Small Cap Catch-Up: Maritime Winners And Luxury Flicks

Braemar (LON:BMS) – Interim Results Due This Wednesday 

This £85m capitalised group is the world’s second largest international shipbroking business. 

As part of its services it provides expert investment, chartering, and risk management advice that enables its clients to secure sustainable returns and mitigate risk in the volatile world of shipping and energy.  

The company’s experienced brokers work in tandem with specialist professionals to form teams tailored to its customers’ needs, and provide an integrated service . 

It provides broking services to the dry cargo, deep sea tanker, specialised tanker and the ‘sale and purchase’ markets. 

Over the last few years, it has been building up its renewables, energy, financial and offshore activities. 

As a leading global shipbroker with offices in London, Singapore, Beijing, Geneva, Perth, Dubai, Athens, Hamburg, Melbourne, Madrid, Shanghai, and Houston, the group is well-positioned to serve key industry players across different time zones and cultures.   

In late June this year the group called for an internal independent investigation into various transactions carried out between 2006 and 2013, whilst awaiting the results dealings in the company’s shares were suspended at around the 233p price level. 

The conclusion of the investigation was that the company needed to reclassify some £2m on its balance sheet. 

On the 21^st of this month the suspension was lifted, and the shares were requoted at around 255p rising to 287.20p before closing that day at 280p. 

For the year to end February 2023 it reported an outstanding year of revenue generation and profitability, showing a 51% increase in revenues to £152.9m (£101.3m) and a double adjusted pre-tax profit of £17.9m (£8.9m), with earnings of 37.9p (18.8p) per share. 

With the independent investigation now completed, the group’s Management looks to the future with confidence. 

This coming Wednesday will see the group declare its Interim Results for the six months to the end of August. 

For the full year to end February 2024 analyst Ian McInally at Cavendish Capital has estimated that revenues will be fairly steady year-on-year looking for £151.0m, while anticipating the adjusted pre-tax profit to come in at £16.0m, worth 38p per share in adjusted earnings. 

Looking into the coming year he has pencilled in £154.4m sales, £16.2m profits and 36.5p of earnings. 

His Price Objective on the shares is 385p. 

Over at Edison Investment Research their analyst Andy Murphy is very much more bullish on his valuation, suggesting 520p as his Price Aim. 

For this year and next he is viewing £15.0m then £15.6m in normalised pre-tax profit, generating earnings of 40.5p then 39.9p respectively for 2024 and 2025. 

I am now looking forward to the company giving a much more descriptive commentary on the investigation, the background to the first half’s trading, together with an overall description of its corporate strategy going forward. 

More details will come out in due course, possibly at the forthcoming AGM on Monday 18^th December. 

In the meantime, I do believe that the group’s shares, which closed at 288p on Friday night, some 10p better on the day, are likely to rise over the 300p level in the near term, possibly up to 325p. 

Very much a ‘watch, wait and see’ situation, as confidence is restored in the group’s equity. 

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

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

Windward Ltd (LON:WNWD) – €3.2m Contract Win With A New European National Coastguard Customer 

Despite the conflict problems in Israel this group, which is headquartered in Tel Aviv-Yafo, has seen its offices remain fully operational. 

It is a leading Maritime AI company, that enables organisations to achieve business and operational readiness.  

Windward’s AI-powered solution allows stakeholders including banks, commodity traders, insurers, and major energy and shipping companies to make real-time, predictive intelligence-driven decisions, providing a 360° view of the maritime ecosystem and its broader impact on safety, security, finance, and business. 

Last Friday morning the company announced that it had signed up an important new customer. 

CEO Ami Daniel stated that: 

“The signing of this five-year contract with a European coastguard underlines the growing need for Windward’s technology in advancing maritime security through our A.I. driven platform.  

This agreement not only underscores recognition of our capabilities but further contributes to our cash position and Annual Contract Value and provides further predictable revenue. 

As we continue to deploy our solution to safeguard against evolving threats, we see a robust pipeline of opportunities driving our success.  

We remain confident of further growth into 2024 and the strengthening of our relationships with existing customers.” 

Analysts Kai Korschelt, Hayley Palmer and Minal Patel at Canaccord Genuity are very bullish about this group’s prospects, they see the group’s sales rising from an estimated $26.0m ($21.6m) to end December this year, to $31.2m next year and $37.4m in 2025. 

In the same period of time, they view it moving from a loss of $16.4m in 2022 to halving that this year and progressing to almost break even by 2025. 

Accordingly, their view is that they look for the shares to rise to 115p in due course, against the 73p at which they closed on Friday night. 

I see them edging ever closer to the 100p barrier, so Hold Tight. 

(Profile 03.04.23 @ 37.5p set a Target Price of 47p*) 

Everyman Media (LON:EMAN) – Now On The Up 

The shares of this independent chain of luxury cinemas group moved up impressively last Friday, closing almost 12% better at 66.50p. 

At that level the group, which has some 41 cinemas operating around 141 screens across the UK, is capitalised at just £60.63m. 

Analyst Mark Photiades, at Canaccord Genuity Capital Markets, rates the shares as a Buy, with a Price Objective of 200p. 

His estimates for the current year to the end of December are for takings to have risen from £78.8m to £94.4m, in the process slicing its losses from £1.3m in 2022 to just £0.9m down this year. 

For next year he sees a leap in receipts to £114.5m, cutting its losses to just £0.7m. 

The big turnaround comes in 2025 when Canaccord Genuity go for £139.9m at the box office, jacking it up into £2.6m of adjusted pre-tax profits, worth 1.96p per share in earnings. 

Although it is loss-making for 2023 and 2024 that estimate for 2025 looks strong. 

However, it is not the earnings that year that are currently boosting the share price, but instead the ongoing accumulation of stock by Blue Coast Private Equity, which I pointed out over the last few weeks. 

Last week it carried on adding to its holdings by buying more shares at 56.2p each, now up to 21,803,639 shares, representing 23.9% of the Everyman Media equity. 

I feel that these shares have been gaining a great deal more interest of late, such that by the time the next Trading Update is announced, in mid-to-late January, they will be quite a bit higher. 

Now nudging closer to my Target Price, they are a Strong Hold. 

(Profile 23.08.23 @ 59p set a Target Price of 73.5p) 

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