Small Cap Catch up – Monday morning summary

Trackwise Designs (LON:TWD) – the ‘stonking short’ @ 165p is paying off

When will this Tewkesbury-based group stop hyping itself up and actually present realistic statements about its prospects that later bear out in truth?

The shares were spoofed upwards from 70p in March 2020 to a 363p High in late December 2020.

Last Friday night they closed at just 49p, after announcing its Trading Update for its year to end December 2022.

The specialist product provider for printed circuit technology reported the that first five months to end May, had seen revenues of £3.3m and was now boasting of having 95 customers in its targeted markets of electric vehicles, medical and aerospace.

Its order book stood at £4.6m for 2022 delivery.

Analyst David Buxton at finnCap presently has estimates out for the current year for £22.1m sales revenues (£8.0m est) with adjusted pre-tax profits of £1.5m for this year against his 2021 estimate of a £1m loss.

On those figures Buxton has pencilled in 5.0p of earnings this year against an estimated loss of 2.1p per share for 2021.

I have been a long-time bear of the company, having realised that its former Finance Director was not up to the job.

Reading between the lines I would imagine that its professional advisers must have had their patience stretched to ultimate limits as prediction, after prediction, after prediction failed to see achievement.

When the 2021 results are actually published, I would expect David Buxton to re-address his latest calculations.

If indeed the current year estimates come to fruition, then at around the current price the shares might be coming into possible buying range again.

But I would want to see actual results bearing out previous ‘market guidances’ that would make a change.

(Profile 10.04.19 @ 92.5p set a Target Price of 150p*)

(Profile 24.09.20 @ 165p ‘a stonking short’ looking for 50p*)

Marlowe (LON:MRL) – tomorrow’s results are sure to be accompanied by a positive statement

Tomorrow morning, we should be seeing the announcement of the finals to end March from this group which provides business-critical services and software which assure safety and regulatory compliance.

The indications are that we should expect to see revenues up from £192.0m to £303.5m, which could have more than doubled adjusted pre-tax profits from £17.1m to £37.2m andearnings almost 50% higher at 36.3p (24.6p) per share.

For the current year, now underway, analyst Peter Renton at Cenkos Securities, one of the group’s joint-brokers, is estimating £410m revenues, profits of £58.9m and earnings charging ahead again to 58.9p per share.

This group is a class act and has a robust enough balance sheet to get out and make more acquisitions as it builds up its overall scope and strength.

And it also boasts around 85% recurring revenues – which is why I rate the group’s shares as cheap at the current 818p.

Let us see what Chief Executive Alex Dacre has to say in tomorrow’s statement.

The shares have a lot further to climb, they peaked at 1094p in January this year, they will be up there again in the medium-term.

(Profile 30.01.20 @468p set a Target Price of 550p*)

RPS Group (LON:RPS) – new upgrade picks shares up in price

We will have to wait until Tuesday 9 August, when this multi-sector global professional services group declares its interims to end June, to see just how well it has done in its first half year.

However, last Friday morning the £315m capitalised group released an unscheduled Pre-Close Trading Update.

The tone was simple enough – ‘better than expected trading and positive outlook’ – well that tells us!

Analyst Alex O’Hanlon at the group’s brokers Liberum Capital, in response lifted his price objective on the group’s shares to 150p – they closed at 115p.

He rates the shares as a ‘buy’ stating that although on this year’s estimates the price-to earnings ratio at 15 times may not be cheap, he states that trading at 8.7 times target earnings creates attractions.

He estimates the year to end December to show sales up from £476m to £534m, with pre-tax profits up from £21.5m to £27.9m, worth 7.28p (5.6p) in earnings, amply covering the modest dividend of 1.46p (0.70p) per share.

The shares look to be very capable of reaching back up to the 132p level they peaked at last November.

Hold very tight.

(Profile 05.05.21 @ 88p set a Target Price of 110p*)

Bonhill Group (LON:BONH) – now a great recovery proposition

Last week’s news from the AGM of the media business clearly stated that the planned selling off of the group’s Business Solutions and Governance unit will give it the ability to concentrate upon its basis financial services sector business.

Bonhill’s Interim Group CEO, Patrick Ponsford, stated that:

“After a slow start to the year, I’m pleased with the performance of the Group, which is in line with the Board’s expectations, and look forward to a stronger second half. The proposed disposal of the Business Solutions & Governance division will enable us to focus solely on financial services and play to our strengths.”

