Small-Cap catch-up – SUR, IOF and MPAC

Sureserve Group (LON:SUR) – securing even more orders

The social housing energy services group earlier this week announced that it had won an eight-year extension to an existing long-term gas servicing, repair and installation contract.

L&Q, which manages 95,000 plus homes in London and the South-East, has awarded the contract worth £68m to Sureserve – it started on 1 May.

Analyst Alastair Stewart, at the group’s brokers Shore Capital Markets, has estimated that current year revenues to end September will be £280.5m (£244.0m), with adjusted pre-tax profits continuing to move ahead from £13.6m to £16.4m this year, worth 8.2p (7.2p) in earnings per share.

Capitalised at just £138m, with its shares at only 83.25p, I rate the shares as undervalued.

Hold very tight.

(Profile 14.01.20 @ 36p set a Target Price of 50p*)

Iofina (LON:IOF) – still undervalued

This iodine and specialty chemicals group has announced another set of record results – fourth in a row.

It saw sales revenues rise from $29.7m to $39.0m in the year to end December 2021. Adjusted pre-tax profits more than trebled to $4.9m ($1.3m), with earnings leaping from 0.7c to 4.8c per share.

For the current year finnCap analyst Jonathan Wright estimates $40.5m revenues and $6.2m profits, generating 3.2c per share in earnings.

He has increased his price objective to 30p, against the current market price of 19.65p.

These shares are worth chasing at around the current levels.

(Profile 29.07.20 @ 13.5p set a Target Price of 18p*)

Mpac Group (LON:MPAC) – increasing order books give a buffer

Last week’s AGM Statement from this excellent high-speed packaging and automation solutions group inferred that despite supply chain uncertainties and operational challenges it is still positive.

The group, which serves the food & beverage, pharmaceuticals and healthcare sectors, has a growing order book. That certainly must provide its management with a certain buffer against any hassles.

Analysts Robin Speakman and Akhil Patel, at Shore Capital Markets, are looking forward to the group reporting its first half Trading Update in July.

They estimate that revenues this year to end December will rise from £94.3m to £105.0m, generating adjusted pre-tax profits of £8.8m (£8.6m), with earnings coming out at 34.5p (39.7p) per share, still with no dividends while it is building up the group’s operations.

Capitalised at under £93m, the group should be ending the year with net cash of £9.4m (7.6m).

Already the analysts have estimates for 2023 of £113m sales, £9.6m profits, and 37.1p per share of earnings.

Considering its growth over the last three years I rate this group’s shares as worth at least 15 times earnings, which would take them back upwards again from the current 460p to 517.5p, based on the Shore estimates.

Could well be worth a small pre-July punt.

(Profile 19.12.19 @ 182p set a Target Price of 235p*)

Galliford Try Holdings (LON:GFRD) – a buying opportunity right now

Ahead of yesterday’s Business Briefing, for analysts and professional investors, the construction group stated that the group has continued to trade in line with management expectations, whilst progressing with its sustainable growth strategy and target operating margins.

Now updates on current trading were made available to those attending the Briefing – so we will have to wait until the mid-July Trading Update on the finals to end June,

In the meantime, the group’s shares at 168p look cheap to me.

(Profile 02.02.22 @ 178p set a Target Price of 220p)

IOG (LON:IOG) – becoming a significant UK player

Last week’s AGM Operational Update highlighted its operations on its Blythe and Elgood fields, after the early year hassles. Further news will be given before the end of June.

Drilling on the two development wells on Southwark East and West is due to start in the final quarter of this current year.

Analyst Daniel Slater, at brokers Arden Partners, rates the group’s shares as a ‘buy’ after upping his price objective to 48p a share, against the current price of 28.25p.

He is estimating current year sales revenues of £121.3m (nil), with adjusted pre-tax profits of £85.8m (£6.8m loss).

For the next year to end December 2023 he goes for £147.7m revenues and £97.9m of profits.

I agree with Slater’s view that IOG is becoming a significant new UK E&P company, with what will be a material, operated production stream.

The shares are not for selling at anywhere close to these levels.

(Profile 06.09.21 @ 22.5p set a Target Price of 30p*)

Kitwave Group (LON:KITW) – ringing doorbells of growth

Confectionery, soft drinks, snacks, beers, wines, groceries, frozen foods and ranges of tobacco – no not your local shop, but instead these lines are all carried by this UK leading independent wholesaler.

A week ago, it gave out a Trading Update for its interim period to end April.

It has had a strong first half-year with all of its business trading at pre-pandemic levels or higher. Accordingly, the expectations for the full year figures to end October should be bettered.

Analyst Mark Photiades at Canaccord Genuity Capital Markets has a ‘buy’ rating on the group’s shares with a price objective of 255p.

He estimates that sales will increase from £380.7m to £462.5m, with trebled adjusted pre-tax profits of £13.5m (£4.5m), generating 15.6p (8.2p) of earnings and paying 7.0p (6.8p) per share in dividends.

This group has an excellent organic growth strategy and is also keen to expand through accretive acquisitions. The shares at 152.5p have a lot further to climb yet.

(Profile 14.02.22 @ 145.5p set a Target Price of 180p)

Dekel Agri-Vision (LON:DKL) – getting nutty with it

This little company is beginning to ramp up its large-scale cashew processing plant in Cote d’Ivoire, while at the same time enduring tighter market prices for its crude palm oil.

Analyst Andrew Simms at Arden Partners in early March was estimating that the group could be seeing sales revenues of €49.0m (€37.0m), helping to shoot adjusted pre-tax profits up by over five times from €0.9m to €5.5m for the year to end December.

That could earn the group more than 1.1c per share against only 0.3c last year. Simms has a 9.4p per share price objective for his ‘buy’ rating.

The West African operating group’s shares still look undervalued to me. Currently just 3.85p, the shares help to capitalise the company at only £21m.

(Profile 23.09.20 @ 2.0p set a Target Price of 3.5p*)

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