In this weekly summary, Mark Watson-Mitchell updates his readers on previous company profiles and other news of interest from the exciting world of small cap stocks…
Renewi Group (LON:RWI) – first half far better than expectations
The half-year trading update from this leading international waste-to-product business was announced yesterday morning.
It was even more bullish than I had anticipated.
It appears that the group’s trading and cash position was materially ahead of the group’s adjusted expectations, boosted by some €10m cost savings made in the first half to end-September.
Accordingly, the group’s board is now looking for a materially advanced full-year result, certainly better than the market has been estimating for the Covid-19 adjusted period results.
And encouragingly it is confident of its three strategic growth initiatives delivering boosted earnings over the next three years and beyond.
The group’s shares have been slow to react to such good news, but it will happen.
They closed last night at 24p.
(Profile 09.10.20 @ 24p set a Target Price of 35p)
Connect Group (LON:CNCT) – finals due within next three weeks
Yesterday this group announced that it had just secured a £175m revenue contract with Associated Newspapers – that secures some 15.9% of the group’s turnover, which means that it is running at £1.1bn in total.
Now some 95% of the distribution group’s turnover has been secured with contracts up to 2024 and beyond.
Last year on 6 November this group, which includes Smiths News (the UK’s largest newspaper and magazine wholesaling business), reported its final results. Will it be about the same time again this year?
That is not long to wait to see just how well the specialist distribution group has performed in the year ending 29 August.
I rate very highly the recovery prospects for this company, despite its massive debt (which is reducing). It has great visibility of future revenue and cash flow.
Hopes are high for a good first quarter’s trading but, first of all, the last year’s results need to come and go for the benefit of its shareholders.
The group’s shares have recently burst into life and now at just 25p they offer some good upside potential in the short term. That will please Worsley Investors, who have been recently increasing their stake in the company.
(Profile 24.07.20 @ 20.25p set a Target Price of 27p)
N Brown Group (LON:BWNG) – Schroders still adding to their holdings
It is pleasing to see that Schroders are continuing to add to their holdings in this Top Ten UK clothing and footwear digital retailer.
The investment management group now holds some 34.39m shares in the company, representing a 12.03% equity stake.
The group’s interim results for the six months to 29 August are due to be announced on Thursday 5 November.
The shares, now at 54p, are fractionally lower than the 55.5p they touched on Monday. Even so I do see them going a lot higher. Perhaps we need some good news to create added impetus to the share price.
(Profile 06.07.20 @ 36.15p set a Target Price of 50p*)
Augean (LON:AUG) – a good Q3 Trading Update due soon?
Last year this leading specialist waste management business published a Q3 trading update on 16 October.
Will it do the same again this year?
The nine months to end-September will combine a good Q1, a poor Q2 and then a much better Q3 – so hopefully the statement, should there be one, could be positive.
Certainly, the recent price move to 190p indicates that followers are bullish.
(Profile 31.10.19 @ 158.5p set a Target Price of 200p*)
(Profile 10.06.20 @ 185p set a Target Price of 235p)
Alumasc Group (LON:ALU) – AGM statement next week?
The shares of this premium building products group are taking some time to get over the 80p barrier and then head up to go back over the 100p level.
Perhaps a good statement next Wednesday (21 October) at the group’s AGM could create the right upward impetus.
Remember a host of the group’s directors bought a load of stock at around 70p a few months ago.
In early September upon its finals to end-June the company stated that “Looking ahead the Board is cautiously optimistic given the strong start to the new financial year across the group. The Board believes that Alumasc’s strong strategic and market positions, which underpin its established track record over many years of outperforming the UK construction market, will enable the group to deliver solid returns in the medium term.”
Don’t underestimate this company, nor its shares, now at 79p.
(Profile 13.02.20 @ 116p set a Target Price of 145p)
(Profile 08.06.20 @ 80p set a Target Price of 105p)
Dekel Agrivision (LON:DKL) – rewards to come for patient penny punters
Last Friday’s statement from this West African focused agriculture company was well received, with the shares picking up to 2.9p, before easing back to the current 2.6p.
Executive Director Lincoln Moore stated that: “September’s excellent numbers have driven an improved set of Q3 figures in line with expectations, which in turn builds on the material uplift in performance we reported for H1 2020. At the time of our half- year numbers, we said we expect to report a material improvement in H2 2020 results compared to H2 2019. Today’s figures only serve to increase our confidence further.
“With the next peak palm oil harvest season due to commence in January 2021 and the commissioning of our large scale cashew processing project at Tiebissou expected in Q2 2021, the next few months promise to be an exciting period for shareholders, as we look to take a major step towards building a multi-project, multi-commodity agriculture business.”
