Small cap comment featuring ELIX, SFE and KAPE

Elixirr International (LON:ELIX) – stunning strength, time to ‘top slice’

The market disrupter and challenger consultancy obviously pleased the market with its interim announcement on Monday morning.

It declared a 77% increase in its revenues to end June at £24m and a thumping 145% in its pre-tax profits to £6.4m.

Furthermore, its net cash balance at the interim period end was a very strong £21.1m.

The guidance is now that the full year could see £47m to £50m revenues and a very healthy EBITDA margin of 30-32%.

Analyst Guy Hewett, at the group’s broker finnCap, is estimating that the final pre-tax will be around £14.1m (£8.7m) with earnings of 22.7p, able to pay a 4.1p dividend per share.

He has upped his price objective for the shares from 662p to 835p.

The shares responded to the results very positively, leaping 31% to 687p.

In the last year this group’s shares, now 680p, have more than trebled my profile price and obviously still offer more upside on finnCap’s estimates.

At these levels a ‘top-slicing’ could leave you in the stock for free.

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

Safestyle (LON:SFE) – already up 51% this year, another 25% climb possible in 2021

The leading UK-focused retailer and maker of PVCu replacement windows and doors declared some very good interim figures for its first half to 4 July this year.

Sales were up 73.4% at £73m, while pre-tax profits came in strongly at £4.3m against a £5.6m loss previously. Earnings were 2.6p (5.0p loss) per share.

CEO Mike Gallacher commented that “the momentum we built on return from the first lockdown was sustained into H1 2021 resulting in strong revenue growth versus 2019 and an order book 65.7% higher than at the end of H1 2019. This performance has underpinned our ability to deliver a rapid recovery in profitability and a further strengthening of our balance sheet.”

I love it. Cracking results and offering so much more to go for in the shares, currently just 55p.

Zeus Capital estimates £144m for 2021 sales and £6.9m of profits, with 4.2p earnings and a 1p dividend per share.

Liberum Capital see £144m of sales, £6.5m of profits, earnings at 4.5p and a 0.5p per share dividend. Their analyst Charlie Campbell has set a price objective of 80p on the shares.

At this current level I would suggest that the group’s shares are easily capable of reacting to more good news, certainly enough to take them over 70p possibly before 2021 is over.

(Profile 06.01.21 @ 36.5p set a Target Price of 48p*)

Kape Technologies (LON:KAPE) – a softly purring noise from Teddy?

In the last month this privacy security software group has announced its biggest deal to date, a $936m acquisition, a $354m placing at 337.5p per share, and its $10m profits interim results all of which pleased the market. Its shares have moved upwards significantly in response.

Therefore, it is pleasing to see Teddy Sagi, the Israeli billionaire entrepreneur behind the group, actually increasing his Isle of Man held stake from 60.44% to 61.18% in the process. That is a whopping 137m shares, which are currently 422.5p each in the market.

Hold very, very tight.

(Profile 21.12.20 @ 172p set a Target Price of 215p*)

Journeo (LON:JNEO) – ready to really chug along

The first six months to end June for this information systems and transport technical services group did not look too spectacular. Certainly, the share price reacted downwards to close at 120p, off 17p on Monday’s announcement.

They saw revenues up just £0.5m to £7.2m, but pre-tax profits improved from £88,000 to £166,000, with earnings jumping from 1.11p to 1.81p per share.

On the face of it the company is still enduring various hassles, customer delays, component stock shortages and other supply chain issues.

However, the business is pulling through, while delayed orders are due to resume within the trading year.

Russ Singleton, the group’s CEO, stated that “Our pipeline and confirmed orders continue to grow for the solutions we have developed, and this gives us confidence of meeting market expectations for 2022.”

Analyst John Cummins at WH Ireland estimates that this year will see sales of £15m (£13.6m), profits of £0.5m (£0.3m), together with earnings of 5.3p (3.6p) per share.

Going into the group’s 2022 year he sees sales of £17.6m, £1.3m of profits, with earnings of 14.5p per share. He also predicts it will end with £1m cash in its coffers.

