Small Cap Catch-Up – Wincanton, Kitwave, McBride And Avingtrans

Wincanton (LON:WIN) – Bids Aplenty But Still More To Deliver Yet? 

It does appear that this group is becoming a much-wanted asset by overseas operators. 

On Monday morning the French-based CMA CGM group put up another £37m to increase its bid for the UK’s leading logistics provider – offering 480p a share cash, worth a total of £604.7m. 

Within minutes the US GXO group, who took out Clipper Logistics a couple of years ago, announced that it had asked to look at Wincanton’s books before possibly making a counteroffer for the company. 

Ahead of Monday morning’s GXO request, the Wincanton Board gave their agreement to the higher French bid. 

The group’s shares jumped up 57p to 505p, with some 12.8m shares changing hands on the day. 

That saw my second Target Price being achieved – but now where? 

GXO Logistics had until 6^th March to declare its intentions, but this morning has made a 605p a share cash £762m bid for the group, boasting some 34% irrevocable acceptances for its offer. 

The shares closed last night at 507p, valuing the group at £633m and have swept 20% higher since to 609p. 

Could well still have more to wait for yet. 

(Profile 07.05.19 @ 247p set a Target Price of 350p*) 

(Profile 06.05.22 @ 412p set a Target Price of 500p*) 

Kitwave Group (LON:KITW) – Not For Chasing 

The announcement on Tuesday of this group’s Final Results, to end October 2023, was good enough to get the shares running up 14p to 319p at one stage. 

But at the end of the day, after some 208,565 shares were traded, they closed at just 297p. 

The company is a delivered wholesale business, specialising in selling and delivering impulse products, frozen, chilled and fresh foods, alcohol, groceries and tobacco to approximately 42,000, mainly independent, customers. 

With a network of 30 depots, it is able to support delivery throughout the UK to a diverse customer base, which includes independent convenience retailers, leisure outlets, vending machine operators, foodservice providers and other wholesalers, as well as leading national retailers. 

The results for the £219m capitalised group reported sales up 20% at £602.2m, while adjusted pre-tax profits were £27.5m (£18.9m), lifting earnings up to 28.7p (22.1p) and its dividend to 11.2p (9.3p) per share. 

Way back in May 2022, I mentioned that this group had an excellent organic growth strategy and that it was also keen to expand through accretive acquisitions.  

I stated that the shares, then at 152.5p, had a lot further to climb yet, they touched 341.57p last summer, before easing back to 241p in October. 

Analyst Mark Photiades at Canaccord Genuity Capital Markets has a Buy rating on the shares, looking for 435p in due course. 

The group’s shares have been an excellent performer over the last couple of years, more than double my Profile price of two years ago, however I can see that its growth may well be slowing down, unless a slew of accretive acquisitions can be made. 

Despite very much higher Price Objectives from the analysts following the company, these shares are for holding while I would certainly not chase these shares for now. 

It may be too soon yet to predict the levels to where its shares are headed, but they continue to have strong appeal.   

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

McBride (LON:MCB) – My First Target Price Will Soon Be Beaten 

This £155m capitalised group is the leading European manufacturer and supplier of private label and contract manufactured products for the domestic household and professional cleaning/hygiene markets. 

Its half-year report to end December last year saw group revenues up nearly 10% at £468.0m, while its adjusted pre-tax profit came in at £22.4m as compared to a loss of £7.9m, with the strong first-half trend continuing into this year. 

The group’s shares, which ended last week at 70.40p have subsequently reacted well to the positive corporate news, touching 90p yesterday after some good trading in the early part of this week. 

Brokers Investec have a ‘buy’ rating on the shares, looking for 112p.and a 112p price target for the stock. 

While Peel Hunt upgraded their Buy rating from 108p to 120p a share. 

It is now apparent that the favourable trends for private label products in its categories will see the group continuing to make reassuring progress in the current year, possibly boosting profits 10% to 15% higher than previous market expectations.  

Earlier in January this year the group’s shares hit 93p before easing back to the 75.60p level at which I mentioned them on Wednesday last week. 

I am encouraged by the new Price Objectives of the two brokers above and continue to believe that my early Target Price will soon be beaten. 

They closed last night at just 89p. 

(Profile 10.03.21 @ 79.5p set a Target Price of 99.5p) 

(Profile 17.07.23 @ 31.15p set a Target Price of 38p*) 

Avingtrans (LON:AVG) – An Interesting Medium-Term Buy 

The Interim Results to end November 2023, reported yesterday, indicated a 30.4% increase in group revenues to £65.2m (£50.0m), while its adjusted pre-tax profits were £4.4m (£4.0m), with earnings of 11.7p (9.8p) and a dividend of 1.8p (1.7p) per share. 

The international engineering group, which designs, manufactures and supplies original equipment, systems and associated aftermarket services to the energy, medical and industrial sectors, declared that it had a strong first-half performance and ended with a robust order book, leaving it well-positioned to meet market expectations for the full year. 

Analyst Caroline de La Soujeole at Singer Capital Markets, with a 510p Price Objective, suggests that the group’s shares have been weak in recent months, down some 15% against the market, but now present an attractive entry point in her view.  

The shares offer a significant upside states David Buxton at Cavendish Capital Markets, who has 495p as his aim. 

Both analysts believe that the group will within the next year or so be making another example of its PIE Strategy – Pinpoint-Invest-Exit – as it sells off one or possibly two of the group’s interests. 

At the current 350p, up 10p on the Interims, the shares value the group at only £116m, which looks far too low a valuation. 

(Profile 04.11.20 @ 260p set a Target Price of 325p*) 

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