Small Cap Catch-Up: Steel, Myths And Brakes

Billington Holdings (LON:BILN) – Expect Some Early Profit-Taking 

A year ago the shares of this structural steel products and safety solutions company were down at 264.50p. 

They subsequently rose to 455p by the end of April last year, before gradually easing back to 282.50p by end-October. 

The Interims to end June showing that the group achieved record first half revenues and good profits, with a strong performance across all its business units.  

Then the very positive Trading Update in mid-November helped to reinvigorate investor interest. 

Since that announcement the group’s shares have been an improving counter, touching 489p at one time yesterday. 

As I have commented before, this really is an undervalued ‘class’ company and I stick to that opinion. 

Valued at around £61.5m, the company could well be signing off on a substantial 44% increase in its 2023 revenues to around £125.0m (£86.6m), while its adjusted pre-tax profits for the last year might be up nearly 230% at £13.3m (£5.8m). 

If those estimates have been achieved, when the company declares its results in April this year, then it is possible that earnings per share could well show through at almost 84p (39.1p) per share, more than amply covering a healthy 20.0p (15.5p) per share in dividend. 

So, at the closing 478p that puts the group’s shares out on an estimated 5.7 times earnings and a 4.2% yield – which is very attractive in rating terms. 

However, this year may not be as bullish as 2023 – with estimates of just £115.0m in revenues, only £8.0m in profits, but with 49.3p of earnings still covering a 20.0p dividend payment. 

Now, those sales figures may well improve during 2024, taking profit estimates higher again, but after such a fabulous share price run over the last few weeks it just has to be sensible to anticipate profit-taking clipping them back. 

(Profile 02.04.19 @ 266p set a Target Price of 314.5p*) 

(Profile 13.06.22 @ 217.5p set a Target Price of 295p*) 

Elixirr International (LON:ELIX) – More Than A Myth

Following the December announced acquisition of Insigniam, a US-based major sector player in the challenger consultancy field, the shares of the UK group have been on the run. 

Less than three weeks ago the shares were trading at 485p. 

Last night they clearly showed a very fancy move through my Target Price set in early February last year. 

The £284m capitalised group, which now operates globally, is expected to show revenues for the last year to end December of £87.5m (£70.7m), while profits could be £23.9m (£19.3m), generating earnings of 34.8p (30.5p) per share, lifting dividends up to 12.3p (10.8p) per share. 

Yesterday they hit 665p at one stage before profit-taking chased the shares back to close at only 601p, off 19p on the day, a 3% fallback. 

It could well now be at an ideal offer not to be missed, before it makes another attempt at breaking even higher again. 

May I remind you that an ‘elixir’ hankers back to alchemy in the Middle Ages – which refers to a substance believed to be capable of changing base metals into gold. 

(Profile 21.09.20 @ 227p set a Target Price of 285p*) 

(Profile 06.02.23 @ 517.5p set a Target Price of 650p*) 

Braemar (LON:BMS) – Ready For The Games In 2024 

I wonder whether the major freighter and tanker re-routing around The Cape of Good Hope is good news for my favourite shipping services group. 

The Yemen-based Houthi rebels are causing aggressive havoc for users of the Red Sea straits up to the Suez Canal. 

That has caused around a 3,500 nautical miles extension for shipping connecting Asia to Europe and added another ten days of sailing time for diverted cargoes. 

That disruption could well also be adding fee income to Braemar. 

The group 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. 

Asa group it certainly needs some luck to start to show through as it progresses into 2024. 

That accounting investigation and suspension of dealings in its shares, from July to late November, was very impactive in 2023. 

However, I really do feel that gradually the group’s shares will regain their poise, hopefully early this year. 

I am expecting a Trading Update to be announced next month. 

Analyst Andy Murphy at Edison Investment Research has a 520p valuation on the group’s shares. 

His estimates for the year to the end of February are for £150.2m (£152.9m) revenues, an easing in pre-tax profits at £15.0m (£18.0m), generating almost unchanged earnings of 45.4p (45.5p), but with an increased dividend of 13.5p (12.0p) per share. 

For the year to end February 2025 he goes for revenues of £150.2m, some £15.8m in profits, 46.6p earnings and a 14.0p dividend. 

Trading at just 275p, these shares are on 6.05 times estimated earnings and offering a very appealing 4.9% yield. 

I still feel that these shares have big upside potential, they are underrated and should be in any portfolio looking for income, growth or just plain value. 

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

(Profile 20.05.20 @ 9pp set a Target Price of 150p*) 

H&T Group (LON:HAT) – Trading Update Due With Next Few weeks 

Having touched 502p in late October last year, the shares of this pawnbroking to jewellery sales group took a real knock in the second week of last month, falling to 390p at one stage. 

It appears that the group is facing some upwards pressure on its operating costs for this year and next. 

The growth continues as more customers will be ‘popping round to Uncles’ but the latest Update saw analysts pulling back their estimates. 

Gary Greenwood at Shore Capital is now looking for the group to have seen its adjusted pre-tax profits in 2023, to end-December, to have increased 55% to £29.5m (£19.0m), lifting earnings to 53.7p (37.2p) and its dividend to 18.0p (15.0p) per share. 

For the current year just started he sees £36.7m profits, 62.8p earnings and 21.0p in dividend. 

For the next year to end December 2025 his estimates show £41.0m profits, 70.2p earnings and 23.0p dividend per share. 

I expect the company to announce a Trading Update within the next couple of weeks or so, that will help the share price to recover even more. 

I still believe that this group’s shares are undervalued and that they are more than capable of breaking above the 500p level within the next few months, before then heading towards the 550p mark. 

They closed last night at 430p, so hold very tight. 

(Profile 06.07.22 @ 332.5p set a Target Price of 400p*) 

And Finally ….. 

Surface Transforms (LON:SCE) – Getting To Grips With A Potential ‘Penny Stock’ Trading Candidate 

I was pleased to see that former fund manager Richard Sneller, a keen follower of and investor in UK Small Caps, has increased his stake from 14.1% to 15.3% in the equity of the carbon-ceramic automotive brake discs maker. 

The recent fund-raising has significantly added to the coffers of the maker of advanced technology products for high-performance road and track applications. 

The group’s shares have been a dismal performer over the last year. 

They touched 41p early in 2023 and traded around that level until late July, before absolutely collapsing back in total lacklustre activity, hitting 10p in pre-Christmas dealings. 

We have previously enjoyed some profitable price action in this emerging and still developing group’s shares. 

I really like the potential for this little company and believe that it has massive profit possibilities in due course. 

However, until we see some accurate guidance from the group, the shares will remain a purely speculative ‘penny stock’ dealing counter. 

Last night they closed fractionally firmer at 11.50p, from which level alert punters could well enjoy some useful gains, while looking for the lucky ‘brakes’. 

I see them at 15p very soon and now set that as my new Target Price. 

(Profile 19.09.19 @ 17p set a Target Price of 30p*) 

(Profile 08.01.21 @ 50p set a Target Price of 65p*) 

(Profile 03.01.24 @ 11.5p set a Target Price of 15p) 

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