The company’s shares, now 119p have been up to 138p since my profile, so considering that Cummins values them at 150p each, now could well be a useful time to add to holdings.

(Profile 07.04.21 @ 95.5p set a Target Price of 120p*)

IOG (LON:IOG) – a mark of faith, up nearly 38% in 23 days

It was very interesting to note that Lombard Odier Asset management stepped up their equity stake in this gas exploration group.

Last Thursday they increased their holding from 18.14% to 19.40% of the 489.4m share equity.

A good mark of faith in the Net Zero producer now that it has sufficient funding to take it forward in its activities.

I had no doubt that my price objective will be achieved within a very short time frame.

Some 10m shares were traded yesterday, nearly 11 times the average daily volume of 450,000.

Now that the shares, at 31p, have beaten my price objective inside 23 days, I am feeling that there may be a 40p magnet hanging overhead.

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

Van Elle Holdings (LON:VANL) – the good trading is continuing

This group, which is the UK’s largest ground engineering contractor, held its AGM on Monday.

The accompanying statement was very positive. Its strong revenues have continued across all of its various divisions, and despite the same hassles that others are facing, in December it should be declaring a good Trading Update for its first half year to end October.

Analyst Andy Hanson at Zeus Capital estimates that the full year to end April 2022 will see revenues up from £84.4m to £102.7m, with last year’s loss of £1.2m being turned around into a £2.6m profit, worth 1.9p in earnings per share, covering a 1p dividend.

Hanson goes for a 64.4p per share valuation against the current 51p.

The shares are a firm hold at this price.

(Profile 29.03.21 @ 37.5p set a Target Price of 47p*)

Totally (LON:TLY) – interims due in six weeks’ time

On Monday it was announced that Miton UK MicroCap Trust last Thursday had been reducing its holding in the medical services group, taking its stake down from 3.62% to just 2.95%.

Then yesterday morning Liontrust Asset Management reported that it had increased its holding in the group from 4.47% to 5.24%, some 9.55m shares.

The interims to end September are due within the next six weeks.

At these levels, on the basis of the group’s growing contractual potential, I would certainly be a buyer of the shares.

Having been up to 44.5p two months ago, they closed last night at just 35.75p.

(Profile 12.03.20 @ 12p set a Target Price of 18p*)

(Profile 25.06.21 @ 38.5p set a Target Price of 50p)

Iofina (LON:IOF) – facing the litmus test over the next 18 months

In its first half to end June this company, which is involved in the exploration and production of iodine and is a maker of other specialty chemical products, reported a 27% increase in revenues at $19.9m and a massive 164% improvement in its pre-tax profits at $3.5m. Its earnings came out at 0.018c a share (0.007c).

It reduced its net debt position by $2.7m down to $7.2m, slicing its interest charges from $0.7m to just $0.2m.

Tom Becker, the group’s CEO stated that “the group has delivered an excellent performance in the first half. Recoveries are underway in our customer markets and with this we expect the demand for iodine and its end-use products to continue to improve.”

Jonathan Wright, analyst at the group’s brokers finnCap, is estimating $4.5m profits on $36.7m of sales for this year, worth 2.3c per share in earnings.

Into 2022 he suggests that $39.1m of sales could see profits of $6.1m, worth 3.2c in earnings per share.

His price objective is 25p against the current 16.15p.

On the basis of the group’s potential over the next year or so, I consider that its shares are a good hold, and my own price aim stays firmly intact.

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

Ebiquity (LON:EBQ) – a very good hold

The global media consultancy is really getting its act together now.

Even though last Thursday’s interims showed a loss of £1.1m to end June, it was an improvement of £0.6m. Revenues for the period were up 20% at £32m. Valued at around £48m the group has a net debt of £9.6m.

The CEO Nick Waters stated that the group “has made a strong and rapid recovery from the challenges of 2020 with client activity rising and a healthy new business performance. The upturn has been broad based with all regions and service lines improving revenue and profitability.”