Analyst Roddy Davidson at Shore Capital, the group’s NOMAD and Broker, has current year estimates out for the group to see revenues, in this year to end December, increase to £18.93m (£16.36m), helping it turn around from the previous loss of £0.18m to an adjusted pre-tax profit of £0.59m, worth 0.5p in earnings (loss 0.2p).

For the year end he sees the £7.5m capitalised group with some £1.09m cash at bank.

Further recovery is in line for 2023, with £20.93m sales £1.64m profits and earnings of 1.2p per share.

That makes the shares a great recovery proposition at the current 6p share price, although it may well take another year or so before it gets anywhere near my price objective.

(Profile 05.11.21 @ 10.75p set a Target Price of 14p)

N Brown Group (LON:BWNG) – ‘insider’ buy looks interesting

It was interesting to note that CEO Steve Johnson bought a small chunk of shares in his group – some £20,000 worth at around the 27p level.

And that was despite the mid-month Update stating that the first three months has seen softer sales in volume terms and suggesting that it has not been getting any better.

However, analysts Darren Shirley and Clive Black, at Shore Capital Markets are reckoning that the current year to February 2023 could see sales up at £739m (£716m) but adjusted pre-tax profits easing from £43.1m to £33.9m, generating just 5.8p per share in earnings (7.4p).

For 2024 they estimate £778m sales, £40.5m profits and 6.5p in earnings.

The shares are currently trading at around the Friday night close of 25.5p, keep holding.

(Profile 06.07.20 @ 36.15p set a Target Price of 50p*)

Christie Group (LON:CTG) – iconic sales award

The £32m capitalised professional business services group is apparently seeing growth this year.

Boss David Rugg told shareholders at the mid-moth AGM that following a solid start to the year the group has been enjoying a busier second quarter in its deal activity.

Analyst Peter Ashworth at Shore Capital Markets has a fair value out on the group’s shares of 149p each.

His estimates for the current year to end December are for revenues of £71.0m (£61.3m) but adjusted pre-tax profits standing still at £3.9m, with earnings of fractionally at 12.2p (13.7p) but with an increased dividend of 3.5p (3.0p) per share.

Jumping forward for the coming two years Ashworth goes for £76.0m then £81.2m in sales, profits of £4.8m then £5.4m, earnings of 15.0p then 16.0p and a dividend of 4.0p then 4.5p per share for 2023 and 2024 respectively.

Recent news that Christie & Co, has been instructed by the St. Modwen property group to sell The Trentham Estate, one of the UK’s most iconic visitor attractions and leisure-based outlet retail and garden centre property investments, is certainly very positive.

With the shares now trading at only 120.5p I reckon they are cheap and destined to rise above their High for the last year of 139.6p fairly soon, possibly before the interims are announced in September.

(Profile 06.10.21 @ 124p set a Target Price of 155p)

MP Evans Group (LON:MPE) – ready for another lift-up

A few weeks ago, I suggested ‘top slicing’ of holdings at prices above the 1000p level, since when the shares have been down 894p.

Today the shares are moving back on upwards again.

Analysts Raymond Greaves and Michael Clifton at brokers finnCap have a current price objective of 1100p on the Indonesian sustainable palm oil producer.

They are going for the current year to end December to see group sales increase from $276.6m to $328.3m, with adjusted pre-tax profits rising from $97.6m to $116.0m, lifting earnings up from 130.7c to 152.3c, comfortably covering unchanged dividends of 54.0c per share.

At the current 904p the shares look capable of another push above the 1050p level before the year is out.

(Profile 07.04.20 @ 540p set a Target Price of 700p*)

The Fulham Shore (LON:FUL) – very good ‘fodder’

In less than one month’s time we should be seeing the finals to 26 March being announced by ‘The Real Greek’ and ‘Franca Manca’ restaurants operator.

The group’s business has turned around very positively from its Covid-19 hassles.

In fact, the first two months of the current year to end March 2023 have already started well.

Analyst Sahil Shan at Singer Capital Markets rates the group’s shares as a ‘buy’ with a price objective almost twice the current 12.5p market price.

His estimates for the last year are £80.2m sales (£40.3m) and an adjusted pre-tax profit of £1.7m against the previous £5.2m loss. Earnings could come out 0.2p (0.6p loss) per share.

For the current year he goes for £105.1m revenues, £3.6m profits and 0.4p earnings per share.

Going forward for the year to end March 2024 Shan estimates £120.8m sales, £6.7m profits and 0.8p per share in earnings.

