Small Cap Catch-Up: Steel, Payment Plus More

Billington Holdings (LON:BILN) – First-Half Momentum Is Continuing Apace

Just three weeks ago the shares of this structural steel and safety solutions company were down to 282p, which I must admit really surprised me considering its recent corporate news.

However, they had crept better to 317p by Monday night, then yesterday some normality of reason bounced back with the shares leaping over 13% to 360p at one stage in response to its latest Trading Update.

The group in late September informed investors of its record first half revenues and good profits, boasting of an excellent performance across all its business units.

Yesterday the company stated that trading had continued to be strong across the group, with further good quality orders secured and increased volumes being delivered in the second half of the year.  

It is benefiting from improved manufacturing efficiencies in each of its production facilities and has been successful in the efficient delivery of high-quality contracts. 

The group now expects both revenue and pre-tax profit for the year to end December to be ahead of previous market expectations.

CEO Mark Smith stated that:

“The strong performance we achieved in the first half of 2023 has continued into the second half.  

The benefit of efficiency enhancements implemented throughout the Group, combined with a diverse range of successfully delivered contracts in 2023, means that I am pleased to report that I now expect the Group to achieve revenue and profits for 2023 ahead of previous market expectations.  

Going forward into 2024 we have a healthy pipeline of further opportunties, however, we do remain mindful of continuing inflationary pressures and an uncertain macroeconomic outlook, but with our strong balance sheet I do believe the Group is well positioned for the future.”

Analyst David Buxton at Cavendish Capital is nearly as bullish as I am about the prospects for this group.

He has a Price Objective of 541p out for the group’s shares.

His estimates are for the current year to see £125.0m (£86.6m) of revenues, with £13.3m (£5.8m) of adjusted pre-tax profits, generating a massive 83.9p (39.1p) per share in earnings, and easily covering a dividend of 20p (15.5p) per share.

Furthermore, he predicts that the year-end net cash balance will be a very useful £16.0m (£10.9m).

My view continues to be very positive about the company, especially with the predicted cash coffer making up some 35% of the current market capitalisation of just £46m.

The shares at the overnight 350p are trading on just 4.2 times current year earnings while yielding a very attractive 5.7%.

Despite sensible caution for next year’s trading, with Buxton noting the outlook comments and predicting £115m sales, £8.0m profits and 49.3p of earnings, the shares are still a strong hold for existing holders, while being a bargain for new ones too.

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

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

PayPoint (LON:PAY) – Broker Has Price To Double

In mid-August this year I boldly stated that I looked forward to seeing this payment solutions group’s shares, then trading at only 560p, to get gradually moving back over the 600p mark and heading to somewhere close to my Target Price, which I noted was looking somewhat adrift.

Well, it still is!

However, I am somewhat heartened by the latest note on the group from one of its ‘champions’ – Joe Brent, analyst at Liberum Capital.

He has stated that the shares are ‘too cheap’ given the growing streams of revenue, said Liberum.

His Buy note gives a Price Objective 1100p on the stock, which was trading at 560p on Monday.

He states that the group’s model was “historically based on utilities, retailers, and customers’ but it has ‘evolved significantly since then’.

The increased proposition has added to the appeal for convenience retailers, and the acquisition of Handepay added 30,000 new small and medium enterprise partners in different sectors.”

The deal allowed PayPoint to expand its client base and “increase the appeal to new customers from a broader demographic’.

However, it has added a fourth leg: the ability to act as a one-stop-shop for payments and commerce.

It is all about revenue growth and the operating leverage that it will bring. With a little bit of extra help from outperformance at Love2shop, this is how PayPoint can achieve £100m of EBITDA in full-year 2026.”

On a price earnings multiple of just 7.8, Brent declared that the shares are ‘too cheap’ and I agree with him.

Since my first mention of this group, its shares have been up to 721p, but not quite hitting my Target Price.

The group, which is due to announce its Interim Results on Friday 24^th November, could well see its shares edging higher from last night’s close of just 564p.

(Profile 17.02.21 @ 598p set a Target Price at 750p)

And some Quick Notes …..

Did you notice the price of Global Ports Holding (LON:GPH) shares earlier this week? They touched 290p on slightly busier dealing activity.  

Last Friday’s Trading Statement obviously encouraged investors. 

We will now have to wait to see the Interims, which should be announced in mid-December. 

In the meantime, the shares of the world’s largest independent cruise port operator could easily nudge over the 300p mark. 

They closed last night at 279p.

(Profile 13.07.20 @74.8p set a Target Price of 100p*)

I see that my favourite shipping services group Braemar (LON:BMS) will be reporting its annual results to end February this year tomorrow morning (16th). 

It will be then issuing its half-year figures on Wednesday 29th, to be followed by the group’s 2023 AGM on Monday 18th December. 

That all means a gentle washing of corporate news from the group, whose shares have been suspended over the last four months or so. 

Expect a low mark-down for the shares upon their imminent return to dealings as ‘locked in’ holders desperately sell out, possibly below 200p (they were suspended at 233p). 

Thereafter, if handled properly, a programme of constructive news should accompany the shares recovering in price to back well over the 350p level that they reached a year ago.

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

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

The Q3 report from Team Internet Group (LON:TIG) obviously disappointed some investors, with the shares easing back to 116p from 127p last Thursday. 

I spoke at some length with Billy Green, the group’s CFO, on Monday morning and remained totally assured that the group’s shares are still undervalued. 

It has been quite a transformation for the group this year as it moves convincingly away from the strong M&A programme of the last few years, to now reflect its concentration upon utilising the various strengths of those previous acquisitions to build up the massive cross-selling opportunities, especially that this globally operating group now has within its organisation. 

The ‘share buyback’ programme still has another £13m to go, which I compute should take it into mid-February 2024 to complete. 

The average buyback price this year has been 124p, the shares closed at 118p last night. 

I still see them going a great deal higher yet.

(Profile 12.07.21 @ 89p set a Target Price of 110p*)

I see that the shares of the mobile payments and messaging group Fonix Mobile (LON:FNX) that, ahead of this Friday’s Children In Need events for which it powers donations, the company is feeling quite positive about its current year prospects. At Tuesday’s AGM it stated that it was trading comfortably in line with expectations, with strong income growth from new and existing media clients in both the UK and Ireland.