At Edison Investment Research its analysts Fiona Orford-Williams and Max Hayes reckon that the media investment analysis group’s shares are trading at a sizeable discount to its peers.

They estimate that the full year will see £63m of revenues (£55.9m) and a £3.2m pre-tax profit (£1.3m loss), which should push earnings out at 3.1p (1.9p loss) and with a 0.5p dividend per share (nil).

Going forward into 2022 Edison goes for £69.3m sales, £5.3m profits, 4.9p earnings and a 1.3p per share dividend.

Way back in November 2019 I profiled the company, I was too early.

However, I can now see that this group, which works for over 70 of the world’s top 100 leading brands, is beginning to make some stronger in-roads into its recovery, offering some good upside, hopefully sufficient to take it through my 2019 fixed price objective.

The shares, now 58p, are on the right upward course – a good hold.

(Profile 05.11.19 @ 43p set a Target Price of 75p)

(Profile 03.02.21 @ 20.5p set a Target Price of 27p*)

Brickability Group (LON:BRCK) – building equity positions

Two investing institutions have recently been adding to their holdings in this construction materials distribution business.

Its interim results to end September are due to be declared in early November.

Octopus Investments last week added nearly 3m shares to its stake, now 17.93m, representing some 6.01% of the group’s equity.

While Fidelity Investments, after recent purchases a week ago, has 5.38%, some 16.05m shares.

The shares closed last night at 111p, after touching 114p earlier in the day.

A good hold.

(Profile 16.04.20 @ 39p set a Target Price of 55p*)

Ten Entertainment Group (LON:TEG) – insider selling but why?

We all need funds from time to time.

But when a CEO sells two thirds of his holding it makes you wonder whether he has assessed his group’s prospects.

That is what Graham Blackwell did in the middle of last week, selling a total of 100,000 shares at around 265.2p, leaving him with just 42,194 shares, representing just 0.1% of the bowling and family entertainment centres group’s equity.

However, Berenberg analyst Charlotte Barrie has a ‘buy’ rating on the shares, looking for 325p, against the current 265p.

(Profile 02.10.20 @ 135p set a Target Price of 170p*)

Medica Group (LON:MGP) – experts disagree after the interims

It is interesting to note that the ongoing bear of this £181m valued radiotechnology experts grouping, Miles Dixon at Peel Hunt, rates the shares as a ‘reduce’ looking for them to fall to 83p.

Last Monday’s reported interims to end June showed revenues up 55.7% at £26.44m, while underlying pre-tax profits were 103.2% better at £3.98m, worth 2.82p in earnings per share (1.21p).

Over at Liberum Capital, brokers to the growing group, its analyst Alistair Campbell rates the shares as a ‘buy’ looking for 245p.

He is going for full year revenues of £62.1m (£38.8m) and profits of £11.1m (£4.7m), generating earnings of 7.7p (3.5p) per share.

The business is really quite strong and the upside is appealing.

I consider that the shares, now at 167.5p, remain a good hold – it has taken them a long time to get to where they are now.

(Profile 07.01.20 @ 155p set a Target Price of 215p)

And finally …..

N Brown Group (LON:BWNG) – interims out on Friday of next week

This digital fashion retailing group is due to announce its interim results to 28 August on Friday 8 October.

Broker Shore Capital in late July reckoned that “Trading on a FY22F PER of 8.7x and an EV/EBITDA multiple of 4.9x, falling to 6.2x and 3.8x respectively to FY24F N Brown’s valuations are very undemanding, and offer considerable upside if medium term targets are delivered (7% annual product growth, 14% EBITDA margin).”

Since its £100m fundraise at 57p, the group’s shares have been up to 77p before falling back to the current 51p, after the late July dip to 45.5p.

The last statement from the company in mid-June reported that it had made a good start to the year and that trading had been in line with management expectations.

I believe that the shares now ready to turn upwards again.

(Profile 06.07.20 @ 36.15p set a Target Price of 50p*)

(Asterisks * denote that Target Prices have been achieved subsequent to profile publication)