Small cap round up: featuring Belvoir, SimplyBiz, Tremor and more…

5 mins. to read
Small cap round up: featuring Belvoir, SimplyBiz, Tremor and more…
Master Investor Magazine

Master Investor Magazine 58

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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…

Belvoir Group (LON:BLV) – broker raises target to 238p

What a cracking trading update from this residential lettings, sales and financial services group.

Sales up 43%, 6% up in property and 148% up in financial services – enough to inspire the company’s own broker, finnCap, to increase its sights from 194p to 238p.

Much better market conditions after Brexit will undoubtedly help in this current year.

Earnings are estimated at 13p for 2019 and 14.8p this year, then up to 15.9p per share next year.

The shares responded to the good news by leaping 10% to 163.5p, still leaving masses of upside potential, as well as a handsome 5% yield.

Profile 09.01.20 @ 141p set an end-2020 target price of 175p.

Petra Diamonds (LON:PDL) – better prices are anticipated

The first six months to end December 2019 showed production up 3% to 2,070,240 carats. It is going for 3,800,000 carats for the full year, possibly more.

First-half revenue was down 6% at $193.9m, with lower prices achieved in the diamond market.

Net debt was up fractionally at $596.4m.

That all looks disappointing – however, we knew what to expect and were not surprised.

Diamond prices are beginning to look stronger as the H2 gets underway.

We could get to know more when the company publishes its Interims on 17 February.

After having touched 11.70p on Thursday of last week, the shares slipped back on Monday’s trading update to 9.09p on the news.

Now at 9.8p, the shares are fancied by brokers Peel Hunt, who have pitched their sights on 18p a share and rate them as a ‘buy’.

Remember that this weekend a group of analysts and investors are due to visit the Cullinan Mine in Botswana.

Profile 21.01.20 @ 9p set an end-2020 target price of 12p.

SimplyBiz Group (LON:SBIZ) – the growth continues

The pre-close trading update from this compliance, technology and business services provider was very encouraging.

For the year to end-December, the group showed 24% revenue growth and an impressive 50% advance in its adjusted EBITDA, together with a 27% EBITDA margin.

What is more, in a year that included the major acquisition of Defaqto, it actually to repay some £7m of debt before the year end.

The group enjoys strong recurring revenue which gives it a lot of visibility into the future.

I look forward to the finals being released on 10 March, when we should get a much deeper insight into how the group is pushing ahead this year.

Peel Hunt raised their sights from 225p to 250p after the update.

I remain very positive about this expanding growth company, with its shares ending the week at around 228p.

Profile 04.04.19 @ 208.5p set an end-2020 target price of 250p.

Tremor International (LON:TRMR) – incredibly undervalued on just 6 times earnings

This week’s trading update from this global marketing solutions group was totally confidence inspiring.

What is evident is that the group is now pushing strongly the progress of its Video and Media sides, turning the Performance business into a non-core activity contributing less than 10% of EBITDA going forward.

Just look at this group’s profit growth $23m in 2016, $31m in 2017, $42m in 2018 and $52m estimated for last year, while $69m is projected for this current year.

Master Investor Magazine

Master Investor Magazine 58

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That should see the sterling equivalent earnings of some 34p per share – so at 206p, up 10% this week, the shares are rated at a mere 6.1 times price earnings – which is incredibly undervaluing such strong profits growth over the last few years and anticipated going forward.

Looking to be headed a great deal higher – sights are set by its broker at 500p a share.

Profile 16.01.20 @ 156p set an end-2020 target price of 235p.

discoverIE (LON:DSCV) – continued confidence

This group is continuing to focus on its target markets of medical, renewable energy, transportation and industrial and connectivity to create sustainable growth.

The Design and Manufacturing side is doing particularly well, while the Custom Supply division has been impacted by destocking in its marketplace in December.

However, the board is confident of making continued progress, both organically and through further acquisition opportunities.

After peaking at 590p the shares close the week at around 568p.

Profile 08.08.19 @ 438p set an end-2020 target price of 550p.

Block Energy (LON:BLOE) – be bold and go for a strike

In last Monday’s Operations Update CEO Paul Haywood stated that the development programme of this oil and gas exploration and production company is moving full speed ahead on multiple fronts.

It appears that Block, which is operating the West Rustavi onshore oil and gas field in the Republic of Georgia, is ‘hitting the ground running’ as it enters 2020.

At just 4p bold investors now could strike it lucky.

Profile 06.06.19 @ 13p set an end-2020 target price of 25p.

Finsbury Food Group (LON:FIF) – Gresham House double stake

Since its pre-close trading statement two weeks ago, the shares of this leading UK speciality baker and food manufacturer have been something of a stale performer. They subsequently peaked at 101.5p and fallen back to a 95.5p low a week ago.

The first-half figures will be published on 24 February and I expect them to show just how well it has outperformed others in its markets, which have been tricky.

I note that fund managers Gresham House have been attracted to the shares, now 99.5p, having doubled their holding to 3.9% – I think that was a wise move.

Profile 12.12.19 @ 84.5p set an end-2020 target price of 110p.

And finally …..

Hotel Chocolat (LON:HOTC) – chocolate egg on my face

Almost as I finished writing my end of week Small Cap Round Up blog last week, the shares of this speciality chocolatier and retailer started to rise again and my opinion was rubbished.

Readers would have been able to have taken a very substantial turn if they had followed my profile indication a year ago.

Its shares peaked at 507p earlier in January, before they fell back to 392p ahead of my piece which suggested that they could fall back more.

Within minutes they bounced convincingly, totally rubbishing my words as they climbed straight back up to 451p by the end of the week.

Profile 21.03.19 @ 340p set an end-2020 target price of 402p.

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