Small-cap comments on BRCK, D4T4, DSCV and INL

Brickability Group (LON:BRCK) – building block by block

With a 197% leap in first half revenues to £223.5m and a 120.4% increase in pre-tax profits at £11.9m this construction materials distributor put in a very lively showing to end September.

Chairman John Richards stated that “We believe Brickability is well positioned for the future, and that the scale and diversity of the business, will enable the Group to capitalise on opportunities in the market and further strengthen our positioning.”

Analyst Kevin Cammack at Cenkos Securities rates the sharesas a ‘buy’ looking for 128p as its fair value.
He estimates £394m sales (£181m) and £25.8m profits (£15.0m), worth 7.5p in earnings and giving a 2.1p per share dividend.

At the current rate of expansion, I see the shares, now 109p, touching 150p within the next year or so.

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

D4T4 Solutions (LON:D4T4) – just the answer

First half results to end September from this data group saw revenues up from £5.1m to £7.6m, helping to turn last time’s £0.6m loss into a £0.1m profit.

The £131m capitalised company has no debt and is long of some £16.1m in cash.

It is managing to get further contract wins, with a good ARR underpinning its revenues for the year. Analyst Lorne Daniel at finnCap is estimating £24.3m revenues for the year to end March 2022, with pre-tax profits of £2.6m, worth 5.6p in earnings and providing a 3.1p per share dividend.

With its shares at 280p, he now goes for a 450p price objective. I am delighted with the performance of this group and rate its shares as an ongoing hold.

(Profile 09.04.20 @ 170p set a Target Price of 215p)

discoverIE Group (LON:DSCV) – record growth in order books

The interims to end September from this customised electronics manufacturer reported a 21% leap in revenues to £174.3m and a 38% improvement in underlying pre-tax profits at £16.1m.

Earnings were 37% better at 13p per share, while the interim dividend was up just 6% at a mere 3.35p.

There has been a record growth in orders and sales are strong.

Chief Executive Nick Jefferies is sounding bullish: “With a clear strategy focused on long-term, high quality, structural growth markets across Europe, North America and Asia, a diversified customer base, a record order book and a strong pipeline of acquisition opportunities, the group is well positioned to make further progress on its key priorities.”

Guy Hewett at the group’s brokers finnCap is looking for £358.1m of sales in the year to end March 2022 and £33.1m of adjusted pre-tax profits, worth 26p in earnings and covering a 10.7p dividend per share.

His price objective is 1220p, against the current 1031p.

These shares have done well and will continue to do so, in my opinion.

(Profile 08.08.19 @ 438p set a Target Price of 550p)

Loungers (LON:LGRS) – very expansive-minded

I like the feel of this group, especially now that its Lounge café-bars and its Cosy Club restaurant-bars are open again.

The 24 weeks to 3 October saw revenues up 91.4% from £53.49m to £102.36m, while pre-tax profits leapt from £0.1m to £12.81m in the period.

Nick Collins, CEO, stated that “As we move into the Christmas trading period any potential impact of Omicron remains to be seen, but as we look ahead to 2022, I am very optimistic with regards to our prospects and the continuing roll-out of both Lounge and Cosy Club.”

Joint broker Liberum Capital’s analyst Anna Barnfather reckons that the shares are a ‘buy’, raising her price aim to 400p a share, compared to the current 278p.

She is looking for £227.1m (£78.3m) sales in the year to end April 2022, and a £20.4m profit (£13.4m loss), with earnings of 15.4p per share (9.6p loss).

With 184 sites now open this group is aiming at 500 in due course.

Clearly expansive, the group’s shares are headed higher still.

(Profile 03.09.19 @ 205p set a Target Price of 275p)

Record (LON:REC) – directional change is promising

Revenues in the six months to end September were up 38% at £16.3m, enabling the currency and derivatives manager doubling its interim pre-tax to £5.2m, lifting earnings up from 1.10p to 2.08p per share.

On commenting upon the group’s change of direction, Leslie Hill, the group’s CEO, stated that “Over the last 18 months, our business has faced this challenge head-on and we have now started to see the tangible benefits in the form of a more diversified business aligned with stronger financial performance.”

Analysts Andrew Mitchell and Martyn King at Edison Investment Research are estimating the full year to end March 2022 will see revenues up to £34.4m (£25.4m), profits of £10.6m (£6.2m), earnings of 4.21p (2.73p) and a dividend of 3.80p (2.30p) per share.

The half-time assets under management equivalent were a chunky $84.1bn, which was up an impressive 28% year on year.

The group’s shares, which were up to 108p in mid-summer this year, have eased back to 83.6p since then.

There should be a Q3 Trading Update out next month, by which time we could see them heading higher again.
Hold very tight.

(Profile 20.08.20 @ 35p set a Target Price of 44p)

Severfield (LON:SFR) – record order books, very attractive

Despite big hassles out in India and a lot over here too this leading structural steelwork group did quite well in its first half to end September.

Revenues were up from £186m to £196m, while pre-tax profits rose from £6.6m to £7.9m, with underlying earnings up 0.5p to 2.7p per share. The interim dividend was increased very slightly from 1.1p to 1.2p per share.

For the full year estimates are for £374m of sales (£363m and profits of £28.3m (£24.8m), helping to jack up estimated earnings from 6.6p to 7.5p per share and its dividend 0.2p better at 3.1p.

The next year should see the group pushing ahead to £32m of profits, earnings of 8.4p and a 3.3p dividend per share.

With its shares at only 69.5p they look very attractive to me, comfortably yielding over 4% and enjoying record order books taking it firmly into 2022 and 2023.

(Profile 12.09.19 @ 62p set a Target Price of 88p)

And finally ……

After the market gyrations of the last week, I am attracted by two ‘wrong priced value stocks’ around currently.

Inland Homes (LON:INL) – after the recent flurry up to 57p this inexpensive property group’s shares look very alluring at just 50p. The increased turnover in the equity was impressive and clearly indicated that the low for the year at 45.5p has been seen, while my 60p short-term aspiration is very achievable.

The group has so much on hand currently and they will be helped significantly by the latest news or refinancing facilities, which will reduce its ongoing funding costs. This is a long-term winner and not to be missed at this price. (P 29.10.21 @ 46.5p TP 60p)

The Brighton Pier Group (LON:PIER) – the recent write-up by Bill Kay in The Times helped to highlight this pier, mini-golf, theme park and premium bars group as an attractive investment.

It took the shares right up to 80p before the market melee of the last few days pulled them back again to only 70p, at which level they still have massive upside potential. (P 30.06.21 @ 61p TP 75p*)

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