Small-cap round-up: featuring Alumasc Group, Elixirr, Luceco 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…

Alumasc Group (LON:ALU) – my ‘star value pick’ for the next year

Yesterday’s AGM Statement from this premium building products supplier was very bullish.

Chairman John McCall commented that Alumasc began the new financial year to 30 June 2021 with record profits in the first quarter, benefiting from strong performances in the group’s three main divisions – building envelope, water management and housebuilding products.

That combines with equally strong cash generation, with net bank borrowings falling to less than £1m currently, against total facilities of £24m.

CEO Paul Hooper stated that the increased trading momentum had continued into Q1 of the new financial year, together with a strong order intake.

Analysts are looking for a £10m increase in current-year sales to end-June 2021 to £86m, upon which adjusted pre-tax profits could almost double from £3.7m to £6.4m, with earnings leaping from 8.2p to 14.3p per share and handsomely covering a 5p estimated dividend.

At the current 92.5p that would put the shares out on an extremely low rating of just 6.5 times earnings and offering an excellent 5.4% yield.

On the back of this trading update, Alumasc Group now would be my ‘star value pick for the next year’, with both of my target prices as attainable goals.

It is now very obvious why so many of the directors were buying more shares just a few months ago.

(Profile 13.02.20 @ 116p set a Target Price of 145p)

(Profile 08.06.20 @ 80p set a Target Price of 105p)

Elixirr International (LON:ELIX) – update is just the tonic

Well it appears that trading has been impressive at this challenger consultancy group.

It enjoyed record revenues in June and July and that strength has continued through to yet another record month in September.

Last Monday’s trading update stated that the group now expects its adjusted EBITDA for the full year to end-December will be in excess of £8.75m – the market has been going for just £7.8m.

The group’s shares have responded well to that positive news and its shares are now trading at around 254p.

Brokers to the company, finnCap, are obviously happy because they have jacked their price objective up from 312p to 336p.

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

Luceco (LON:LUCE) – lighting up the market

This manufacturer and distributor of high quality and wiring accessories, LED Lighting and portable power products is another company showing a strong Q3 to end-September.

Tuesday’s announcement showed that both Q3 and current trading are well ahead of expectations. The market was previously anticipating some £23m adjusted operating profits for the full year – however, it is now being guided to go for between £28m and £30m.

And that is on full-year revenue that should be at least equal to 2019’s £172m, despite lost sales during the ‘lockdown’.

Responding to the better than expected Q3 2020 trading update, news brokers Liberum Capital upped their ‘buy’ advice with an increased price objective of 260p, against their previous 230p.

The shares, after hitting 258p, have since eased back to 245p. A strong hold, but best not chased too far.

(Profile 15.06.20 @ 96.1p set a Target Price of 125p*)

Renewi (LON:RWI) – still plenty of time to get ‘wasted’

In his latest note on this waste-to-product company, Analyst Toby Thorrington at Edison Research states that the group is now in a new strategic phase to deliver a substantial increase in profitability.

He concludes that the company offers investors an environmentally friendly above-average earnings growth opportunity.

The shares are steady at just 21.75p, some 2p below my profile price, but I am still aiming at 35p.

(Profile @ 23.75p set a Target Price of 35p)

Tremor International (LON:TRMR) – programming for a share price doubling?

This group is a global leader in video, data and CTV advertising technologies.

Wednesday’s trading statement indicated that the year to end-December is going to be better than hoped.

Apparently strong demand in Q3 has helped to confirm management hopes of around $350m revenues and $33m adjusted EBITDA for the full year to end-December.

Following a strong share price spurt to 200p a few days ago, from its August 120p, the reaction to 175p on Tuesday of this week was bettered by the shares recovering with some verve to the current 215p.

The highest price was in February at 222p, so not quite hitting my TP.

The company’s brokers have retained their price pitch at a whopping 500p.

(Profile 16.01.20 @ 156p set a Target Price of 235p)

Record (LON:REC) – certainly looking dynamic now

The Q2 trading update from this specialist currency manager reported that its assets under management equivalents were up 4% to a stunning $65.9bn as at the end of September.

Revenues for the full year to end-March 2021 are expected to have fallen back from £25.6m to £24.9m, while pre-tax profits are likely to decrease £1.2m to £6.5m, worth 2.7p per share in earnings, but still covering a 2.3p dividend.

For the end-March 2022 year, revenues could jump to £28.7m with profits of £8.9m, giving 3.65p of earnings and a 2.3p dividend per share.

The shares dropped 2p to 41.5p, which is 3.5p lower than their peak achieved a week ago.

I think they are a strong hold and will be going back up again soon.

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

Solid State (LON:SOLI) – just a ‘hold’ at present?

Seventeen days before Christmas is when this value-added electronics group will declare its interims to the end of September.

However, well before Tuesday 8 December, we now know that the group could be seeing first-half revenues hardly changed, despite Covid-19, at around some £33m (£33.6m), with the adjusted interim pre-tax profit of £2.5m, against £2.67m previously.

It will be interesting to see what revenue and profit guidance the company might give to brokers on the back of the announcement.

The shares peaked at 698p earlier this year, before the virus impacted one and all. They subsequently more than halved to 230p, prior to the steady recovery to 655p a couple of months ago.

Now at 585p, the shares, at best, may be just a ‘hold’ but the next few weeks will define any further action.

(Profile 15.08.19 @ 404p set a Target Price of 546p*)

D4t4 Solutions (LON:D4T4) – speed up the contract negotiations please

This AIM-listed data solutions provider will hold a virtual Capital Markets Day for investors and analysts in the last week of November. That is when the group’s interim results to end-September will be declared.

We now know that its H1 revenues will be £5.09m against £8.84m previously, which is what the management were expecting.

Just how the second half now underway will show through is very much in the laps of the gods, until current contract negotiations are concluded.

But what I did like to see in this week’s trading update was the fact that annual recurring revenues were over 55% compared to the end-March 45.2% figure.

Furthermore, end period net cash was a healthy £12.08m (£11.24m).

Boss Peter Kear stated that, “Overall, we are in a good position with a number of contracts in final negotiation and a strong pipeline with an increase in new opportunities. Based on our organic business, H2 annual recurring revenues and the depth and quality of contracts in final negotiation coupled with a strong new business pipeline, we remain confident about our prospects for the full year.”

We have had a good run with this group’s shares over the last seven months, peaking out at 248p at one stage, after its 120p low in late March.

Now at 198p I have a sneaking feeling that we could be in for some good news and another run up in price.

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

(*denotes that Target Prices have already been achieved.)