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…
Amino Technologies (LON:AMO) – still time to get tuned in
The recently announced finals to end-November from this software-led global media technology company showed revenues up from $77.2m to $82.7m, upon which it made $9.8m adjusted pre-tax profits ($9.4m).
For the current year analysts Blaine Tatum and Gareth Evans at Progressive Equity Research estimate almost a standstill in revenues at $82.6m but a strong move upwards in profits to $12.1m, worth 13.3c per share (9.9c).
Going forward they see $84.4m sales next year and $13.3m profits, with 14.7c in earnings.
Last week it announced two new linear TV and streaming deals – with GO in Malta and Cablenet in Cyprus.
The global TV streaming market is set to double to $167bn by 2025 – and Amino plans to become an important player in the sector.
The shares, at 151p, obviously have upside potential. My price objective is just pennies away, and still the shares have strong appeal.
(Profile 09.12.20 @ 121p set a Target Price of 155p)
Aquis Exchange (LON:AQX) – fast closing in on my target price
Just three weeks after appointing Canaccord Genuity as a Joint Broker, with Liberum Capital, this exchange services group has published a bullish trading and operational update.
It appears that the company will be reporting a maiden profit for the last year to end-December.
Buoyed by a number of its clients renewing their licensing contracts towards the end of the year, the group seems well positioned for further profits this year.
Liberum’s analyst Shailesh Raikundia rates the group’s shares as a ‘buy’. He is looking for £11m sales last year (£6.9m) and an adjusted pre-tax profit of £0.7m (loss £0.7m).
For the current year he estimates £15.6m of sales revenues and £2.4m of profits.
The shares reacted to the good news by closing up 35p on Friday night at 555p.
They may have further to climb yet.
(Profile 26.10.20 @ 435p set a Target Price of 606p)
Audioboom (LON:BOOM) – more than doubled in price
Friday’s announcement that this global podcast company is now ranked ‘fifth largest US podcast publisher’ helped to lift the shares 25p to 430p, valuing the enlarged group at £67.4m.
Audioboom’s CEO, Stuart Last, commented: “Our improved position in the latest Triton Digital report validates the tremendous value that we are building in the business through our content-focused growth strategy. Ranking so highly, amongst an incredible set of peers, is very satisfying.”
We are getting the message, loud and clear, Stuart. And we are pleased that the market in the group’s shares is also picking up.
(Profile 09.07.19 @ 210p set no Target Price)
Card Factory (LON:CARD) – ready to greet more business
Who would want to be selling any type of goods out on Britain’s High Street during the lockdown?
And the drainage of capital for so many has been horrendous.
It has been commercial suicide for so many businesses, large and small.
Therefore, it has not been too much of a surprise to see that this greetings cards retail group has had liquidity hassles.
Full marks to the company for having kept the market, and thus its investors, informed as it has been ‘engaging in constructive discussions’ with its banking syndicate.
Its shops should reopen during April and the group will, no doubt, update further on its refinancing progress.
Giving a bolster to Friday’s update from the group, it stated that “the Board is confident the business is well placed to deliver for the benefit of all stakeholders.”
The shares touched 50p in response to the news before profit-taking clipped the price back to 47.15p.
(Profile 05.08.20 @ 42p set a Target Price of 60p)
Corero Network Security (LON:CNS) – hacking higher yet
I wonder whether there is a dealing opportunity building up for the shares of this cyber defence solutions business.
They touched 16.88p after the trading update issued on 19 January, but subsequently eased back to 11.5p earlier last week.
They closed steady at 13p on Friday night.
We should get the end-December 2020 finals declared within the next week or so, probably for early next month.
Between now and then could the shares edge higher again towards their near 17p peak?
I think that anticipation of good results and a bullish outlook statement could be the driver.
(Profile 14.04.20 @ 4.2p set a Target Price of 6.5p*)
KRM22 (LON:KRM) – losses reducing
Analyst Andrew Darley, at KRM22 house broker finnCap, seems to approve this group’s partnership link announced last Wednesday.
The business, which covers five risk categories of enterprise, market, compliance, operational and technology risk, has combined with Kintail Consulting in a partnership that could well drive further business to KRM22.
Later this month we should see the group’s end-December 2020 finals being announced.
