Small Cap Catch-Up: Windward, Strix And DWF All Going Higher

Windward Ltd (LON:WNWD) – A Cracking LSEG Deal

In a statement that surprised many onlookers, on Wednesday morning the company announced a new contract.

The LSEG is now looking to deploy the Windward artificial intelligence capabilities to combat ‘sanctions-busting’ across global shipping in real-time. 

Windward’s Maritime AI-powered technology will augment existing shipping analytic capabilities available on the LSEG Workspace platform in real-time.

It will track approximately 117,200 vessels currently at sea globally including oil tankers, dry bulk carriers and container vessels. 

Then, using AI and advanced behavioural risk assessments models, the technology screens against criteria which could be an indicator of illicit activity to determine a risk profile.

This could include ‘going dark’ – turning off or altering an AIS tracking device, visiting the port of a sanctioned country, and/or loitering in a sanctioned area.

CEO and Windward Co-founder Ami Daniel stated that:

“We are thrilled to join forces with LSEG to provide crucial insights into maritime risk, a must for anyone involved in maritime trade.

In this turbulent environment, it is more important than ever for stakeholders to be aware of all evolving risks. 

By combining our Maritime AI technology with LSEG’s comprehensive market data and reach, we are strategically poised to revolutionise risk management in the maritime domain.

Our joint efforts will empower stakeholders with actionable insights, enabling them to navigate the complexities of global trade risk with confidence.”

Brokers Canaccord Genuity rate this group’s shares as a Buy, looking for 115p.

They reckon that both the LSE Group win and the 11^th Russia EU sanctions package support its Buy case for the undervalued shares.

The brokers consider that there is materially more upside ahead, with the potential to hit 165p a share.

They closed last night, up another 6% on the day, at 71p, now up nearly 90% in just three months.

Hold very tight.

(Profile 03.04.23 @ 37.5p set a Target Price of 47p*)

Strix Group (LON:KETL) – ‘Green Shoots’ Appearing

The Isle of Man-based global leader in kettle safety controls earlier this week announced a positive AGM Statement.

CEO Mark Bartlett reported an improved trading performance in its second quarter.

He stated that following a period of uncertainty across a number of its key export markets, the group’s sales data in 2023 has indicated that some green shoots were appearing.

“I can report that this trend has continued with Group performance in Q2 improving versus Q1. We are continuing to receive increased frequency of orders from customers, albeit with smaller quantities as they manage their cash balances prudently.

We also continue to make successful progress on the integration of Billi which is in line and remains on track with our plan for the full year. This is another step that will propel Strix into a new growth phase, further diversifying away from the core Kettle Controls business.”

Every day this group’s kettle safety controls are used by over 1.2bn people, in more than 100 countries and by over 10% of the world’s population.

The group is involved in the design, manufacture and supply of kettle safety controls and other components and devices involving water heating and temperature control, steam management and water filtration.

Its core product range comprises a variety of safety controls for small domestic appliances, primarily kettles.

Kettle safety controls require precision engineering and intricate knowledge of material properties in order to repeatedly function correctly.

There are some 218.7m shares in issue.

The larger holders include Octopus Investment Nominees (11.57%), Canaccord Genuity Wealth (4.94%), Schroder Investment Management (4.73%), Gam Holding (4.09%), Hargreaves Lansdown Asset Management (4.08%), AEGON Asset Management (3.94%), Rathbone Investment Management (3.60%), Premier Fund Managers (3.59%), Investec Wealth & Investment (3.46%), Abrdn (Standard Life) (3.26%), and Close Asset Management (3.22%).

The Consensus Broker’s View shows an average Target Price of 132p.

Andy Hanson at the group’s NOMAD and broker Zeus Capital is encouraged by the AGM Statement.

Hanson considers that the improvement is in part due to seasonality, but also due to the potential re-stocking of customer inventories as management continue to see an increased frequency of orders from customers.

For the current year to end December he goes for a leap in sales from £106.9m to £155.6m, enabling a rise in adjusted pre-tax profits of £29.7m (£22.2m), lifting earnings to 12.1p (10.9p) and raising the dividend to 6.3p (6.0p) per share.

For 2024 his figures suggest £171.6m revenues, £33.8m profits, 13.8p earnings and a 6.8p dividend.

Over at Equity Development analysts David O’Brien and Hannah Crowe are equally positive.

They have put out a ‘fair value’ of 216p on the group’s shares.

They noted that the recent acquisition of Billi, the premium boiling, chilled and sparkling filtered water system company, is gradually being integrated into the group with global launches being planned.

Their estimates for the current year are for £155.17m sales, £29.2m adjusted pre-tax profits, generating 11.8p earnings and paying out a 6.3p dividend per share.

For next year they go for £74.0m sales, £34.2m profits, 13.7p earnings and a 6.7p per share dividend.

As for my view – well it is that now could be a good time to get switched on to Strix.

We will get some further market guidance within the next month or so when the company announces its Interim Pre-close Trading Update.

This £218m group’s shares are looking undervalued at the current 96.50p, where they are trading at just 8.2 times its price earnings ratio, while yielding a very attractive 6.5%.

On the face of it these shares could put on at least 30% and still look cheap.

(Profile 31.12.19 @ 196p set a Target Price at 250p*)

(Profile 31.03.23 @ 97p set a Target Price at 120p)

DWF Group (LON:DWF) – Gresham House Takes 5% Stake

I was very pleased to see that Gresham House Asset Management announced that, on Friday of last week, it had added to its stake in this undervalued legal services group.

On behalf of both its LF Gresham House UK Multi Cap Income Fund and for its LF Gresham House UK Smaller Companies Fund, it had boosted its stake in the group to 17,291,914 shares, representing 5.06% of its equity, with its Income Fund being the bigger holder.

That is not surprising considering the massive 10%⁺ dividend yield anticipated this year.

The shares have been an active counter, subsequent to my Profile on Wednesday of last week, with over 253,000 shares traded yesterday.

Remember the £230m group’s end April 2023 results are due to be announced within the next few weeks, which I believe will spur even more investor interest for this under-rated company.

Its shares, now 67p, could so easily double within the next year.

(Profile 01.06.20 @ 67p set a Target Price of 100p*)

(Profile 28.06.23 @ 56.5p now sets an easy 2023 Target Price of 75p)

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