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…
Begbies Traynor (LON:BEG) – getting closer to a ten-year high
These may well prove to be totally suitable times for this corporate rescue and recovery practice. Just imagine how many companies, large and small, will founder upon the rocks of our virus hit economy.
And that will prove to be even more business for Begbies, which is the UK’s leader in such services.
So when you see the likes of Brighthouse, Chiquito and Carluccios, joining others like Beales, Soak and Laura Ashley – it becomes very evident that companies like Begbies will obviously be called upon to help either restructure the victims or help to put them out of life. All very good business.
This £102m valued company is likely to make some £9.5m pre-tax profits for the year to the end of April. For the coming year £11m plus is more than possible, worth over 7p per share in earnings.
There has been recent pull back in share price from 95p just a fortnight ago, down to as low as 57p, before the bounce over the last three days to close the week at around 83p.
Don’t overlook this company and its important services. Its shares have been up to 195p but that was at the end of August in 2008 (when another crisis was breaking). I see them soon breaking above their January 2020 High of 95p.
Profile 26.11.19 @ 85p set an end-2020 Target Price of 110p.
Manolete Partners (LON:MANO) – what turn-down?
Well the insolvency theme continues with my favourite litigation financing company.
Facing up to the virus fairly early on, having all of its employees operating from home for several weeks already, it has been very busy during March.
From some 50 new case enquiries, 15 new signed cases and eight case completions in the month, the company will end the year to end-March with a 131% increase in new cases at 141 (61) and a 54% increase in completed cases at 54 (35).
It appears that gross proceeds of £10.1m (£9.3m) were achieved for the full year; with gross proceeds in the second half of £7.7m, compared to £2.4m in the first half.
Well that was certainly news good enough to get the shares perked up from the 235p level of just two weeks ago, to 310p last Wednesday and subsequently up by a walloping 110p to close the week at around the 410p level.
Its shares have been up to 620p in the last year.
This company remains a firm favourite of mine, its business model is both fascinating and simple.
Profile 12.02.19 @ 230p set an end-2020 Target Price of 300p *.
The MISSION Group (LON:TMG) – looking to future opportunities
The year to end-December 2019 saw this marketing communications group push revenues up from £77m to £81m, pre-tax profits up from £9.2m to £10.2m, with earnings rising from 8.5p to 9p per share. The final dividend is on hold.
Impressively, net cash from its operating activities swelled to £9.3m by the end of the year.
However, this current year has already seen clients reschedule commitments, just how much impact this will mark upon trading is yet to be quantified. But it is sticking firmly to its cash coffers.
The company considers that it is well placed to serve its clients, several of them being blue-chips, and it will therefore benefit when better times return.
After falling to a low of 33.25p a couple of weeks ago the shares are closing the week looking a lot stronger at the current 58.5p.
There is still a lot higher to climb yet to match the 110p high scored just six weeks previously.
Inexpensively rated at the current price.
Profile 04.02.20 @ 88.5p set an end-2020 Target Price of 125p.
Helical (LON:HLCL) – still far too low for such prudent management
If you want to see just how a company should push out a trading and Covid-19 update, then just take a good look at last Wednesday’s statement from another of my favourites.
This London and Manchester office developer and investor is a really well managed business. It has masses of property assets let out predominantly to major and multinational companies.
Just 1.4% is let out to food and beverage occupiers, with whom it has already agreed to defer rental payments until the next quarter.
The update gives a breakdown of its finances, it is currently less than 35% leveraged (and that is prudently low). It has masses of cash deposits and also plenty of unused facilities.
Currently the company is not expecting its earnings to be affected by the virus crisis; however, we can expect the end of the 31 March 2020 year to experience some impact upon the investment property valuations.
The group has a high-quality prime offices portfolio, which is 83% let to a wide range of tenants. It has a number of developments on hand, at various stages of completion and letting.
Really, check out the statement for yourself – this company is conservatively run and its shares, which peaked at 540p just over a month ago, have subsequently been down to just 200p a fortnight since, and are now ending the week showing a firmer performance at 338p.
Having followed this company for over 34 years, I have total faith in its ability to weather any financial and economic storms.
Profile 11.06.19 @ 389p set a Target Price of 500p *.
Chemring (LON:CHG) – now the brokers say ‘buy’
I was pleased to note that brokers Berenberg have come out with a ‘buy’ note on this global business.
It specialises in the manufacture of high technology products and the provision of services to the aerospace, defence and security markets.
With customers in more than fifty countries across the globe, the group employs over 2,500 people across its production facilities in some four countries.
It is largely known for its chemical chaff products; however, its operations are split into two segments: sensors and information; and countermeasures and energetics.
As at the AGM in early March, the virus outbreak had not had any material impact upon Chemring’s business or its supply chains. However, that is more than likely to be a moving situation.
The brokers suggest that the shares, currently 190p, have a goal of 235p – noting that the group is insulated by a strong order book and a sole-source position in its key growth positions.
The shares, which hit 288p earlier this year, were down to just 167p two weeks ago.
Profile 20.06.19 @ 177p set an end-2020 Target Price of 300p.
Tremor International (LON:TRMR) – confident of trading through the uncertainty
This Israeli based group is one of the global leaders in video advertising technologies. It has offices throughout the US and Canada, Europe, Asia-Pacific and Australia.
Last Tuesday the company announced its results for the year to end-December 2019, showing revenues up 18% at $326m and an adjusted EBITDA of $60m.
It also disclosed a very healthy balance sheet with nearly $77m net cash. Sensibly it is using just $10m of that coffer to commence a buy-back programme of its shares.
Great potential for this group, aided significantly by the confirmation that Rebekah Brooks has just been appointed to the Board. She is the CEO of News UK, an important part of the News Corp empire, of which she is also a director.
What I did like to see was the company’s statement that “Despite the current uncertainty in the global economy, the Company’s business model remains strong and management is confident Tremor’s talent and market position will be maintained.”
The shares, which two months ago were trading at 222p, fell to a 2020 low of 85p on 18 March. They close the week looking very much healthier at 137p.
Please do not underestimate the possibilities for this company and its investors.
Profile 16.01.20 @ 156p set an end-2020 Target Price of 235p.