its annual recurring revenue has improved significantly to $3.41m ($0.97m Dec 2021).

Since the end of June the group has pulled off an excellent expansion deal in acquiring the global payments business of NTT DOCOMO, which has brought on board so many of the world’s largest merchants as new clients.

CEO Paul Larbey stated that:

“The first 9 months of 2022 have been more exciting than ever as we continue to execute on our growth plan. The excellent progress in both Bango Audiences and the Platform business provide the basis for accelerating growth, highlighted by Annual Recurring Revenue increasing 3.5x to $3.4M at the end of June.

We added more merchants than ever in the first half of 2022 and our partnership with the confidential ‘Global Tech leader’, a household name in consumer products and services, that we announced back in June, is progressing well.

The Acquisition is an important event for the market as a whole. Merchants clearly now have a ‘go to’ platform for monetizing their content and services. Having one, market-wide monetization platform enables them to deliver better targeted marketing and collect more payments, all through a standard infrastructure.

With increased scale, new wins delivering revenue, and major events such as Amazon Prime Day, Black Friday, Cyber Monday, the World Cup and Christmas, the second half looks to be even more rewarding, and the Board remains bullish about the future growth of Bango.”

Analyst Ciaran Donnelly at Liberum Capital rates the shares as a Buy, with a price objective of 345p compared to the current market price of 197p.

My price objective remains firm.

(Profile 05.09.22 @ 198.5p set a Target Price of 250p)

Safestyle (LON:SFE) – ‘insider’ buying marks our cards

After last week’s interim results outlined the difficulties created by the New Year ‘hacking’ of the group, bundled together with supply chain and cost pressures, the interim loss of £2.8m (£4.3m profit) has seen the windows and doors group’s shares going into reverse.

So, I am pleased to see that a number of its directors have been buyers of the company’s shares at prices ranging from 23.0p to 26.58p per share.

Very much like my ‘buzz’ for ARR figures, I follow ‘insider’ dealings with great interest – they can be an extremely useful pointer to the particular company’s progress.

This group will be holding a Capital Markets Day on 16 November and then issuing a Trading Update in January.

Having more than halved in price from their year’s peak of 57p, the shares are now trading steadily above the recent low of 20.5p, with a current market price of 26.5p.

The group’s brokers expect profits to bounce back strongly next year to end 2023, with estimates of £180m sales, £8.5m profits and 4.6p of earnings, even paying a 1.9p dividend per share.

I see the shares rising over the next few months.

(Profile 06.01.21 @ 36.5p set a Target Price of 48p*)

Card Factory (LON:CARD) – better news

This greetings cards, gifts, wrap and bags retailer saw its interims to end July report sales up 69.4% at £198.0m and a 320% swing to profits of £14.3m (loss of £6.5m), interims earnings came out at 3.4p (loss of 1.5p).

Times are still tricky, but it does appear that the group is straightening itself up and trading on a more even keel, which is very good news with Christmas coming up soon.

In the last week the shares have been up to 48p and down to 41p but are now looking more balanced at 45p.

Hold tight for more price recovery.

(Profile 05.08.20 @ 42p set a Target Price of 60p*)

Coral Products (LON:CRU) – materially ahead

In yesterday’s AGM Statement, by this plastic products group, Chairman Joe Grimond commented that:

“I am delighted to report that the Group has enjoyed a very strong start to our current financial period with sales and profits before tax materially ahead of the same period last year and in line with market expectations.

Whilst the short-term macroeconomic outlook remains challenging, the Group will continue to seek opportunities to strengthen and develop our business.

With our strong balance sheet, we are confident of further progress in the current financial period.”

Analyst Edward Stacey at Cenkos Securities rates the group’s shares as a Buy, with a ‘fair value’ rating of 20.8p per share.

He is estimating that the current year to end April 2023 will see more than doubled sales at £32.10m (£14.39m), with adjusted pre-tax profits increasing to £1.89m (£1.49m), lifting earnings up to 1.87p (1.52p) covering a 1.2p (1.1p) dividend per share.

The broker stated that:

“We believe that Coral Products is well positioned to deliver strong growth and profitability in FY23E. In the FY22E results the company reported that the business continues to make good progress. Furthermore, energy cost inflation is substantially mitigated by fixed contracts which are in place.”