Darley is going for revenues to have risen slightly to £4.6m (£4.1m), while the pre-tax loss will have more than halved from £4m to £1.7m.
For the current year he estimates £5.3m of sales could reduce the loss further still, to just £1.5m.
He is keen on the group extending its risk reach with Kintail – and states that he is looking for 56p for the shares, which closed last week at 42p. Stay with it.
(Profile 13.05.20 @ 30p set a Target Price of 50p)
Macfarlane Group (LON:MACF) – packed to climb
I was pleased to see this Glasgow-based packaging distribution and manufacturing group announce a very good set of figures, better than the market was expecting for the year to end-December last.
They showed a 2.1% increase in sales to £230m and a 9.6% improvement in pre-tax profits at £13m.
Earnings were up 5.9% at 6.45p while the well-covered dividend rose impressively from 0.39p to 2.55p per share.
Those were excellent figures in the light of the Covid-19 hassles that the group endured. Even net bank borrowings were lower at just £0.5m (£12.7m).
This current year has started well, and I await a positive chairman’s statement on 11 May.
The group’s shares touched 95p on Thursday, when the results were published, but closed the week at 92p.
I have total faith that my price objective will be achieved this year.
(Profile 08.07.20 @ 77p set a Target Price of 100p)
Morgan Sindall Group (LON:MGNS) – incredible workload
Despite pre-tax profits falling 29% last year to £63.9m, on the back of sales just 1% lower at £3.03bn, the shares of the construction and regeneration group reacted well, closing up 180p at 1,676p on Thursday night.
The group, which is capitalised at £765m, had net cash of £333m at the end of the year.
The group’s secured workload stands at over £8bn, which gives confidence that over £90m of profits could well be in line for this current year. That could see earnings of over 165p per share this year (108.6p).
At Friday’s closing price of 1,639p these shares are certainly not for selling just yet.
(Profile 14.05.19 @ 1300p set a Target Price of 1600p*)
Severfield (LON:SFR) – structural opportunities
Early in April we should get a pre-close trading update from this structural steel design, fabrication and construction group.
The group’s year to the end of March is estimated to have seen revenues up from £327m to £365m, while pre-tax profits could well have eased from £28.6m to £23m, knocking earnings down from 7.7p to just 6p per share, but the dividend is likely to remain unchanged at 2.9p.
Profits recovery will be on its way in the coming year, hopefully boosted by gains from the recently announced acquisition of specialist fabricator DAM Structures.
I have followed this group for a couple of decades, I continue to be a fan of its business and its potential.
The shares at 75.5p are not expensive.
(Profile 12.09.19 @ 62p set a Target Price of 88p*)
Solid State (LON:SOLI) – well above target but not yet ready to sell
Early last week this group, which makes computing, power and communications products, as well as being a value-added supplier of electronic and opto-electronic components, published a trading tpdate for the year to end-March.
Trading has been robust, while sales were steady and profits slightly ahead of market expectations.
Estimates are for revenues of £64.2m against £67.4m, with pre-tax profits up to £4.9m (£4.7m).
Earnings could come out at 47.4p (46.3p), while the dividend could increase to 15p (12.5p).
Current views for the coming year see not too much difference from the latter figures.
Even so the market just loves this stock, the shares touched 800p earlier last week and closed at 760p.
Hold tight but no need to chase new positions.
(Profile 15.08.19 @ 404p set a Target Price of 546p*)
Ten Entertainment Group (LON:TEG) – bowled the maiden over?
I was interested to note that BlackRock last week almost doubled their stake in this bowling alley group, from 5.61% to 10.01% of the equity.
Assumptions that its entertainment venues will open again soon has probably been the spur for renewed interest in the shares, which closed the week at 222p.
Anna Barnfather, an analyst at Liberum Capital, rates the shares as a ‘buy’ looking for 310p as her price objective.
The group’s results to end-December last are due towards the end of this month. She estimates revenues to have been understandably slashed to ribbons at £36.3m (£84.1m) while 2019’s profit of £15.4m has swung to a massive £16.4m loss.
For the current year she goes for £55.9m of sales and a very much smaller loss of just £4.5m.
I like that she reckons the shares are going higher, but I have a gut feel that she may well prove too bearish on current year estimates.
(Profile 02.10.20 @ 120p set a Target Price of 170p*)
(Asterisk * denotes Target Prices have been attained since publication)