Small Cap Catch-Up: Legals, Pensions, Electricals and Medics

DWF Group (LON:DWF) – Confirmation That It Is In 100p A Share Cash Talks

On Monday morning the legal services business declared that it was in discussions with Inflexion Private Equity Partners with regard to a possible cash offer for the entire equity.

It is proposed that a 100p a share cash bid could be made.

Talks between DWF and Inflexion are ongoing and there can be no certainty that an offer will be made, even if the pre-conditions are satisfied or waived.

The £289m group’s shares peaked at 94.80p in immediate reaction, before closing the day at 87p, which was a healthy 33% jump on the day.

Apart from those readers who were influenced by my recent words just consider the lift that the LF Gresham House Fund Managers have enjoyed subsequent to them announcing that two Friday’s ago they took their stake in the group up to a very useful 5.06% of its equity.

Last night they were treading water at around the 85p level.

Until more is known I believe that the shares remain a strong hold, even with such a super 54% profit since my latest Profile on the group at 56.5p just two weeks ago.

(Profile 01.06.20 @67p set a Target Price of 100p*)

STM Group (LON:STM) – Also In Bid Talks

This cross border financial services group is in talks with Pension SuperFund Capital about a possible cash offer of 70p a share.

Obviously various Financial Services Commission approvals will be needed to swing the deal through, such as those in Malta and Gibraltar.

We should get some firm guidance within the next month.

The last couple of years have been bumpy for the group and its shares have been languishing at around the 25p level for some time.

I would think that certain shareholders, and also boss Alan Kentish, will be very happy to see the bid succeeding.

The £31m company’s shares touched 62.60p on the offer news yesterday morning, before closing at 50p which was still up some 82% on the day.

(Profile 27.05.20 @ 33.7p set a Target Price of 50p*)

Global Ports Holding (LON:GPH) – Strong Start To Cruise Season

The world’s largest independent cruise port operator has declared its annual results to end March this year.

They showed that it handled almost four times as many passengers in the period – some 9.2m against 2.4m previously.

Its adjusted revenues came in at $117.2m ($43.4m), boosting from a loss of $43.4m to an adjusted pre-tax profit of $1.7m.

For the current year analyst Greg Johnson at Shore Capital is going for revenues of $154.9m and a more than tenfold profit increase to $20.5m, which would lift it up to 14.5c per share in earnings.

The Co-Founder, CEO and Chairman Mehmet Kutman stated that:

“Our cruise operations have returned to, and have in fact now exceeded, pre-pandemic activity levels.

We are delighted with the performance in the Reporting Period and are very pleased with our strong start to the 2023 cruise season.

The outlook for the cruise industry is strong and GPH is well positioned to be a key enabler and beneficiary of its continued growth and success in the years ahead.”

For the current year the £130m capitalised group expects, based on confirmed booking requests made by its cruise line partners, that it will welcome 11.8m passengers to its consolidated and managed cruise port portfolio, while trading is broadly in line with current market expectations.

Less than a month ago I stated that I saw the group’s shares trading in the 200p – 220p price range.

Last night they closed at 207p.

Hold very tight.

(Profile 11.11.22 @ 81.5p set a Target Price of 100p*)

Hunting (LON:HTG) – Shares Picking Up With More To Come

Just over a month ago I noted that this £423m valued global group was reporting rising order books.

Providing tools and components for the oil and gas and the energy industries, the company had contracts for over $575m of business.

At that time, I stated that the shares, despite having risen 10% beforehand, were then just 219p and offering an excellent buying opportunity because they were on their way back up again.

Since then, analyst Mark Wilson at Jefferies continued his Buy recommendation on the group’s shares, fixing a 350p price objective.

The group has recently increased its full-year 2023 earnings guidance for the second time this year, and it now sits 9% above consensus.

Wilson stated that ‘more materially’ the outlook for 2024 is improving as sales order books increase.

Full-year 2024 earnings guidance was given for the first time and at $125m – $135m is more than 21% above consensus expectations of $107m.

Last night the shares closed at 256p, which has been a good advance in the month but is only part of the way to the better rating that is due the shares.

(Profile 15.03.21 @ 275p set a Target Price at 350p*)

Currys (LON:CURY) – Well Now We Know

Mike Ashley’s Frasers Group added another 7.6m shares to its holding in the ailing electrical retailer on Monday.

That took his holding up to 125.4m shares, representing 11.06% of the group’s equity.

Following on from my Profile on Monday, you will have noted that I was impressed that both the group’s Chairman and its Chief Financial Officer were buyers of its shares last Thursday, the day of the 2023 results.

It is always important to identify the trend of ‘insider’ dealings, they usually are the indicator of better prospects ahead.

The shares closed last night at 51p as the market assumed that Ashley was a ‘goer-on’, which will reflect on the improving share price.

(Profile 10.07.23 @ 49p set a Target Price at 61p)

Totally (LON:TLY) – Growth In 2023 Results But Current Year Warnings

Frontline healthcare services provider Totally (LON:TLY) has reported an advance in its results for the year to end March 2023 but warns that it expects the coming year to be challenging as the NHS continues to operate in crisis and faces ever-increasing demand across all services.

The last year has reported £135.7m in revenues and £3.8m in adjusted pre-tax profits, with earnings of 2.0p and a dividend of 0.6p per share.

However, it is expecting that a slowdown in tender activity for new business combined with an exit from various contracts, will see lower current year sales and profitability.

Analyst James Wood at Canaccord Genuity Capital Markets still rates the group’s shares as a Buy but has lowered his Target Price by 25% to 30p a share.

Reflecting the significant operational headwinds, he is dropping his current year sales and profit estimates.

He now expects sales to fall to £118m for the year to end March 2024, while halving his adjusted previous profit estimate to £3.2m, slashing earnings by almost two-thirds to just 1.2p, but still covering a 0.6p dividend per share.

On the back of Monday’s news and subsequent broker lowered estimates the group’s shares reacted negatively, settling at around 11.25p, before closing last night at 11.62p.

Now let the weak holders get out and then get ready to average existing positions.

Based upon the Canaccord estimates the £24m company’s shares have now been oversold – give them a chance and recovery will shine through.

(Profile 12.03.20 @ 12p set a Target Price of 18p*)

(Profile 21.04.23 @ 19.5p set a Target Price of 25p*)

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