Still very early days in the real development of this palm oil and cashew business.
Even so, the patient investor may be rewarded with handsome profits – well that is my view.
(Profile 23.09.20 @ 2p set a Target Price of 3.5p)
Helical (LON:HLCL) – knock, knock your rent is due
Who would want to have been in the property-owning sector over the last six months or so?
Just imagine how difficult it has been for so many tenants, private and commercial, to find cash sufficient to pay the rent when earnings and business are so low.
That is when the quality of your tenants shows through. Their ability to pay is paramount to your own existence.
Well the offices owned by Helical are centred in the City of London and also in Manchester. Their tenants are major and international businesses and despite the Covid-19 lockdown and ‘stay at home’ policy this group has fared very well.
In Q4 to end-March this year it managed to collect 94.7% of all rent contracted and payable for that quarter.
Then in Q1 to end-June it collected 91.3% and arranged with tenants for the balance.
So far, the Q2 to end-September has seen 84% collected, with arrangements in place for further collections over the next couple of months to take that up to around 93%.
Over the last month or so the company’s shares had drifted down to 248p by the end of September, since when they have recovered well to the current 335.5p.
They peaked this year at 540p in mid-February. They may not get back up there for a while yet due to the Covid-19 restrictions; however, I see them trading back up in the 360p/380p range very soon.
The company should announce its interim results in about five weeks.
Helical is a quality property developer and investor (net asset value circa 485p per share) and its shares have some real value appeal.
(Profile 11.06.19 @ 389p set a Target Price of 489p*)
Cake Box (LON:CBOX) – getting fresh?
Last Monday’s interim trading update was almost as comforting as the company’s fresh cream cakes.
Their shops were closed for six weeks at the start of the lockdown; however, the 20 weeks to end-September showed revenues of £8.6m, up £2m on the same period last year.
New store franchises are being rolled out, another six were added in the first half year, while its pipeline for new franchisees looks strong.
There was £5m net cash at period end, which encouraged the payment of a special dividend of 3.2p per share.
We shall get a fuller update on the group’s business on Monday 23 November.
The group’s shares at 176p responded well to the company’s statement.
Brokers Liberum rate the shares as a ‘buy’ and have a price objective of 265p.
(Profile 30.07.19 @ 180p set a Target Price of 240p)
Record (LON:REC) – nothing to do with gardening, much better than that
The £84m valued market leading specialist currency manager will be announcing its Q2 trading update next Monday (19 October). Positive news is hoped for at that time.
Could we also be getting some news on whether it has concluded its contract negotiations for a $8bn dynamic hedging mandate?
If such news does not come out next week then we may well have to wait until the interims are declared on Tuesday 24 November.
With four main operating lines – dynamic hedging, passive hedging, currency for return, and multi-product, this little group really is a specialist in the services that it offers to its institutional clients.
The group’s shares at 44.5p are moving in the right direction.
(Profile 20.08.20 @ 35p set a Target Price of 44p*)
And finally… ‘On The Move’
Braemar Shipping Services (LON:BMS) – profit-taking before the next rise?
After a few days of seeing its shares trading at around the 170p level I noted on Monday morning that they had fallen back to 151.5p.
This shipbroking, financial advisory, logistics and engineering services group should be announcing its interim figures very shortly, they came out on 24 October last year.
Hopefully, the fall-back in the share price is not due to ‘knowledgeable insiders’ taking a view.
Obviously, I do not know just how well it has fared in the period from 1 March to end-August; however, we were given a bit of a positive steer on 19 August when the group gave a trading update at its AGM.
“Overall, Braemar has continued to trade strongly since the beginning of the current financial year, despite the challenges caused by the COVID-19 outbreak on global trade… In the absence of any further deterioration in market conditions, trading is expected to continue in line with previous management expectations.”
The shares slipped back again yesterday to close at 146p, at which level investors should be tempted. That 180p hurdle is very close and easily attainable.
(Profile 05.12.19 @ 185p set a Target Price of 250p)
(Profile 20.05.20 @ 99p set a Target Price of 150p*)
MPAC Group (LON:MPAC) – automating its share price
Well the nosey buyers have been proved right. Just look at the way the shares of this packaging processing machinery group have performed of late.
Spurred by a swish acquisition in the US, the group is powering away, not just in share price terms, but also, I hope, in trading.
At 385p this very solid company has been an excellent performer this year, despite the Covid-19 hassles.
Now having more than doubled in the last ten months – hold tight.
(Profile 19.12.19 @ 182p set a Target Price of 235p*)
(*denotes that Target Prices have been achieved)