In my view the shares of Coral Products will easily touch 20p within the next year or so and at the current 14p they have very strong appeal.

(Profile 28.04.21 @ 14p set a Target Price of 18p*)

Van Elle Holdings (LON:VANL) – still undervalued

This group is the UK’s largest ground engineering contractor, its CEO, Mark Cutler, informed shareholders at the AGM that:

“The Group has built on the strong trading momentum highlighted in its full year results announcement published on 3 August 2022, with a strong order book, and revenues to date ahead of management expectations.

However, the challenges associated with the industry-wide supply chain and inflationary cost pressures remain prevalent and are expected to persist into the next calendar year. These challenges are being mitigated as far as possible and the Board remains confident in achieving full year profitability in line with market expectations.”

Analysts Andy Hanson and Carl Smith at Zeus Capital have adjusted their estimates for the current year to end April 2023 to achieve £136.5m revenues (£124.9m) and adjusted pre-tax profits of £4.8m (£3.6m), worth 3.7p (2.7p) in earnings and paying 1.2p (1.0p) in dividends per share.

They have a valuation estimate on the group’s shares at 64.4p, which shows upside potential against the current share price of 40p, up 1.5p after the AGM Statement.

I stick firmly to my view that the shares will again rise over my previously achieved aim of 47p.

(Profile 29.03.21 @ 37.5p set a Target Price of 47p*)

Braemar (LON:BMS) – strong dollar benefits

In its Pre-Close Trading Update, issued yesterday, shipbroking group Braemar declared that it continues to benefit from the increased scale and breadth of its broking operations which have achieved significantly higher trading activity and transaction volumes during the Period.

The company commented that trading had been very strong with all sectors of the core Shipbroking business generating higher revenue than in the previous six months.

Revenue to 31 August 2022 is expected to be not less than £69m (£47m), an increase of 47%, with underlying operating profit for the period not less than £10.5m, an improvement of 88% (£5.6m).

The group is a big beneficiary of the stronger dollar and that will feed through the figures this year. 

It is looking forward to the second half of the year with a high degree of confidence in the ongoing execution of its growth strategy.

Analyst Ian McInally at Cenkos Securities has a Buy out on the group’s shares, looking for £127.8m (£101.3m) revenues and adjusted pre-tax profits of £19.5m (£8.9m), which would pick earnings up at 51.0p (45.6p) and cover a dividend of 11.3p (9.0p) per share.

The shares at the current 285p look seriously undervalued.

(Profile 05.12.19 @ 185p set a Target Price of 250p*)

(Profile 20.05.20 @ 99p set a Target Price of 150p*)

Cohort (LON:CHRT) – improving order books

“Overall, we continue to expect that our trading performance for 2022/23 will be ahead of that achieved for the year ended 30 April 2022. We also remain optimistic that the Group will make further progress in 2023/24, based on current orders for long-term delivery and on our pipeline of opportunities.”

That comment came from this aerospace and defence technology group at Tuesday’s AGM.

Its current order book at over £300m is looking very strong.

With net cash of £7.2m and some £40m of facilities, the company has a firm base enough to cope with better sales and profits in the current year to end April 2023.

Analyst Andy Chambers, at Edison Investment Research, is looking for £164.1m (£137.8m) of current year sales and £17.6m of profits (£14.7m), taking earnings up to 34.2p (31.1p) and comfortably covering a 13.4p (12.2p) per share dividend.

He has increased his DCF value to 726p per share against 684p previously.

The interim results in December should be good and the group’s shares at the current 475p have appeal.

I still fancy this group to receive an overseas private equity bid.

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

And finally ….

I note that Chamberlin (LON:CMH), the Walsall-based castings group, now expects its results for the year to end May being announced before the end of October.

The figures are expected to be in line with its recent market guidance, while the delay has been caused by its auditors.

The company’s shares have eased back to 4.5p, which is way below what the directors paid for additional stock.

Hopefully, this price reaction presents a good buying opportunity.

(Profile 29.07.22 @ 4.7p set a Target Price of 7p)

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