Small-cap mid-week round-up: featuring Robinson, Capita, Strix and more…

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Small-cap mid-week round-up: featuring Robinson, Capita, Strix and more…

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…

Robinson (LON:RBN) – Shares up 240% since April profile

Yesterday’s cracking interims from this Chesterfield-based packaging group saw its shares hit 142.5p before easing back on mild profit-taking.

They closed at 133p, showing a stunning 240% increase on my early April profile price.

Revenue for the six months to end-June was up just 5% at £17.9m, while pre-tax profits shot ahead from £0.3m to £1.1m. Net borrowings are down £1.3m to £5.6m.

Earnings came in at 5.1p per share, up from 1.3p, very capably covering the surprise second interim dividend of 2p to add to the first 3.5p dividend – making 5.5p in dividend on a 55.5p profile price. The final could be another 3p on that, making a handsome 8.5p for the current year to end-December.

House broker finnCap is very bullish, going for £37.2m sales and £2.4m pre-tax for the year, jumping earnings up to 12.7p per share.

Furthermore, their Head of Research Raymond Greaves reckons that the shares have a value of 145p each, taking into account the surplus property.

I remain delighted with this little plastic and paperboard packaging group’s performance to date.

(Profile 02.04.20 @ 55.5p set a Target Price of 80p*, which is already beaten)

Capita (LON:CPI) – Disappointing but not unexpected interims

Yesterday’s interim results announcement was not too encouraging.

In fact, it was quite disappointing, noting that the Covid19 impact during the lockdown was massive, slicing 9% off its revenues at £1.65bn and causing a sizeable £60m swing from profits to £28.5m losses.

Furthermore, the virus has hit the outsourcing services group‘s growth plans, leaving it unable to generate sustainable cashflow for 1-2 years.

However, it is now working flat out on selling off various unnecessary companies within its operating portfolio, with a view to strengthening its balance sheet, reducing its net debt and its pension liabilities.

Chief Executive Jon Lewis stated that, these are unprecedented times and we need to adapt but our strategy remains the right one.”

The group’s shares fell 20% to 28.75p, which is way below my recent profile price. Even so, I am confident that this will come right in due course. Will brave investors average now on their holdings?

(Profile 01.07.20 @ 44p set a Target Price of 66p)

One Media (LON:OMIP) – Excellent fund-raising offers investor attractions

This digital music rights acquirer, publisher and distributor is going great guns currently.

It has just announced a £6m gross proceeds placing of 86.3m new shares at 7p each to new and existing institutional holders.

The £5.6m net will be used to buy more rights to create and expand its digital assets.

Broker Cenkos Securities is looking for the group to report revenue to end-October this year of £3.84m, rising to £4.89m next year, with pre-tax profits of £607,000 this year and then £970,000 next year.

The broker likes the annual recurring revenue of the group, currently running at 88%, and puts a post-money fair market value of 13.7p per share.

They closed at 7.05p last night, giving new investors a cheap way into the equity.

(Profile 21.02.19 @ 5.75p set a Target Price of 10p)

Angling Direct (LON:ANG) – A very good trading update

Well the half-year trading update from the UK’s largest fishing tackle retailer, announced yesterday, was better than many expected.

They showed that in the period up to end-July group revenue was up 21% at £32.1m, with online sales putting in the biggest contribution at £17.9m, an increase of 43%.

Impressively, sales across all its channels from mid-June to end-July were up a staggering 95%.

The group ended the half year with £21m in cash compared to £13.3m this time last year.

The interim results will be declared on Wednesday 14 October.

The shares closed 6p higher at 55p, some way off my price objective, but I am still hoping.

(Profile 29.10.19 @ 58p set a Target Price of 100p)

And finally…

Strix Group (LON:KETL) – buyers coming in ahead of next month’s interims

The recent upward price movement in this Isle of Man-based kettle safety controls group has been pleasing.

It has, no doubt, been helped by institutional investors increasing their holdings in the company. The latest to add to its holdings was Octopus Investments, which has in just the last two weeks taken its position up from 6.02% to 9.24% of the equity.

The shares closed last night at 220.5p after hitting a new high of 228p. That was some recovery after their fall away to 110.8p in late March.

Come Wednesday 23 September we will see the interim results for end-June. Perhaps at long last my price objective on this stock might be achieved.

(Profile 31.1.19 @ 196p set a Target Price of 250p)

Sureserve Group (LON:SUR) – just issued a strong trading update

Well it looks as though Bob Holt has done it again. Under promised and over delivered.

This morning his Sureserve Group (LON:SUR) has delivered a positive update on its trading since the end of March.

It is a leading compliance and energy services group that performs critical functions in homes, public and commercial buildings, with a focus on clients in the UK public sector and regulated markets.

Because of the essential work it performs the group was able to continue to work all the way through the lockdown process and despite the hassles it has demonstrated its resilience, picking up new orders and paying off all of its borrowings by the end of July.

It retains a £25m revolving credit facility, together with its overdraft giving it an ability to fund its future growth plans.

The order book was boosted by 21 new contracts, adding £16m of annual contracts. Furthermore, it has strengthened its bidding team to seek even more such business.

“The group continues to show resilient growth in revenue, earnings and cash flows and looks forward to continuing its strong operational and financial performance during the rest of the financial year.”

A very strong sign of its confidence is given as the group has guided its brokers as to current year, next year and prospective earnings.

Estimates suggest that revenues to its September year end could be around £207.5m (£212.1m) with adjusted pre-tax profits coming in at £9.25m (£8.3m), jumping earnings up to 4.7p (4.2p) per share and easily covering a dividend of 0.8p (0.5p).

The year to end-September 2021 could see £224m of revenues and £10.35m of profits, worth 5.25p in earnings and 1p of dividend per share.

The way that Executive Chairman Bob Holt is shaping this £75m market capitalised group is confidence inspiring. Its strong balance sheet and financing ability should enable it to expand over the next few years.

Considering its consistent growth in earnings, I believe that this company’s shares should be trading on at least a 15 times p/e, which would see them up to 70p.

Brokers N+1 Singer have today put out a one-year price objective of 83p on the shares, which are up 9% at 46p in response to the update.

(Profile 14.01.20 @ 36p set a Target Price of 50p*, which has already been beaten)


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