This is looking very positive for the group’s shares, which were trading at around 20p just nine months ago.

They are looking good for an early spin upwards.

(Profile 15.12.21 @ 15p set a Target Price of 20p)

Gateley (Holdings) (LON:GTLY) – doing even better

The law group did better than expected in the last trading year.

The end April 2022 Trading Update shows that the year had a strong growth in revenues and profits, ahead of market hopes.

The finals which will be announced in September, could show revenues up 13% at £137m and adjusted pre-tax profits up 11% at £21.5m and earnings some 7% better at 14.10p per share, amply covering a dividend of 8.5p (7.5p) per share.

Analyst James Allan at Liberum Capital rates the shares as a ‘buy’ looking for 320p, compared to the current 206p.

His current year estimates show sales of £162m, profits of £26.1m, earnings of 16.5p and a 9.7p per share dividend.

I see these shares going a lot higher yet, possibly with a good market returning generally within the next couple of months and helping to take them back up above the 262p High of September last year.

(Profile 18.05.20 @ 155p set a Target Price of 195p*)

Hargreaves Services (LON:HSP) – even more to go for

This now diversified property services group has already stated that it expects that its results for the year to end May will come out ahead of market expectations.

It appears that its German joint venture is really helping the numbers.

Although the group’s revenues may prove to have been lower at £166.0m (£204.8m), however adjusted pre-tax profits are estimated at £32.9m (£21.2m), pushing earnings up from 70.1p to 97.0p per share, comfortably covering a dividend of 20.4p (19.2p) per share.

Analyst James Tetley at Singer Capital Markets has a ‘buy’ out on the shares with a price objective of 710p each.

Considering that they are now trading at 522p in the market I would suggest that there is still a lot more to go for with this group’s shares.

(Profile 29.12.20 @ 263p set a Target Price of 325p*)

Harworth Group (LON:HWG) – growth strategy outlined

The land and property regenerator recently held a Capital Markets Day which helped push its shares up to 163p in reaction to investors views as they were taken around several of the group’s sites in the Midlands.

That they have drifted of with the market over the last week or so, to 151.5p, is not a bad sign.

Instead, it could be taken as a buying opportunity if investors agree with its broker’s view that its shares are a ‘buy’.

Analyst Chris Spearing at Liberum Capital was impressed at the CMD outline by the group for its growth strategy as it goes ahead.

He has a ‘buy’ out on the shares with a 21p objective.

(Profile 25.07.19 @ 130p set a Target Price of 170p*)

Hercules Sites Services (LON:HERC) – offering near-term upside

The recently announced interim results to end March, from this labour and services supply group, whoed a good advance.

Revenues were up 42% at £19.9m (£14.0m) while the impact of £0.41m of IPO costs took the loss before tax down to £0.38m (£0.74m profit).

Analyst Tania Maciver at SP Angel rates the group’s shares as a ’buy’ with a price objective of 74p, compared with the current 51p.

She states that the group has been carefully and strategically grown since inception by an exceptional management team with extensive experience.

And Maciver is now looking for aggressive growth, stating the shares are an attractive investment opportunity, supported by a stable yield over the longer-term.

The group’s shares peaked at 61.90p in early June, just a few pence short of my price aim.

I have no worries about this company, it is well-based and has excellent prospects.

The shares at the current price offer near-term upside.

(Profile 04.05.22 @ 52p set a Target Price of 64p)

Redcentric (LON:RCN) – finals before the end of July will be positive

On Thursday 21 July this cloud and data connectivity solutions provider will be announcing its results for its year to end March 2022.

We have already been indicated that revenues will have risen from £91.4m to £93.1m, while adjusted pre-tax profits will be slightly ahead at £13.9m (£13.7m) and earnings of 7.3p (7.1p) per share covering the unchanged 3.6p dividend.

The year now underway will be looking a lot better, with revenues estimated out at £103m, profits of £16.1m, earnings of 8.2p and double covering a 4.1p per share dividend.

Analysts Andrew Darley and Kimberley Carstens at finnCap have a price objective on the group’s shares some 56% higher at 190p.

They were impressed by the recently announced acquisition of the business and assets of Sungard data centres.

I look forward to some positive statement from the group when it publishes its accounts for its 2022 year in under a month’s time.

My price aim is more modest that that of the group’s brokers, even so at the current 120.75p its shares have strong appeal.

(Profile 19.04.21 @ 139.5p set a Target Price of 170p)

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